HomeMy WebLinkAbout2009 07 01 MemoOfLiabilityMONTANA MUNICIPAL INTERLOCAL
AUTHORITY
MEMORANDUM OF LIABILITY COVERAGE
EFFECTIVE
JULY 1, 2009
MMIA Memorandum of Liability, July 1, 2009 i
TABLE OF CONTENTS
TABLE OF CONTENTS ...................................................................................................I
SECTION 1. COVERAGE ..............................................................................................2
SECTION 2. DEFENSE,JUDGMENT, AND SETTLE MENT .........................................2
SECTION 3. DEDUCTIB LE ...........................................................................................2
SECTION 4. LIMITS O F LIABILITY ...............................................................................3
SECTION 5. COVERED PARTY ...................................................................................3
SECTION 6. ADDITION AL COVERED PARTY END ORSEMENT ................................4
SECTION 7. TERRITOR Y ..............................................................................................5
SECTION 8. COMMON C OVERAGE DEFINITIONS .....................................................6
SECTION 9. GENERAL EXCLUSIONS .......................................................................10
SECTION 10. GENERAL LIABILITY COVERAGE .....................................................10
SECTION 11. PUBLI C OFFICIALS ERRORS A ND OMISSIONS ...............................17
SECTION 12. EMPLOYM ENT PRACTICES COVERA GE ..........................................23
SECTION13. EMPLOYEE BENEFIT LIABILITY CO VERAG E ....................................25
SECTION 14. LAND US E PRACTICES ......................................................................27
SECTION 15. CONDITI ONS ........................................................................................28
MMIA Memorandum of Liability, July 1, 2009 1
MONTANA MUNICIPAL INTERLO CAL AUTHORITY
MEMORANDUM OF LIABILITY COVERAGE
EFFECTIVE JULY 1, 2009
THIS DOCUMENT IS NOT AN INSURANCE POLICY. The Montana Municipal Interlocal
Authority (Authority) is not an insurance company. The Authority is an entity created pursuant to
Montana C ode Annotated (Mont. Code Ann.), Title 7, Chapter 11, parts 1 through 8. The
Montana Insurance Code, Mont. Code Ann. Title 33, does not apply to the Authority. Mont.
Code Ann. 33 -1 -102(9)
This document is a contract by the Authority and its Member Entit ies to pay all covered Ultimate
Net Losses subject to the LIMITS OF LIABILITY and other terms and conditions of this
Memorandum, the Interlocal Agreement entered into between and among the Members of the
Authority, the Liability Program Agreement, the Byla ws, and the Policies and Procedures of the
Authority, as the same may be amended or modified from time -to -time.
The Authority has no duty to pay for any Ultimate Net Loss or to indemnify any COVERED
PARTY for sums paid, or to defend in connection with Oc currences to which this Memorandum
does not apply , afford coverage ,or which did not occur during the COVERAGE PERIOD .
Various provisions in this Memorandum and the DECLARATIONS restrict coverage. Please
read the entire document carefully to determine rig hts, duties and what is and what is not
covered.
In consideration of the payment of the Member Assessment , the Authority agrees, subject to the
LIMITS OF LIABILITY, EXCLUSIONS, CONDITIONS and other terms of this Memorandum and
DECLARATIONS, to pay on beha lf of the Member Entity named in the DECLARATIONS (the
Entity)and a COVERED PARTY as follows:
.
MMIA Memorandum of Liability, July 1, 2009 2
SECTION 1. COVERAGE
1.1 The Authority, subject to the EXCLUSIONS,CONDITIONS,limitations, and restrictions
set forth in this Memorandum, agrees to pay o n behalf of a COVERED PARTY all sums
in excess of the DEDUCTIBLE up to the LIMITS OF LIABILITY set forth in the
DECLARATIONS which the COVERED PARTY shall become legally obligated to pay as
an Ultimate Net Loss because of:
Coverage A.General Liability
C overage B .Public Officials Errors and Omissions
Coverage C .Employment Practices
Coverage D .Employee Benefit Liability
Coverage E .Land Use Practices
As those terms are herein defined and to which the Memorandum applies, caused by an
Occurrence durin g the COVERAGE PERIOD.
SECTION 2. DEFENSE, JUDGMENT, AND SETTLEMENT
2.1 The Authority shall have the right and duty subject to the terms of this Memorandum to
defend any Claim against a COVERED PARTY claiming Damages for which coverage is
afforded unde r this Memorandum for an Occurrence during the COVERAGE PERIOD,
even if any of the allegations of the Claim are groundless, false, or fraudulent, and may
make such investigation and settlement of any Claim as it deems expedient. No Defense
Costs shall be i ncurred on behalf of the Authority without its prior written consent.
2.2 Subject to Sections 15.9.2 and 1 5.9.3, t he Authority shall be responsible for payment of
all reasonable attorney ’s fees and costs for defense of a COVERED PARTY and shall
only be re sponsible for payment of that portion of a settlement or judgment which relates
to C laims for which coverage is afforded under the terms of this Memorandum.
Provided, however, the Authority shall not be obligated to pay any settlement or
judgment or to de fend any Claim after the LIMITS OF LIABILITY have been exhausted
by payment of settlements or judgments ..
2.3 In the event that a Claim that would be covered under this Memorandum does not seek
Damages other than the claimant’s attorney fees or expenses,the Authority shall pay
reasonable Defense Costs for such C laims in an amount subject to the LIMITS OF
LIABILITY for non -monetary Claims and for the COVERAGE PERIOD as provided in the
DECLARATIONS .
SECTION 3. DEDUCTIBLE
3.1 The obligation of the Auth ority to pay an Ultimate Net Loss on behalf of a COVERED
PARTY shall apply up to the applicable LIMITS OF LIABILITY as stated in the
DECLARATIONS . The DEDUCTIBLE amount stated in the DECLARATIONS applies on
MMIA Memorandum of Liability, July 1, 2009 3
a per O ccurrence basis and is subtracted from th e portion covered by the Authority for
the Ultimate Net Loss and Defense Costs for the Occurrence.
