Borsheim Builders Supply, Inc., d/b/a Borsheim Crane Service, Plaintiff and Appellant
v.
Manger Insurance, Inc., and Mid-Continent Casualty Company, Defendants and Appellees
Appeal
from the District Court of Williams County, Northwest
Judicial District, the Honorable Joshua B. Rustad, Judge.
Christian A. Preus, Minneapolis, MN, for plaintiff and
appellant.
Tyler
J. Siewert, Bismarck, ND, for defendants and appellees.
OPINION
McEvers, Justice.
[¶
1] Borsheim Builders Supply, Inc., doing business as Borsheim
Crane Service, ("Borsheim") appeals from a
declaratory judgment granting summary judgment to
Mid-Continent Casualty Company and dismissing Borsheim's
claims for coverage. We conclude the district court erred in
concluding Construction Services, Inc. ("CSI"), and
Whiting Oil and Gas Corporation ("Whiting") are not
insureds entitled to defense and indemnity under the
"additional insured" endorsement in the commercial
general liability ("CGL") policy Mid-Continent
issued to Borsheim. We further conclude the court erred in
holding Mid-Continent has no duty to defend or indemnify
Borsheim, CSI, and Whiting under the CGL policy for the
underlying bodily injury lawsuit. We reverse and remand.
I
[¶
2] In May 2005, Whiting and Borsheim entered into a master
service contract ("MSC"). In the MSC, Borsheim, as
the "contractor," agreed to defend, indemnify, and
hold harmless the Whiting Group, intending to extend
Borsheim's indemnity obligation to CSI, one of
Whiting's subcontractors, selected and assigned to work
with Borsheim. Section 12 of the MSC states, in part:
12. Indemnities.
a. Contractor hereby agrees to release, defend, indemnify and
hold the "Whiting Group" harmless from and against
any and all loss, cost, damage or expense of every kind and
nature... arising out of bodily injury... to the Contractor
Group, ... WHETHER OR NOT RESULTING IN WHOLE OR IN PART FROM
THE SOLE, CONCURRENT, OR COMPARATIVE NEGLIGENCE, OR STRICT
LIABILITY OF THE Whiting GROUP.
Section
2(l) of the MSC defines the "Whiting Group" as
"Whiting, its Affiliates, co-owners at the Site, joint
venturers, partners, contractors and subcontractors and all
of their respective directors, officers, employees,
representatives and agents."
[¶
3] Section 13 of the MSC requires Borsheim to "secure
and maintain" insurance coverage during the term of the
MSC and to "furnish certificates of such insurance
satisfactory to Whiting before commencing the Work." The
required insurance under this section includes
"Comprehensive General Liability Insurance INCLUDING
CONTRACTUAL LIABILITY" and "SHALL EXTEND TO AND
PROTECT THE Whiting GROUP TO THE FULL EXTENT AND AMOUNT OF
SUCH COVERAGE." This section also states,
"Contractor's insurance carrier(s) will provide
Whiting, as evidence that the required insurance coverage has
been obtained, with a certificate of insurance reflecting the
amount of any deductibles."
[¶
4] In 2000, Mid-Continent issued a CGL insurance policy to
Borsheim, which was renewed each year for an annual term for
the following ten years. Mid-Continent provided the CGL
policy at issue for the policy period April 17, 2011, to
April 17, 2012. While the CGL policy contains an exclusion
for "contractual liability," the policy also
contains an exception to the exclusion for an "insured
contract." The term "insured contract" is
defined in the CGL coverage form and is amended by the
"amendment of insured contract definition"
endorsement. The policy also includes an "additional
insured-owners, lessees or contractors-scheduled person or
organization" endorsement. Certificates of liability
insurance were issued separately to Whiting and to CSI.
