Chartwell partners David Rossmiller, Elissa Boyd and Sean Carney recently won a major victory for client State Farm Fire and Casualty Company in the U.S. Ninth Circuit Court of Appeals. On December 21, 2022, in Wigton v. State Farm Fire and Casualty Co., the Ninth Circuit reversed the district court’s grant of summary judgment against State Farm. The U.S. District Court for the District of Montana, Missoula Division, had held that State Farm breached a duty to defend insured David Murphy, the manager of a Montana apartment complex that included Section 8 housing for low-income residents because State Farm did not defend Murphy against Section 8 resident Carla Wigton’s lawsuit alleging that he had maliciously used his managerial position to intimidate, sexually assault and sexually harass Wigton. Following State Farm’s denial of defense, which was based in part on the Business Pursuits Exclusions and the Willful and Malicious Acts Exclusions found in Murphy’s Homeowners Policy and Personal Liability Umbrella Policy, Wigton and Murphy entered into a $1.1 million covenant judgment. Wigton then filed suit against State Farm under an assignment of Murphy’s rights, and the district court granted summary judgment to Wigton. The Ninth Circuit reversed the district court, finding that the above-mentioned exclusions justified State Farm’s decision to deny a defense. The court also rejected Wigton’s argument and the district court’s finding that an insurer breaches a duty to defend unless it defends the insured and brings a declaratory judgment action to resolve coverage issues. Quoting Montana law that an insurer refuses a defense “at its peril,” the Ninth Circuit stated, “State Farm’s decision to forgo filing a declaratory action and deny defense outright may have been ‘at its peril,’ but it was not perilous.”
Congratulations, David, Elissa, and Sean!