3.2 The terms of the Memorandum, including those with respect to the Authority’s rights and
duties for the defense of Claims , apply without regard to the ap plication of the
DEDUCTIBLE amount.
3.3 The Authority may pay any part of or the entire DEDUCTIBLE amount to effect a
settlement of any C laim or pay any final judgment for such Claim. U pon notification of
such payment , the Entity shall promptly reimburse the Authority for such part of the
DEDUCTIBLE amount as has been paid by the Authority.
SECTION 4. LIMITS OF LIABILITY
4.1 Regardless of the number of (1)COVERED PARTIES under the Memorandum, (2)
persons or organizations who sustain injury or damage,or (3)C laims made for Personal
Injury, Property Damage, Bodily Injury,Automobile Liability, Professional Liability,Public
Officials Errors and Omissions, Employment Practices, Employee Benefit Liability or
Land Use Practices, the Ultimate Net Loss as t he result of any one Occurrence shall be
subject to the LIMITS OF LIABILITY as specified in the DECLARATIONS.
4.2 The Authority’s liability up to the LIMITS OF LIABILITY stated i n the DECLARATIONS
shall apply separately to each Member Entity under this Me morandum in the event of an
Occurrence that involves two or more Member Entities.
4.3 For the purpose of determining the LIMIT S OF LIABILITY ,the Ultimate Net Loss arising
from Damages for Bodily Injury,Personal Injury, Property Damage,Automobile Liabi lity,
Professional Liability,Public Officials Errors and Omissions, Employment Practices,
Employee Benefits Liability , or Land Use Practices arising out of continuous or repeated
exposure to substantially the same general conditions shall be considered as arising out
of one Occurrence, and shall be deemed to have originated in the COVERAGE PERIOD
in which the Damages were first incurred and only the LIMIT S OF LIABILITY as
specified in the DECLARATIONS for that first COVERAGE PERIOD shall apply.
SECTION 5 . COVERED PARTY
Each one of the following is a COVERED PARTY under this Memorandum:
5.1.The Entity
5.2.While acting within the scope of his or her duties for the Member Entity:
5.2.1 .Those individuals who were, or are now, elected or appointed offi cials of the
Entity, whether or not compensated, including members of the Entity’s governing
body or any other committees, boards, commissions or special districts of the
Entity, while acting for or on behalf of the Entity during the COVERAGE PERIOD .
5.2.2 .Past or present employees of the Entity, whether or not compensated, while
acting for or on behalf of the Entity during the COVERAGE PERIOD .
MMIA Memorandum of Liability, July 1, 2009 4
5.2.3 .All persons who perform a service on a volunteer basis for a M ember Entity
provided such performance is under the direction and control of the Member
Entity.
5.2.4 .Any peace officer or law enforcement entity which may render assistance during
the COVERAGE PERIOD upon request of a peace officer or law enforcement
organization of the Entity pursuant to appl icable law.
5.2.5 .Any firefighter or firefighting entity which may render assistance upon request of
a firefighter or firefighting organization of the Entity pursuant to a Mutual Aid
Agreement entered into under the authority of Mont. Code Ann. 7 -3 -4112 , (200 7 ),
or pursuant to a request for assistance made under Mont. Code Ann. 10 -3 -209,
(200 7 ), as the same may be amended from time -to -time .
5.3 An agency, board or commission which is established by the Entity pursuant to
resolution, ordinance, charter o r statute to perform such functions as prescribed in a
resolution, ordinance, charter or statute for the Entity ;provided, however, that any such
agency, board or commission which is required by resolution, ordinance, charter or
statute to obtain separate insurance to cover such functions or has obtained coverage
from some other source to cover such functions , whether or not required to do so,shall
not be a COVERED PARTY .
5.4 A quasi -governmental or intergovernmental agency, board or commission which is
g overned directly by the Entity by having a majority of the members of such agency,
board, or commission representing or appointed by the Entity ; provided, however, that
any such agency, board or commission that is required by the Entity or pursuant to
reso lution, ordinance, charter or statute to obtain its own separate insurance coverage or
has obtained coverage from some other source to cover its activities and functions ,
whether or not required to do so,shall not be a COVERED PARTY . Any quasi -
government al or intergovernmental agency, board or commission which is autonomous
from the Entity is not a COVERED PARTY . For purposes of this paragraph 5.4 indicia of
autonomy shall include but not be limited to the ability to hire employees, collect fees or
other revenues, enter into contracts, or purchase equipment or materials. An Entity
desiring coverage for a quasi -governmental or intergovernmental agency, board or
commission not otherwise covered under this Memorandum may apply to the Authority
requesting th at such agency, board or commission be endorsed as an Additional
Covered Party under this Memorandum, and the Authority may at its discretion grant
such application by issuing an ENDORSEMENT or amendment to this Memorandum.
5.5 Additional Covered Party.An A dditional C overed P arty means any other entity, agency,
board ,commission ,person, or other private party named by ENDORSEMENT to this
Memorandum as an Additional Covered Party pursuant to Section 6 of this
Memorandum.
SECTION 6. ADDITIONAL COVERED PARTY ENDORSEMENT
6.1.In order to obtain an Additional Covered Party e ndorsement (“Additional Covered Party
ENDORSEMENT ”), a Member Entity must submit a written request to the MMIA for
issuance of an Additional Covered Party ENDORSEMENT stating the name , address,
MMIA Memorandum of Liability, July 1, 2009 5
and description of the person or entity to be named in the ENDORSEMENT , including a
description of the need for such ENDORSEMENT and the time period for which an
ENDORSEMENT is sought. Such request shall also contain information which
addresses the criteria set forth in Paragraph 6.2 below and include an agreement in the
form prescribed by the MMIA executed by the person or on behalf of the entity to be
named in the ENDORSEMENT to abide by the terms of the applicable Memorandum of
Liability Cove rage if such ENDORSEMENT is granted. It shall also include an
acknowledgment by the Member Entity that it is aware that an Ultimate Net Loss paid on
behalf of the Additional Covered Party will be assessed to the Member Entity pursuant to
the MMIA’s Liabil ity Program Agreement, the Interlocal Agreement , and the Policies and
Procedures adopted by the Board of Directors of the MMIA .
