NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FILED

FOR THE NINTH CIRCUIT

SEP 16 2016

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

JUDITH NEWMAN, as Personal No. 14-35103 Representative of the Estate of Karlye Newman, D.C. No. 9:13-cv-00047-DLC

Plaintiff-Appellee,

MEMORANDUM*

v.

UNITED FIRE & CASUALTY

COMPANY,

Defendant-Appellant.

Appeal from the United States District Court for the District of Montana Dana L. Christensen, Chief Judge, Presiding

Submitted July 8, 2016** Seattle, Washington

Before: TASHIMA and M. SMITH, Circuit Judges, and KOBAYASHI,*** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). *** The Honorable Leslie E. Kobayashi, United States District Judge for the District of Hawaii, sitting by designation. Defendant-Appellant United Fire & Casualty Co. (“United Fire”) appeals the

award of summary judgment in favor of Plaintiff-Appellee Judith Newman, as

Personal Representative of the Estate of Karlye Newman (“Newman”), in an

insurance-coverage action. First, we hold that Montana law applies pursuant to

Mitchell v. State Farm Insurance Co., 68 P.3d 703 (Mont. 2003), and Mont. Code

Ann. § 28-3-102.

Second, we recognize that the endorsement in the commercial general

liability policy titled “LIMITATION OF COVERAGE TO DESIGNATED

PREMISES OR PROJECT” and the similar endorsement in the umbrella policy

(collectively, “the Premises Endorsements” and “the Policies”) could be interpreted

as limiting coverage to occurrences tied to National Contract Services’ (“National

Contract”) St. George, Utah, premises. Such an interpretation, however, would be

inconsistent with the Policies’ definitions of the “coverage territory,” which

include, inter alia, all of the United States. Reading the Premises Endorsements in

light of the Policies as a whole, we hold that the endorsements are reasonably

susceptible to two different interpretations, and therefore are ambiguous. See

Westchester Surplus Lines Ins. Co. v. Keller Transp., Inc., 365 P.3d 465, 470

(Mont. 2016). Montana law construes ambiguous provisions “against the insurer

2 and in favor of extending coverage.” Id. We therefore reject United Fire’s

argument that the Premises Endorsements limit coverage to incidents that occurred

on the St. George premises. Because the Premises Endorsements purport to cover

claims “arising out of . . . the use of” the St. George premises, they are sufficiently

capacious to include coverage for bodily injury in Montana that flows from or

grows out of the use of the St. George premises. See State Farm Mut. Auto. Ins.

Co. v. Ferrin, 54 P.3d 21, 23 (Mont. 2002) (holding that “the phrase ‘arising out of

the use’ is ambiguous,” and interpreting it as “originat[ing] from, or grow[ing] out

of, or flow[ing] from”). Thus, United Fire had a duty to defend National Contract

in the underlying action.

Third, because United Fire unjustifiably refused to defend National Contract,

we hold that it is liable for the full amount of Newman’s judgment against National

Contract, including amounts in excess of the Policies’ limits. See Tidyman’s

Mgmt. Servs., Inc. v. Davis, 330 P.3d 1139, 1149 (Mont. 2014). Finally, we hold

that the district court awarded the correct rate of post-judgment interest provided in

Mont. Code Ann. § 25-9-205(1). AFFIRMED.

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FILED

Newman v. United Fire & Casualty Co., No. 14-35103

SEP 16 2016

TASHIMA, Circuit Judge, dissenting: MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

Although I agree with the majority’s conclusion that Montana law applies, I

disagree that United Fire had a duty to defend its insured, National Contract

Services. In arriving at its duty-to-defend conclusion, the majority reasons that the

Premises Endorsement may be construed in favor of coverage. The Premises

Endorsement, which modifies the Policies, limits coverage to a specified physical

location: National Contract’s 12,000 square foot office in St. George, Utah. Given

this limitation, the majority’s interpretation of the Premises Endorsement relies on

a number faulty premises and conclusions. I therefore dissent.

1. The underlying complaint does not mention St. George, Utah. See

Tidyman’s Mgmt. Servs. Inc. v. Davis, 330 P.3d 1139, 1149 (Mont. 2014) (“The

duty to defend arises when a complaint against an insured alleges facts which, if

proved, would result in coverage.”). It alleges that National Contract is a citizen of

Nevada and Montana. It also alleges that National Contract negligently provided

program materials and services, leading to the bodily injury in Sanders County,

Montana. But nowhere does the complaint allege that National Contract

committed these negligent acts – or otherwise conducted any business connected

with the underlying incident – in St. George, or even Utah.

2. The majority concludes that the Policies cannot be read as limiting coverage to occurrences tied to the St. George premises, because that would “be

inconsistent with the Policies’ definition of the ‘coverage territory,’ which

includes, inter alia, all of the United States.” But this reasoning overlooks that the

Premises Endorsement specifically provides that [t]his endorsement modifies the

insurance provided under” the Policies, by narrowing the originally broad grant of

coverage. Thus, by its plain and unambiguous terms, the Premises Endorsement is

designed to override and narrow the geographic coverage provided by the Policies.

3. Finally, interpreting the Policies to require coverage under the

allegations of the underlying complaint renders the Premises Endorsement

superfluous. An insurance policy must be read “as a whole . . . to give each [part]

meaning and effect.” Newbury v. State Farm Fire & Cas. Ins. Co. of Bloomington,

Ill., 184 P.3d 1021, 1025 (Mont. 2008). The district court reasoned that the

underlying complaint concerning events in Montana triggered coverage because

the Premises Endorsement covers “operations necessary or incidental to [the]

premises,” i.e., National Contract’s office in St. George. However, because the

Endorsement is a modification to the general form Policies, it must, in some way,

differ from the initial grant of coverage provided for by the Policies; otherwise, it

serves no function – it is completely meaningless surplusage. By conflating the

term “premises” with “business,” the district court read the Premises Endorsement

2 as covering any damages arising from National Contract’s business. This reading

is effectively coextensive with the initial, limitless grant of coverage before that

coverage was limited by the Premises Endorsement: damages caused by an

occurrence anywhere in the United States, for which National Contract is

responsible.

• ! •

Because the underlying complaint cannot be read to trigger coverage under

the Policies, as modified by the Premises Endorsement, I respectfully dissent.

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