Dale Conley v. First National Insurance Company of America; American States Insurance Company

This disposition is not appropriate for publication and is not precedent*
except as provided by Ninth Circuit Rule 36-3.
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DALE CONLEY; KAREN CONLEY, in
the name of the Estate of Steve A. Stolp;
KARIN M. STOLP; KAREN S.
SCHNABL, co-personal representatives of
the Estate of Steve A. Stolp, deceased;
SILVERTIP ACCOUNTING, INC., AKA
Silvertip Accounting; SILVERTIP
CONSTRUCTION, INC.,
Plaintiffs - Appellants,
v.
FIRST NATIONAL INSURANCE
COMPANY OF AMERICA; AMERICAN
STATES INSURANCE COMPANY,
Defendants - Appellees.
No. 11-35577
D.C. No. 9:10-cv-00116-DWM
MEMORANDUM*
DALE CONLEY; KAREN CONLEY, in
the name of the Estate of Steve A. Stolp;
KARIN M. STOLP; KAREN S.
SCHNABL, co-personal representatives of
the Estate of Steve A. Stolp, deceased;
SILVERTIP ACCOUNTING, INC., AKA
Silvertip Accounting; SILVERTIP
CONSTRUCTION, INC.,
No. 11-35617
D.C. No. 9:10-cv-00116-DWM
FILED
SEP 27 2012
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

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The Honorable Jed S. Rakoff, Senior District Judge for the U.S.**
District Court for the Southern District of New York, sitting by designation.
2
Plaintiffs - Appellees,
v.
FIRST NATIONAL INSURANCE
COMPANY OF AMERICA; AMERICAN
STATES INSURANCE COMPANY,
Defendants - Appellants.
Appeal from the United States District Court
for the District of Montana
Donald W. Molloy, District Judge, Presiding
Argued and Submitted August 31, 2012
Seattle, Washington
Before: SCHROEDER and GOULD, Circuit Judges, and RAKOFF, Senior District
Judge.**
Dale and Karen Conley (the “Conleys”) appeal the district court’s order
denying their motion for summary judgment and granting defendant’s cross motion
for summary judgment in this action against First National Insurance Company and
American States Insurance Company (“Insurers”). Insurers cross-appeal the
district court’s finding that there was a covered “occurrence” under the subject
policy. We have jurisdiction under 28 U.S.C. § 1332, and we AFFIRM.

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The relevant insurance policy covered “bodily injury.” Under Montana law,
“bodily injury” includes “mental or psychological injury that is accompanied by
physical manifestations.” Allstate Ins. Co. v. Wagner-Ellsworth, 188 P.3d 1042,
1051 (Mont. 2008). “Such conditions include those which are susceptible to
medical diagnosis and treatment in a manner which distinguishes them from
mental injuries.” Id. at 1052.
The Conleys contend their allegation of “anxiety” triggered Insurers’ duty to
defend because, unlike emotional distress or mental anguish, anxiety “is commonly
understood to include physical manifestations.” They further argue this duty was
triggered by their October 1, 2009, letter to Insurers, which explained, “[T]he dread
of the tax liability that the Conleys face [has] taken a serious toll on their health.”
Even if anxiety “typically includes such things as headaches, sleeplessness,
muscle tension, [and] nausea,” an insurer need not assume physical manifestations
rising to the level of “bodily injury” whenever “anxiety” is alleged. See id. “At a
minimum, there must be allegations of physical manifestations supported by
sufficient documented evidence in order for insurance coverage to be triggered.”
Id. at 1052 (quoting State Farm Fire & Cas. Co. v. Basham, 520 N.W.2d 713, 715
(Mich. App. 1994)). The district court correctly held that the Conleys’ letter “fails
to make even a generalized reference to physical injury” and that it was reasonable

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to read “a serious toll on their health” in context with the rest of the paragraph,
which discussed only the “‘emotional cost’ of Stolp’s bad advice.”
The Conleys argue that, at the very least, their complaint and letter triggered
a duty to investigate and that such an investigation would have revealed their
extreme weight loss and chronic diarrhea. But Montana law supports the district
court’s holding that it was “not the [Insurers’] responsibility to affirmatively
disprove a bodily injury where none had been alleged.” See Revelation Industries
v. St. Paul Fire & Marine Ins. Co., 206 P.3d 919, 926 (Mont. 2009). Insurers
fulfilled their duty to investigate by reading the complaint and submitted
information and requesting “additional information, documentation or authority
[that would] in any way help support [the] claim for coverage.” See Daly Ditches
Irrigation Dist. v. National Sur. Corp., 764 P.2d 1276, 1279 (Mont. 1988).
We conclude that the district court was correct in granting summary
judgment, because there was no genuine dispute as to any material fact relating to
the asserted duty to defend, and defendants were entitled to judgment as a matter of
law. Because we decide Insurers had no duty to defend, we do not reach other
issues on appeal or cross appeal.
AFFIRMED.

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