6.2.MMIA will maintain absolute discretion in determining whether to issue an Additional
Covered Party ENDORSEMENT , and will r eview requests and make decisions on the
issuance of an ENDORSEMENT based on such criteria that may include, but are not
limited to:
6.2.1 .Proposed Additional Covered Party’s authority to conduct business in Montana.
6.2.2 .Experience and expertise in the p roposed Additional Covered Party’s area of
service or purpose
6.2.3 .Risk management training, practices or programs by the person or entity seeking
to be named in the Additional Covered Party ENDORSEMENT .
6.2.4 .Loss or lawsuit history of the pe rson or entity seeking to be named in the
Additional Covered Party ENDORSEMENT .
6.2.5 .Risk associated with service provided or purpose of the person or entity seeking
to be named in the Additional Covered Party ENDORSEMENT .
6.2.6 .Duration the Additio nal Covered Party ENDORSEMENT will be in effect .
6.2.7 .Any other criteria MMIA staff determines to be applicable.
6.3.The MMIA may either issue an Additional Covered Party ENDORSEMENT as
requested, issue the ENDORSEMENT with conditions, request additi onal information
before making a decision, or deny the request for ENDORSEMENT .
6.4.The MMIA reserves the right to deny an Additional Covered Party ENDORSEMENT for
coverage of the p roposed Additional Covered Party that in the MMIA’s sole estimation
pose s unreasonable risk or exposure to the Liability Program.
6.5.The decision to deny or conditionally approve a request for an Additional Covered Party
ENDORSEMENT may be appealed to the MMIA Underwriting Committee pursuant to
the provisions of the Memoran dum of Liability Coverage.
SECTION 7. TERRITORY
7.1 This Memorandum applies to any Personal Injury, Property Damage, Bodily Injury,
MMIA Memorandum of Liability, July 1, 2009 6
Automobile Liability,Professional Liability ,Public Officials Error or Omission ,
Employment Practice s , Employee Benef it Liability, or Land Use Practice s Liability
occurring during the COVERAGE PERIOD anywhere in the world provided a C laim is
made or brought within the United States of America, its territories or possessions, or
Canada.
SECTION 8. COMMON COVERAGE DEFI NITIONS
The following definitions shall govern the meaning of the defined terms for the purpose of this
Memorandum. Defined terms have special meaning and are capitalized where used in this
Memorandum. Words that appear entirely in capital letters have reference to the like -titled
section in this Memorandum or in the DECLARATIONS.
8.1.Additional Covered Party means any other entity, agency, board ,commission ,person,
or other private party named by ENDORSEMENT to this Memorandum as an Additional
Covere d Party pursuant to Section 6 of this Memorandum.
8.2.Aircraft means any contrivance invented, used, or designed to navigate, or fly, in the air.
8.3.Air Navigation Facility means a facility, personnel, mechanism, or equipment used,
available for u se, or designed for use in aid of air navigation, including runways,
taxiways, places on land or water, including a landing field, used or intended to be used,
for the takeoff and landing of Aircraft, lights, apparatus or equipment for distributing
weather information, signaling, radio -directional finding, or radio or other electromagnetic
communication, and any other structures or mechanism for monitoring, directing, guiding
or controlling flight in the air or the landing, taxiing, or taking off of Aircraf t, but does not
include Airport Premises.
8.4.Airport Premises means those premises including buildings, parking lots,garages,
sidewalks, streets, alleys, and structures that are not Air Navigation Facilities and are
used for sheltering, receiving or di scharging passengers or cargo.
8.5.Authority means the Montana Municipal Interlocal Authority.
8.6.Automobile means a land motor vehicle designed for travel on public roads, including a
trailer or semi -trailer and any attached machinery, equipment or a ttached devices.
8.7 Automobile Liability means liability for those Damages that a Member Entity or
COVERED PARTY shall become obligated to pay because of Bodily Injury or Property
Damage resulting from the use of an Automobile by a COVERED PARTY while a cting
within the scope and course of his or her duties for the Entity. Such Damages do not
include those Damages to an Automobile owned, rented, or leased by a Member Entity
or COVERED PARTY, or in the care, custody and control of a Member Entity or
COVER ED PARTY.
8.8 .Bodily Injury means physical injury, sickness or disease, including disability, shock,
mental anguish, mental injury, emotional distress, including care and loss of services
resulting from any of the foregoing, sustained by a person and inc luding death resulting
therefrom.Bodily Injury also includes assault and battery if committed or directed for the
purpose of protecting persons from injury or death, or property from damage provided
MMIA Memorandum of Liability, July 1, 2009 7
that such actions are not deemed in violation of crimin al law.
8.9 .Claim means a written demand for Damages or other relief in law or equity advising a
COVERED PARTY of the intent to sue, a notice of a charge or violation from any
governmental agency, an arbitration notice or any civil or administrative proc eeding
commenced by the service of a summons, complaint or similar pleading received by the
COVERED PARTY alleging a negligent or wrongful act or omission or notice of an
administrative hearing regarding an alleged negligent or wrongful act or omission
com mitted by the COVERED PARTY while acting within the course and scope of
employ ment .As used herein, allegations arising from a negligent or wrongful act or
omission that result s in Damages to a single person are considered one Claim
regardless of the numb er of persons or entities claiming Damages.
8.10 .Contractor for Residential Construction means a person or an e ntity acting as a
developer, general contractor, subcontractor or trade person or organization involved in
or undertaking Residential Construct ion.
8.11 .Covered Party means any person or e ntity qualifying as a COVERED PARTY as set
forth in Section 5 of this Memorandum.
8.12 .Dam means any artificial barrier, together with appurtenant works, used to impound or
divert water with an impounding capacity of 50 acre feet or greater, and shall include a
barrier designated as a “high hazard dam” pursuant to Mont. Code Ann. Sections 85 -15 -
106 and 85 -15 -209 , as the same may be amended from time -to -time .
