Order Denying Insurer’s Motion to Dismiss Insured’s Third-Party Complaint Against Insurance Agency

Post number 5349

Insurance Agents Must Honestly Report Coverage In Policy Obtained

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In Golden Bear Insurance Company v. SBD Enterprises, Inc. d/b/a America Wild West, SBD Enterprises, Inc. d/b/a America Wild West, Third-Party Plaintiff v. FMSI Upper Plains, L.C. d/b/a Revo Insurance Alliance, Nos. CV 25-71-BLG-DWM, CV 25-73-BLG-DWM. United States District Court, D. Montana, Billings Division (May 7, 2026)

FACTS

Two firearm-related incidents occurred at the America Wild West bar in Billings, Montana (Feb. 2023): (1) a patron (Xavier Buffalo) fatally shot Beau Harlan Beaumont in the parking lot after an altercation and removal from the bar; and (2) bartender David Simmons pointed a handgun at patrons Derek Coffman and Guadalupe Garza and fired at least once, striking no one.

Beaumont’s Estate, and Coffman/Garza, filed separate state-court suits against SBD Enterprises, Inc. (the bar operator) (the “Underlying Actions”). SBD tendered the suits to its insurer, Golden Bear Insurance Company, requesting defense and indemnity. Golden Bear denied coverage, invoking an assault-and-battery exclusion in the policy.

Golden Bear filed two federal declaratory judgment actions (May 2025) seeking rulings that it owes no duty to defend or indemnify. SBD counterclaimed against Golden Bear and impleaded the selling agency, FMSI Upper Plains, L.C. d/b/a Revo Insurance Alliance (“Revo”), alleging negligence and negligent misrepresentation if coverage is found lacking, and asserting Golden Bear is vicariously liable based on an alleged agency relationship with Revo. Golden Bear moved to dismiss under Rule 12(b)(6) (counterclaim) and to strike/dismiss the third-party complaint as improper under Rule 14(a).

LAW / RULES

Rule 12(b)(6) plausibility standard:

A claim must plead sufficient factual matter to state a plausible claim for relief; courts accept well-pled facts as true and draw reasonable inferences in the pleader’s favor.

Rule 8(a) pleading:

Requires a short and plain statement; courts may reject “shotgun pleadings” that obscure who did what, but minimal incorporation defects are not automatically fatal when the pleading is short and clear.
Montana insurance agency (procurement) framework:

Montana divides procurement into two steps.

(1) When the client solicits the agency to investigate/select among insurers, the agency acts as the client’s agent.

(2) Once the agency solicits and procures a specific policy from a particular insurer, the agency becomes the insurer’s agent for that procurement.

Rule 14(a) Impleader:

A defending party may implead a nonparty who is or may be liable for all or part of the claim against it. The third-party liability must be dependent on the outcome of the main claim and secondary/derivative—not merely factually related. Courts balance efficiency and consistent results against prejudice, complexity, and delay.

DISCUSSION / ANALYSIS

Counterclaim (agency/vicarious liability) survives Rule 12(b)(6):

Golden Bear argued SBD offered only conclusory allegations of an agency relationship with Revo. The court rejected a formalistic “incorporation” argument because the pleading was short, organized, and not a shotgun complaint.

Montana’s two-step procurement test supports plausibility:

Even if an agency acts for the insured in the initial “shopping” stage, SBD alleged Revo made representations about the specific insurance SBD was buying and about coverage for the types of claims later asserted. Those allegations plausibly imply Revo had solicited/procured the particular Golden Bear policy, placing the conduct in step two and thereby supporting an insurer–agent relationship.

Key pleaded facts the court relied on:

SBD told Revo it operated a bar selling alcohol and needed adequate insurance; Revo represented the purchased policy would cover general/liquor liability and the kinds of claims in the Underlying Actions; SBD relied on those representations. These are enough at the pleading stage to infer agency and vicarious-liability theories.

Although Revo could not be liable to Golden Bear in the coverage action, Revo may be liable to SBD for all or part of SBD’s exposure that results from an adverse coverage ruling. That makes the third-party claim sufficiently “dependent on” and “derivative of” the coverage determination for Rule 14 purposes.

The court acknowledged added complexity because the coverage issue may resolve at summary judgment while negligence claims may require more fact development. But the presence of SBD’s counterclaims already expands the case; early posture reduces delay concerns; neither side’s claims appeared frivolous. Efficiency and consistent results therefore outweigh prejudice.

CONCLUSION

The court denied Golden Bear’s motion to dismiss because SBD plausibly alleged an agency relationship between Revo and Golden Bear under Montana’s two-step procurement framework. The court also held SBD’s third-party negligence and negligent-misrepresentation claims against Revo are permissible under Rule 14(a) because they are contingent on, and derivative of, a no-coverage determination, and discretionary factors (efficiency, early timing, and lack of undue prejudice) favor impleader in this declaratory-judgment coverage dispute.

SBD Enterprises had alleged in its Third-Party Complaint against Golden Bear that “Revo was acting as Golden Bear’s agent in selling the [Golden Bear] Policy to SBD [Enterprises]” and that “Golden Bear is vicariously liable to SBD [Enterprises].”

Golden Bear unsuccessfully argued that these legal conclusions do not allege any specific conduct or agreement demonstrating the purported agency relationship between Revo and Golden Bear.

ZALMA OPINION

Golden Bear’s assault and battery exclusion would probably succeed at summary judgment establishing lack of coverage for shooting a customer in the insured’s bar. If the agent sold the policy as not having that exclusion, there could be a viable case against the purported agent and Golden Bear could be exposed by its agent’s misrepresentation. They tried a dismissal and failed and the case will be resolved at trial or motion practice.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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