After the estate sued, Continental made a tender to Employers Mutual Casualty Company under the commercial general liability (“CGL”) insurance policy Employers Mutual had issued to Black Rock, asserting that it was an additional insured under the policy.

Employers Mutual denied the tender and filed a declaratory judgment action seeking a determination that Continental was not an additional insured under the policy and that Employers Mutual did not have to defend or to indemnify Continental in the estate's suit.

The trial court granted summary judgment in favor of Continental, concluding that Employers Mutual had not made an unequivocal demonstration that Continental was not an additional insured under the policy.

The dispute reached the Supreme Court of Montana.

The Montana Supreme Court's Decision

The court reversed, finding that the trial court erred as a matter of law when it determined that Employers Mutual had to defend Continental as an additional insured under the CGL insurance policy it issued to Black Rock.

The court first explained that Continental could be covered under the policy's automatic additional insured provision only if it was a manager or lessor of property to Black Rock or a lessor of equipment to Black Rock that had contracted with Black Rock to provide insurance for liability arising out of Black Rock's maintenance, operation, or use of such leased property or equipment.

The court then said that, even if a master service contract had been executed and had been in force before Mr. Buckles' death, which the parties disputed, it did not help Continental because it was a service contract and did not provide for the leasing of property or any equipment from Continental to Black Rock.

The court then ruled that Continental also was not an additional insured under an endorsement that named it an “additional interested party.” In the court's view, although the endorsement did not define “additional interest” or “additional interested parties,” the descriptions in the endorsement and the forms attached made clear that the endorsement waived Employers Mutual's subrogation rights against Continental.

According to the court, it did not describe coverage for Continental under the policy and did not state that it amended the section of the policy entitled, “Who Is An Insured.” The explicit incorporation of a form waiving subrogation, the court said, demonstrated that the endorsement was “not for purposes of adding Continental as an insured.”

The endorsement, the court found “did not add Continental as an additional insured under the policy,” and, accordingly, Employers Mutual did not have to defend or indemnify Continental under the policy.

The case is Employers Mutual Casualty Co. v. Estate of Buckles, No. DA 18-0436 (Mont. June 11, 2019). Attorneys involved include: For Appellee Continental Resources, Inc.: Kyle A. Gray, W. Scott Mitchell, Holland & Hart, LLP, Billings, Montana. For Appellee BH Flow Testing, Inc.: Christopher C. Stoneback, Monique P. Voigt, Crowley Fleck PLLP, Billings, Montana.