8.13 .Damages means a monetary judgment, monetar y award, or a monetary settlement in
payment of compensatory or actual damages, including general and special damages,
which a COVERED PARTY is obligated to pay to a third party for a covered Claim.
8.14 .Defense Costs means all reasonable fees and expens es caused by and relating to the
adjustment, investigation, defense or appeal of a C laim for which coverage is afforded
under this Memorandum, including attorney ’s fees, paralegal fees, court costs and
interest on judgments accruing after entry of judgment . However, Defense Costs shall
not include the office expenses or salaries of employees or officials of the Authority or
any COVERED PARTY nor expenses of claims administrators engaged by the Authority
or any COVERED PARTY .
8.15 .Entity or Member Entity means the city, town or political subdivision named in the
DECLARATIONS.
8.16 .Fungal Pathogen means any fungus or mycota, or any byproduct or type of infestation
produced by such fungus or mycota including but not limited to mold, mildew,
mycotoxins, sp ores, or biogenic aerosols.
8.17 .Memorandum means this Memorandum of Liability Coverage for the Montana Municipal
Interlocal Authority and any endorsements or attachments or amendments thereto.
8.18 .Non -structural Repair Work means any Residential Cons truction except Residential
Construction that adds or involves a load bearing portion of any structure or involves any
defect that significantly and adversely affects use or utility for residential habitation.
8.19 .Nuclear Material means source material,special nuclear material, or by -product
MMIA Memorandum of Liability, July 1, 2009 8
material. Source material, special nuclear material and by -product material have the
meanings given to them by the Atomic Energy Act of 1954 or in any law amendatory
thereof.
8.20 .Occurrence means an accident or event, including injurious exposure to conditions,
which results, during the COVERAGE PERIOD, in Bodily Injury, Property Damage,
Personal Injury,Automobile Liability,Professional Liability ,Public Officials Errors and
Omissions, Employment Practices, Emp loyee Benefits Liability , or Land Use Practice s
Liability neither expected nor intended from the standpoint of the COVERED PARTY .An
Ultimate Net Loss arising out of a continuous or repeated exposure to substantially the
same general conditions, regardless of the frequency, timing, repetition, the number or
kind of events or offenses or the number of claimants, shall be considered arising out of
one Occurrence and shall be deemed to have first occurred on the date of the first event
or offense alleged to ha ve caused the Damage s for the Ultimate Net Loss.
8.21 .Personal Injury means injury, other than Bodily Injury,that is limited to one or more of
the following:
8.21.1 .False arrest, detention, imprisonment, or malicious prosecution;
8.21.2 .Wrongful ent ry or eviction of any person from a room, dwelling or premises that a
person occupies, or other invasion of private occupancy;
8.21.3 .The publication or utterance of a libel or slander, including disparaging
statements concerning the condition, value, qu ality or use of real or personal
property; or a publication or utterance in violation of the rights of privacy;
8.21.4 .Unlawful discrimination or violation of civil rights .
8.22 .Pollutant means:
8.22.1 .any solid, liquid, gaseous, or thermal irritant or contaminant, including without
limitation, smoke, vapor, soot, fumes, acids, alkalis, chemicals, electromagnetic
radiation, fiberglass, lead, lead paint, lead pigment, lead in water, lead products
or materials containing lead, refrigerants, green house gasses, or any hazardous
or toxic substance or waste of whatever kind. Waste material included materials
that are intended to be or have been recycled, reconditioned or reclaimed.
8.22.2 .any fungal pathogens or bacteria, including any fungus or mycota or any
byproduct or type of infestation produced by such fungus or mycota, including but
not limited to mold, mildew, mycotoxins, spores, or any biogenic aerosols,
whether indoors or outdoors.
8.23 Professional Liability means any act, omission, neglect,or breach of duty, including
but not limited to such acts as negligence, misrepresentation, and inaccurate advice, by
a COVERED PARTY who holds himself or herself out to the general public as having
greater than average expertise in particular areas in th e discharge of his or her duties
with the Member Entity that results in legal liability to a third party which is neither t he
Entity nor a COVERED PARTY.Professional Liability does not include Bod ily Injury,
Personal Injury,Property Damage,Automobile L iability,Public Officials Errors and
Omissio ns, Employee Practices, Employee Benefit Liability, or Land Use Practices
Liability;nor does it include an act, omission, neglect, or breach of duty which causes
injury or Damage to the Member Entity itself or a COVERED PARTY.
MMIA Memorandum of Liability, July 1, 2009 9
8.24 .Property Damage means:
8.24.1 .Physical injury to, or destruction of, tangible property which occurs during the
COVERAGE PERIOD, including loss of use thereof at any time resulting
therefrom; or
8.24.2 .Loss of use of tangible prop erty that is not physically injured provided such loss
of use is caused by an O ccurrence during the COVERAGE PERIOD.
8.25 .Public Officials Errors and Omissions means any act, omission, neglect, or breach of
duty, including nonfeasance, misfeasance, and m alfeasance by a COVERED PARTY in
the discharge of their duties with the Entity, but shall not mean or include Bodily Injury,
Personal Injury, Property Damage , Automobile Liability,Professional Liability ,
Employment Practices, Employee Benefit Liability, o r Land Use Practices Liability .
8.26 .Quantum Meruit means “as much as he deserves”. An equitable doctrine, based on
the concept that no one who benefits by the labor and materials of another should be
unjustly enriched. Under those circumstances, the l aw implies a promise to pay a
reasonable amount of the labor and materials furnished, even absent a specific contract.
8.27 .Residential Construction means all development, design, building or other
construction, improvements, site selection, surface or s ubsurface site preparation, or any
work, products or component parts thereof or services provided in relation to any of the
foregoing, involving property intended in whole or in part for residential habitation, or any
common or public areas or facilities r elated thereto, involving or undertaken by a
COVERED PARTY . As used herein, Residential Construction does not include Non -
structural Repair Work which is begun after the date of initial occupancy provided such
work is unrelated to or not completing work be gun prior to the date of initial occupancy.
