Troutt

Opinion by Judge CYNTHIA HOLCOMB HALL; Partial Concurrence and Partial Dissent by Judge BETTY B. FLETCHER.

Colorado Western Insurance Company (“CWIC”) appeals the district court’s judgment after trial holding that a policy which it issued Peggy Troutt (“Troutt”) d/b/a Little Joe’s Tavern applied to an injury suffered by Terry Engstrand (“Engst-rand”) sustained during the latter’s performance of a job on behalf of Troutt. Troutt cross-appeals the same district court judgment holding that CWIC neither had a duty to defend Troutt from Engstrand’s suit against her, nor breached its agreement with Troutt by failing to investigate the claim and not settling before trial. We have jurisdiction pursuant to 28 U.S.C. § 1291 and we affirm on all issues.

I

In October 1993, Engstrand had almost all of his fingers amputated while working on a team that was splitting firewood for Little Joe’s Tavern, a bar owned by Troutt and her husband, Lee, now deceased. The team consisted of Lee Troutt, and patrons of Little Joe’s Tavern, all of whom allegedly undertook the wood splitting task in return for a promise of free alcohol from Troutt. Some alcohol consumption occurred throughout the day the…

concurring in part and dissenting in part:

I concur in much of the majority’s analysis and reasoning, but I respectfully dissent from Parts 11(D) and 11(E); I agree that CWIC breached its duty to indemnify but I am convinced that CWIC also breached its duty to investigate. I would hold that this failure to conduct a proper investigation caused CWIC to subsequently breach its duty to defend and fail to meet its obligation to settle. Insurers enter into relationships of statutory and contractual trust and obligation with those that they insure. Part of them obligation is to investigate claims that allegedly trigger coverage under the policies that they hold. Mont.Code. Ann. § 33-18-201(4) (1999). In this case, the defendant sold a “Liquor Liability Policy” to a tavern that covered injuries “arising] out of the selling, serving or furnishing of any alcoholic beverage.” The insured filed a claim asking for coverage to pay a man who lost almost all of his fingers while chopping firewood near and on behalf of the tavern. In my opinion, the Insurance Company’s investigation of this claim was manifestly insufficient.

This was an ill-fated enterprise from the beginning. The group tried…