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Coverage denied for intentional acts

Coverage denied for intentional acts

Coverage denied for intentional acts
February 01
16:01 2022


Digested from case reports published online


Coverage denied for intentional acts

Katy Wessel and John Mehan held a homeowners policy issued by Farmers Insurance Exchange. They were sued by neighboring landowners Marc and Gloria Flora and the estate of John Michael Crites, who alleged that the insureds had harassed and threatened them over a dispute concerning the use of land they and the insureds owned. (Crites went missing in June 2011. His remains were recovered in two separate locations in October 2011 and September 2012. An arrest for the murder was made in 2020.)

In 2008, Wessel and Mehan purchased property in Lewis and Clark County, Montana, that was accessed by Turk Road. At the time, neighboring landowners, the Floras and Michael Crites, used Turk Road to access their homes located further north. Turk Road, which traverses the insureds’ property, was the only means of access to the Floras’ and Michael Crites’ properties. Both the Floras and the Crites estate maintained they had a right to use Turk Road and that Turk Road historically provided the only means of access to their properties.

In 2008, Wessel and Mehan asked for permission to snowmobile and otherwise recreate on the Floras’ property. The Floras were unable to grant them permission because the property was in a conservation easement that prohibited motorized use. Wessel and Mehan became upset and retaliated by not allowing the Floras and Michael Crites to use Turk Road.

The Floras and the Crites estate alleged that Wessel and Mehan began a concerted campaign to intimidate and harass them and others who needed to use Turk Road to access their properties. As a result, the Floras purchased, from another landowner, an easement on property that adjoined Wessel and Mehan’s property and constructed a new driveway that did not traverse the insureds’ property and that also could be used by Michael Crites.

The Floras alleged that, in retaliation for their not allowing Wessel and Mehan to recreate on their property, the insureds constructed snow berms and gates, felled trees, and created other obstacles to prevent them and others from using the new driveway to access their properties. (Ironically, the man arrested for the murder of Crites, Leon Ford, was a different neighbor who had a similar property dispute with Crites.)

Additionally, the Floras alleged that the insureds physically threatened them; interfered with the enjoyment of their property and home; and intimidated them, including discharging firearms at them. The Floras alleged they were compelled to leave their home, upon advice of law enforcement, and because they feared for their lives. The Floras were unable to find anyone to live in their home, even for free; and their home continued to sit vacant, to decay, and could not be sold.

Wessel and Mehan tendered the claims to Farmers, which concluded that coverage was not available because the claims asserted intentional conduct by the insureds. Farmers filed a declaratory judgment action to confirm that it did not have a duty to defend or indemnify the insureds.

The district court granted summary judgment to Farmers, concluding that there was no coverage under the policy and that the issue of indemnification was not justiciable. Wessel and Mehan appealed.

The Montana Supreme Court affirmed in part and reversed in part, holding that the district court (1) correctly concluded there was no coverage under the policy; (2) did not abuse its discretion in denying the insureds more time for discovery; but (3) erred in concluding that the issue of whether Farmers had a duty to indemnify was not justiciable.

Farmers Insurance Exchange v. Wessel—Montana Supreme Court—December 22, 2020—No. DA 19-0727.

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