8.28 .Terrorism means activities against persons, organizations or property of any nature:
8.28.1 That involve the following or preparation for the following:
(a)use or threat of force or violence; or
(b)commission or thre at of a dangerous act; or
(c)commission or threat of an act that interferes with or disrupts an electronic,
communication, information, or mechanical system; and,
8.28.2 When one or both of the following applies:
(a)The effect is to intimidate or coerce a government or the civilian population
or any segment thereof, or to disrupt any segment of the economy; or
(b)It appears that the intent is to intimidate or coerce a government, or to
further political, ideological, religious, social or economic objective s or to
express (or express opposition to) a philosophy or ideology.
8.29 .Ultimate Net Loss means the sums for which a COVERED PARTY is legally liable as
covered Damages for Claims for monetary relief,or for Defense Costs only for Claims
for non -monetar y relief as defined under Section 2.3 ,by reason of a judgment,
arbitration award, entered as a judgment, or settlement, including any prejudgment or
postjudgment interest on a judgment arising out of an Occurrence subject to the LIMITS
OF LIABILITY as pro vided in the DECLARATIONS .
8.30 .War means war whether or not declared, civil war, martial law, insurrection, revolution,
invasion, bombardment or any use of military force, usurped power or confiscation,
MMIA Memorandum of Liability, July 1, 2009 10
nationalization or damage of property by any gover nment, military or other authority.
SECTION 9. GENERAL EXCLUSIONS
The following EXCLUSIONS shall apply to all coverages, Section 10 through Section 14,
contained in this Memorandum:
9.1.Any liability arising out of C laims, demands, or actions se eking relief or redress in any
form other than Damages ; or for fees or expenses relating to claims, demands or actions
seeking relief or redress in any form other than Damages ,except to the extent o therwise
provided under Section 2 of this Memorandum rela ted to the payment of Defense Costs .
9.2.Any liability arising out of fines, punitive damages, penalties, exemplary damages, or
damage multiples such as double or treble damages awardable pursuant to statute.
9.3.Any liability arising out of the willful violation of a statute, ordinance or regulation, where
the violation can result in the imposition of criminal or civil penalties, committed by or
with the knowledge or consent of a COVERED PARTY ; except that no violation by any
COVERED PARTY shall be imputed to any other COVERED PARTY.
9.4.Any liability of a COVERED PARTY aris ing in whole or in part out of the COVERED
PARTY obtaining remuneration or financial gain to which the COVERED PARTY was
not legally entitled.
9.5.Any liability ari sing out of any deliberately dishonest or fraudulent act or omission, or any
criminal or malicious act or omission, or any willful violation of the law.
However,a COVERED PARTY shall be covered under the terms of this Memorandum
for any C laims against th em by reason of any alleged dishonesty on the part of the
COVERED PARTY unless a judgment or other final adjudication thereof adverse to the
COVERED PARTY shall establish that acts of deliberate dishonesty committed by the
COVERED PARTY were material to th e C laim.
9.6 A ny liability arising out of a COVERED PARTY’s contractual assumption of
indemnification for liability for D amages, unless the COVERED PARTY would other wise
have been liable for such D amages in the absence of the assumption.
9.7 Any liabilit y based on or arising out of a notarized certification of a signature without the
physical appearance before a notary public.
9.8.Any liability for Claims arising out of or related to a Collective Bargaining Agreement.
SECTION 10 . GENERAL LIABILITY CO VERAGE
10 .1.General Liability Coverage
The MMIA agrees to pay on behalf of a COVERED PARTY those sums as part of the
Ultimate Net Loss up to the LIMITS OF LIABILITY which the COVERED PARTY shall
MMIA Memorandum of Liability, July 1, 2009 11
become obligated to pay by reason of liability imposed by law because of a covered
Claim for Bodily Injury, Personal Injury, Property Damage , Automobile Liability, or
Professional Liability to which this Coverage Section applies, caused by an Occurrence
during the COVERAGE PERIOD.
10 .2.General Liability Coverag e EXCLUSIONS
In addition to the EXCLUSIONS stated in Section 9 of this Memorandum, t he following
are excluded from coverage under the G eneral L iability C overage provided by this
Memorandum:
10 .2.1.Any liability for Public Officials Errors or Omissions ,Employment Practices,
Employee Benefit Liability, or Land Use Practices Liability .
10 .2.2 .Any liability arising out of the discharge, dispersal, release or escape of
Pollutants, anywhere in the world;
(1)Any obligation to defend any Claim against a COVE RED PARTY alleging
Bodily Injury,Personal Injury ,Property Damage , Automobile Liability,
Professional Liability,Public Officials Errors and Omissions , or Land Use
Practices Liability and seeking Damages, if such Claim arises from Bodily
Injury,Personal Injury, Property Damage,Automobile Liability,
Professional Liability,Public Officials Errors and Omissions , or Land Use
Practices Liability arising out of the discharge, dispersal, release or
escape of Pollutants, anywhere in the world;
(2)Any liabili ty arising out of any governmental direction or request that a
COVERED PARTY test for, monitor, clean up, remove, contain, treat,
detoxify or neutralize, or in any way respond to, or assess the effect of
Pollutants;
(3)Any liability incurred by a COVERED PAR TY or other third party,
including but not limited to cost of investigation and monitoring, and
attorneys' fees, relating to activities in connection with efforts to test for,
monitor, clean up, remove, contain, trace, detoxify or neutralize Pollutants
pur suant to the Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA), the Resource Conservation and Recovery
Act (RCRA), or any other environmental statute or regulation promulgated
by any federal, state or local authority, including any liability arising out of
any governmental directions or request that a COVERED PARTY test for,
monitor, clean up, remove, contain, treat, detoxify or neutralize Pollutants
situated on any premises which the COVERED PARTY owns, rents or
otherwise occupi es, or will own, rent or occupy in the future.
