by Wilton H. Strickland


Back in December of 2012, I published an article in the Montana Lawyer (page 20) discussing the “occurrence” trigger for liability insurance coverage in Montana. I explained that Montana jurisprudence was clear that an “occurrence” — which most policies define as an “accident” — does not encompass intentional conduct of any sort, regardless of whether the resulting harm is intentional or unintentional. For example, a defendant who intentionally punches someone cannot claim coverage because he caused intentional harm, but by the same token a defendant who merely provides incompetent services also cannot claim coverage because whatever unintentional harms he caused still stemmed from his intentional conduct.

Two decisions by the Montana Supreme Court plus one decision by the U.S. District Court for the District of Montana all agreed on this issue, with only one recent decision by U.S. District Judge Molloy going the other way. I criticized Judge Molloy because he expanded the definition of “occurrence” to include intentional conduct that causes unintentional harm, specifically by reading the definition in conjunction with a policy exclusion for expected or intended harms. In so doing Molloy ignored well-established canons of insurance construction, and he also mistakenly found that the exclusion under review was unique from the exclusions in the other three cases. In point of fact, the exclusions were all the same and required the same holding of no “occurrence” and no coverage.

In the wake of my article, two very interesting (and ironic) things happened.

First, Judge Molloy changed his ways in 2014 and ruled that there indeed is no “occurrence” when someone engages in intentional conduct that causes unintentional harm. RQR Dev., LLC v. Atl. Cas. Ins. Co., No. CV 14-118-M-DWM, 2014 U.S. Dist. LEXIS 171084, at *7-*9 (D. Mont. Dec. 10, 2014). This was quite a switch in time, and on some level I hoped that my article was what helped motivate Molloy to look at this issue with a fresh pair of eyes.

Yet as fate would have it, in 2016 the Montana Supreme Court itself switched course. In Employers Mut. Cas. Co. v. Fisher Builders, Inc., 2016 MT 91, 383 Mont. 187, 371 P.3d 375, the court rejected its former view that intentional conduct of any sort rules out an “occurrence,” even though admitting that the policies at issue all had the same exclusion for expected or intended harms. Henceforth, intentional conduct qualifies as an “occurrence” so long as it produces no intentional harm as well.

So, just when the federal court decided to straighten up and fly right, the Montana Supreme Court unleashed the equivalent of a pole shift and threw everyone’s compass into disarray. But if there is one thing I’ve learned since coming to practice in Montana in 2010, it’s that these flip-flops are a common occurrence themselves.

Category: Legal Substance

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