[¶
5] In 2011, David Stec, Borsheim's employee, was injured
while working on Whiting's oil rig site when a backhoe,
owned by CSI and operated by its employee, released a beam
and crushed his foot. Stec and his wife subsequently
commenced a negligence action against CSI. In 2013, an
attorney retained to defend CSI and Whiting against
Stec's underlying liability claim tendered a demand for
indemnity and defense to Borsheim under the MSC and to
Mid-Continent under the CGL policy. Mid-Continent denied
coverage. In 2014, Borsheim sued Mid-Continent for breach of
contract after Mid-Continent failed to provide a defense or
indemnity coverage under its CGL policy for the underlying
bodily injury lawsuit. Mid-Continent answered the lawsuit and
filed a counterclaim for declaratory judgment. In 2015,
Borsheim moved for summary judgment. Mid-Continent opposed
the motion and filed its own summary judgment motion.
[¶
6] In March 2016, the district court entered an order for
declaratory judgment concluding Borsheim is statutorily
immune from liability under North Dakota's workers
compensation act; the CGL policy's contractual liability
exclusion applies to preclude coverage because of this
immunity; CSI and Whiting are not additional insureds under
the CGL policy; Mid-Continent did not breach its duty to
defend; and summary judgment was inappropriate and therefore
denied. In December 2017, the court entered a declaratory
judgment dismissing all claims against Mid-Continent with
prejudice.
II
[¶
7] Our standard for reviewing summary judgment is well
established:
Summary judgment is a procedural device for the prompt
resolution of a controversy on the merits without a trial if
there are no genuine issues of material fact or inferences
that can reasonably be drawn from undisputed facts, or if the
only issues to be resolved are questions of law. A party
moving for summary judgment has the burden of showing there
are no genuine issues of material fact and the moving party
is entitled to judgment as a matter of law. In determining
whether summary judgment was appropriately granted, we must
view the evidence in the light most favorable to the party
opposing the motion, and that party will be given the benefit
of all favorable inferences which can reasonably be drawn
from the record. On appeal, this Court decides whether the
information available to the district court precluded the
existence of a genuine issue of material fact and entitled
the moving party to judgment as a matter of law. Whether the
district court properly granted summary judgment is a
question of law which we review de novo on the entire record.
Forsman v. Blues, Brews & Bar-B-Ques, Inc., 2017
ND 266, ¶ 9, 903 N.W.2d 524 (quoting K & L
Homes, Inc. v. Am. Family Mut. Ins. Co., 2013 ND 57,
¶ 7, 829 N.W.2d 724)).
[¶
8] "Insurance policy interpretation is a question of
law, which is fully reviewable on appeal."
Forsman, 2017 ND 266, ¶ 10, 903 N.W.2d 524.
This Court independently examines and construes the insurance
contract on appeal to decide whether coverage exists. K
& L Homes, 2013 ND 57, ¶ 8, 829 N.W.2d 724.
This Court construes policy language to give effect to the
parties' mutual intention at the time of contracting:
We look first to the language of the insurance contract, and
if the policy language is clear on its face, there is no room
for construction. If coverage hinges on an undefined term, we
apply the plain, ordinary meaning of the term in interpreting
the contract. While we regard insurance policies as adhesion
contracts and resolve ambiguities in favor of the insured, we
will not rewrite a contract to impose liability on an insurer
if the policy unambiguously precludes coverage. We will not
strain the definition of an undefined term to provide
coverage for the insured. We construe insurance contracts as
a whole to give meaning and effect to each clause, if
possible. The whole of a contract is to be taken together to
give effect to every part, and each clause is to help
interpret the others.
Forsman, at ¶ 10 (quoting K & L
Homes, at ¶ 8). "Exclusions from coverage...
must be clear and explicit and are strictly construed against
the insurer." Schleuter v. N. Plains Ins. Co.,
Inc., 2009 ND 171, ¶ 8, 772 N.W.2d 879 (quoting
Nationwide Mut. Ins. Cos. v. Lagodinski, 2004 ND
147, ¶ 9, 683 N.W.2d 903). "While exclusionary
clauses are strictly construed, a contract will not be
rewritten to impose liability when the policy unambiguously
precludes coverage." ...