(4)Any liability directly or indirectly arising out of, resulting from or in any
manner related to Fungal Pathogens or bacteria whether or not there is
another cause that may have contributed to concurrently or in any
sequence to an Occurrence .
Notwithstanding the above EXCLUSION , the following shall be exempted from this
EXCLUSION :
MMIA Memorandum of Liability, July 1, 2009 12
(1)Fire fighting activities, including training burns, or intentional demolition or
burns for the purpose of limiting a fire, or the discharge of Pollutants for
the purpose of controlling a fire; or to the police use of mace, oleoresin,
capsicum (O.C.), pepper gas or tear gas, or any other chemical
recognized and authorized for use by law enforcement authorities; or to
weed abatement,tree spraying or insect or mosquito control conducted
by a licensed operator using herbicides or pesticides which have been
duly licensed by any federal, state or local governmental agency and are
being used or applied by the operator for the intended use.
(2)Bodily Injury or Property Damage caused by heat, smoke, or fumes from
a hostile fire. As used in this EXCLUSION , a hostile fire means one
which becomes uncontrollable or breaks out where it was not intended to
be.
(3)The discharge , dispersal, release or e scape of Pollutants caused by a
c ollision, upset, or overturn of any Automobile .
(4)Any Claim arising from materials being collected as part of any drop -off or
curbside recycling program implemented and operated by a COVERED
PARTY , or any Claim arising from materials collected by the COVERED
PARTY which were abandoned on public property; if the materials have
not been stored by the COVERED PARTY for a continuous period
exceeding ninety (90) days.
(5)Any Claim arising from sudden and accidental sanitary and stor m sewer
backups on any property intended for use or occupancy.
(6)Any Claim arising from the sudden and accidental discharge, dispersal,
release, or escape of chlorine or other chemicals (gas, liquid or solid)
which are being used or being prepared for use i n fresh or waste water
treatment or in water used in swimming pools, wading pools, or
decorative fountains owned and operated by a COVERED PARTY .
10.2.3 .Any liability for Bodily Injury or Personal Injury to an employee of a COVERED
PARTY arising out of a nd in the course of employment by the COVERED
PARTY , or for the spouse, child, parent, brother or sister of that employee as a
consequence of actions of the employee arising out of and in the course of
employment by a COVERED PARTY .
This EXCLUSION applie s whether a COVERED PARTY may be liable as an
employer or in any other capacity, except with respect to liability of others
assumed under contract.
This EXCLUSION shall not apply where the Bodily Injury or the Personal Injury
alleged to have occurred is determined not to be a compensable injury within
the meaning of the Workers’ Compensation and Occupational Disease Acts of
the State of Montana.
10.2.4 .Any obligation for which a COVERED PARTY ,or any insurance company or
self -insurance pool of which the COVERED PARTY is a member as its insurer ,
may be held liable under any workers’ compensation or disability benefits law or
MMIA Memorandum of Liability, July 1, 2009 13
any similar law.
10.2.5 .Any liability arising out of the ownership, loading or unloading, rental, lease,
borrowing, loaning, navig ation, operation, piloting, use or maintenance of any
Aircraft or Air Navigation Facility, including skydiving, hot air ballooning, hang
gliding or other similar aerial activities.
However, in connection with airfields, runways, hangers, buildings or ot her
properties in connection with aviation activities, this EXCLUSION shall not apply
to those areas open to the public for the purpose of entering, leaving, or using
the Airport Premises ; and as respects vendors and tradesmen, this coverage
shall be exces s over any valid and collectible insurance .Provided, however,
that this coverage may be waived by written ENDORSEMENT with the express
written consent of the Member Entity. “Loading” and “unloading” of aircraft as
set forth above shall not apply to para me dics, nurses or emergency medical
technicians employed or acting on behalf of the Entity.
10.2.6 .Any liability arising out of, or in connection with, the ownership or operation of
any hospital, clinic , veterinary clinic ,pharmacy,or established health care
facility , including but not limited to:
(1)The rendering of or failure to render:
(a)Medical, surgical, dental, X -ray or nursing service or treatment, or
the furnishing of food or beverages in connection therewith;
(b)Any service or treatment relate d to physical or mental health or of
a professional nature or;
(c)Any cosmetic or tonsorial service or treatment;
(d)Any veterinary service or treatment;
(2)The furnishing of or dispensing of drugs or medical, dental, or surgical
supplies or appliances.
This EXCLUSION shall not apply, however, to any professional activities arising
out of the performance of occupational physical examinations, paramedics,
emergency first aid, or emergency medical technicians.
10.2.7 .Any liability arising out of partial or complete structural failure of a Dam.
10.2.8 .Any liability for Property Damage to property owned by a COVERED PARTY , or
property rented to or leased to the COVERED PARTY where it has assumed
liability for damage to or destruction of such property, unl ess the COVERED
PARTY would have been liable in the absence of such assumption of liability.
10.2.9 .Any liability arising out of the failure to supply or provide an adequate supply of
gas, water or electricity when such failure is a result of the inadequ acy or
interruption of a COVERED PARTY ’s facilities to supply or produce sufficient
gas, water or electricity to meet the demand.
10.2.10 .A ny liability:
(1)With respect to which a COVERED PARTY is also an insured under a
nuclear energy liability Cover age Document issued by Nuclear Energy
MMIA Memorandum of Liability, July 1, 2009 14
Liability Insurance Association, Mutual Atomic Energy Liability
Underwriters or Nuclear Insurance Association of Canada, any similar
Coverage Document or would be an insured under any such Coverage
Document but for its termination upon exhaustion of its limit of liability; or
(2)Resulting from the ” hazardous properties” of Nuclear Material and with
respect to which:
(a)Any person or organization is required to maintain financial
protection pursuant to the Atomic Ener gy Act of 1954, or any law
amendatory thereof; or
(b)The COVERED PARTY is, or had this coverage document not been
issued would be, entitled to indemnity from the United States of
America, or any agency thereof, under any agreement entered into
by the Unit ed States of America, or any agency thereof, with any
person or organization.
(3)With respect to expenses incurred resulting from the “hazardous
properties” of Nuclear Material and arising out of the operation of a
“nuclear facility” by any person or orga nization.
(4)Resulting from the “hazardous properties” of Nuclear Material, if:
(a)The Nuclear Material:
(i)Is at any “nuclear facility” owned by, operated by, or on behalf
of, a COVERED PARTY ; or
(ii)Has been discharged or dispersed there from;
(b)Th e Nuclear Material is contained in “spent fuel” or “waste” at any
time possessed, handled, used, processed, stored, transported or
disposed of by or on behalf of a COVERED PARTY ; or
(c)The injury or damage arises out of the furnishing by a COVERED
PARTY o f services, materials, parts or equipment in connection with
the planning, construction, maintenance, operation or use of any
“nuclear facility”, but if such facility is located within the United
States of America, its territories or possessions or Canada,this
EXCLUSION (iii) applies only to “property damage” to such “nuclear
facility” and any property thereat.
As used in this EXCLUSION :
(1)“Byproduct material, source material and special nuclear material ”have
the meanings given them in the Atomic Ener gy Act of 1954 or in any law
amendatory thereof.
(2)“Hazardous properties ”include radioactive, toxic or explosive properties.
(3)“Nuclear facility ”means:
(a)Any “nuclear reactor”;
(b)Any equipment or device designed or used for:
(i)Any “nuclear reac tor”;
(ii)Any equipment or device designed or used for:
(a)Separating the isotopes of uranium or plutonium;
(b)Processing or unitizing “spent fuel”; or
(c)Handling, processing or packaging “waste”;
(c)Any equipment or device used for the processing,fabricating or
alloying of a “special nuclear material” if at any time the total amount
of such material in the custody of the COVERED PARTY at the
premises where such equipment or device is located consists of or
contains more than 25 grams of plutonium o r uranium 233 or any
MMIA Memorandum of Liability, July 1, 2009 15
combination thereof, or more than 250 grams of uranium 235;
(d)Any structure, basin, excavation, premises or place prepared or
used for the storage of disposal of “waste”; and includes the site on
which any of the foregoing is located , all operations conducted on
such site and all premises used for such operations.
(4)“Nuclear material ”means “byproduct material”, “source material” or
“special nuclear material”.
(5)“Nuclear reactor ”means any apparatus designed or used to sustain
nuc lear fission in a self -supporting chain reaction or to contain a critical
mass of fissionable material.
(6)“Property damage ”includes all forms of radioactive contamination of
property.
(7)“Spent fuel ”means any fuel element or fuel component, solid or l iquid,
which has been used or exposed to radiation in a “nuclear reactor”.
(8)“Waste ”means any waste material:
(a)Containing “byproduct material” other than the tailings or wastes
produced by the extraction or concentration of uranium or thorium
from an y ore processed primarily for its “source material” content;
and
(b)Resulting from the operation by any person or organization or any
“nuclear facility” included under the first two paragraphs of the
definition of “nuclear facility”.
10.2.11 .A ny liabili ty arising out of the following special activities:
(1)Air shows involving the aerial display of Aircraft;
(2)Circuses;
(3)Rodeos;
(4)Fireworks involving the ignition of a commercial or COVERED PARTY’s
sponsored display;
(5)Animal racing;
(6)Carniva l or amusement rides;
(7)Motorized vehicle racing;
(8)Water sports other than those associated with municipal swimming pools,
lakes or other municipal designated aquatic areas;
(9)The rental of any motorized vehicle or apparatus used for individual
conv eyance or entertainment;
(10)Boxing or other martial arts competition.
10.2.12 .Any liability arising out of a publication or utterance concerning any organization
or business enterprise, or its products or services, made by or at the direction of
any CO VERED PARTY with knowledge of the falsity thereof.
10.2.13 .Any liability arising out of the assessment of taxes ,fees or other assessments ,
or failure to refund taxes, fees or other assessments.
10.2.14 .Any liability arising out of failure to perform,or breach of, a contractual
obligation.
This EXCLUSION also applies to liability arising out of defaulting on municipal
financing instruments ,including but not limited to:
MMIA Memorandum of Liability, July 1, 2009 16
(1)Special Obligation Bonds
(2)Special Tax Bonds
(3)Special Assessment Bonds and Notes
(4)Revenue Bonds
(5)Industrial Revenue Bonds
(6)Moral Obligation Bonds
(7)Short -term Debt Bonds
(8)Particular Obligations Issued Pursuant to Federal Programs
10.2.15 .Any liability arising out of estimates of probable costs or cost estimat es being
exceeded or faulty preparation of bid or contract specifications or plans ,
including architectural plans ,or failure to award contracts in accordance with a
statute or ordinance which under law must be submitted for bids.
10.2.16 .Any liability a rising out of the Employee Retirement Income Security Act of
1974, and any law amendatory thereof, or similar provisions of any federal,
state or local statutory law or common law.
10.2.17 .Any liability for failure to fund or to pay any principal or int erest owed for any
retirement, health or welfare benefit provided by a COVERED PARTY whether
voluntarily or pursuant to any federal, state or local law, statute or ordinance.
10.2.18 .Any liability for Property Damage arising solely out of an act of vand alism, theft
or other criminal act.
10.2.19 .Any liability arising out of Property Damage to personal property loaned to a
COVERED PARTY for temporary use or claim arising out of Property Damage
to personal property belonging to another, but stored by the COVERED PARTY ,
with or without charge. However, this EXCLUSION does not apply to (a)
property of persons who are involuntarily confined by the COVERED PARTY , or
(b) property held as evidence or otherwise seized or impounded by the
COVERED PARTY ; provided that in either the case of (a) or (b), above, the
property has been accurately recorded by the COVERED PARTY and is
reasonably secured by the COVERED PARTY .
10.2.20 .Any liability arising out of the use of a structure designed to facilitate the
operation or use of a skateboard, whether or not the structure is utilized for
skateboarding purposes.
However, this EXCLUSION does not apply to liability arising out of the use of a
structure designed to facilitate the operation or use of a skateboard if the
COV ERED PARTY has applied for and received from the Authority an
ENDORSEMENT for Skateboard Facilities.
10.2.21 .Any liability arising out of, or based on, principles of Quantum Meruit.
10.2.22 .Any liability arising out of any Claim for salary or hourly wa ges and benefits,
back wages and benefits, front wages, or overtime, future benefits, severance
obligations, or similar demands, even if liquidated damages under federal, state,
or local statute, rule or regulation .
10.2.23 .Any liability, including all Damages , directly or indirectly arising out of or related
MMIA Memorandum of Liability, July 1, 2009 17
to the liability of a COVERED PARTY involved in or acting as Contractors for
Residential Construction.
10.2.24 .Any liability arising, directly or indirectly, out of Terrorism, including any action
taken in hindering or defending against an actual or expected incident of
terrorism regardless of any other cause or event that contributes concurrently or
in any sequence to the injury or damage.
10.2.25 .Any liability arising, directly or indirectly, o ut of War. This includes all Damages
directly or indirectly arising out of, resulting as a consequence of or related to
War.
This EXCLUSION shall apply whether or not there is another cause of injury or
Damages which may have contributed concurrently or in any sequence to an
injury or Damages .
10.2.26 .Any liability arising out of an Employment Practices C laim seeking damages or
other relief, direct or consequential, for or arising out of B odily I njury or loss of
consortium .
10.2.27 .Any liability fo r any Employment Practices C laim seeking D amages or other
relief, direct or consequential, arising from physical injury to or destruction of
any tangible property, including loss of use thereof.
10.2.28 .Any liability arising out of the Federal Fair Labo r Standards Act or similar state
laws.
10.2.29 .Any liability arising out of a lock -out, picket line, replacement or other similar
actions in connection with labor disputes or labor negotiations.
10.2.30 .Any liability arising out of the Workers' Adjus tment and Retraining Act or any
similar federal, state, or local law.
10.2.31 .Any liability for any Employment Practices C laim seeking insurance benefits
which the claimant may have been entitled to receive pursuant to any federal or
state law or regula tion regarding the continuation of insurance after termination
of employment.
SECTION 1 1 . PUBLIC OFFICIALS ERRORS AND OMISSIONS
1 1 .1.Public Officials Errors and Omissions Coverage
The MMIA agrees to pay on behalf of the COVERED PARTY those sums as pa rt of the
Ultimate Net Loss up to the LIMITS OF LIABILITY which the COVERED PARTY shall
become obligated to pay by reason of liability imposed by law because of a covered
Claim for Public Officials Errors and Omissions to which this Coverage Section applie s,
caused by an Occurrence during the COVERAGE PERIOD.
1 1 .2.Public Officials Errors and Omissions EXCLUSION S
MMIA Memorandum of Liability, July 1, 2009 18
In addition to the EXCLUSIONS stated in Section 9 of this Memorandum, t he following
EXCLUSION S apply to Public Officials Errors and Omissions co verage provided by this
Memorandum:
11.2.1 Any liability for Bodily Injury, Personal Injury ,Property Damage , Automobile
Liability,Professional Liability , Employmen t Practices, Employee Benefit
Liability, or Land Use Practices Liability .
1 1 .2.2 .Any liabilit y arising out of the discharge, dispersal, release or escape of
Pollutants, anywhere in the world;
(1)Any obligation to defend any Claim against a COVERED PARTY alleging
Bodily Injury,Personal Injury ,Property Damage , Automobile Liability,
Professional Liab ility,Public Officials Errors and Omissions , or Land Use
Practices Liability and seeking Damages, if such Claim arises from Bodily
Injury,Personal Injury, Property Damage,Automobile Liability,
Professional Liability,Public Officials Errors and Omission s , or Land Use
Practices Liability arising out of the discharge, dispersal, release or
escape of Pollutants, anywhere in the world;
(2)Any liabil i ty arising out of any governmental direction or request that a
COVERED PARTY test for, monitor, clean up, remove , contain, treat,
detoxify or neutralize, or in any way respond to, or assess the effect of
Pollutants;
(3)Any liability incurred by a COVERED PARTY or other third party,
including but not limited to cost of investigation and monitoring, and
attorneys' fees,relating to activities in connection with efforts to test for,
monitor, clean up, remove, contain, trace, detoxify or neutralize Pollutants
pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA), the Resource Conserv ation and Recovery
Act (RCRA), or any other environmental statute or regulation promulgated
by any federal, state or local authority, including liability or expense
arising out of any governmental directions or request that a COVERED
PARTY test for, monito r, clean up, remove, contain, treat, detoxify or
neutralize Pollutants situated on any premises which a COVERED
PARTY owns, rents or otherwise occupies, or will own, rent or occupy in
the future.
(4)Any liability directly or indirectly arising out of, result ing from or in any
manner related to Fungal Pathogens or bacteria whether or not there is
another cause that may have contributed to concurrently or in any
sequence to an Occurrence .
Notwithstanding the above EXCLUSION the following shall be exempted fro m
this EXCLUSION :
(1)Fire fighting activities, including training burns, or intentional demolition or
burns for the purpose of limiting a fire, or the discharge of Pollutants for
the purpose of controlling a fire; or to the police use of mace, oleoresin,
capsicum, (O.C.), pepper gas or tear gas, or any other chemical
recognized and authorized for use by law enforcement authorities; or to
MMIA Memorandum of Liability, July 1, 2009 19
weed abatement, tree spraying or insect or mosquito control conducted
by a licensed operator using herbicides or pestic ides which have been
duly licensed by any federal, state or local governmental agency and are
being used or applied by the operator for the intended use.
(2)Bodily Injury or Property Damage caused by heat, smoke, or fumes from
a hostile fire. As used in this EXCLUSION , a hostile fire means one
which becomes uncontrollable or breaks out where it was not intended to
be.
(3)The discharge , dispersal, release or escape of Pollutants caused by a
c ollision, upset, or overturn of any Automobile .
(4)Any C laim arising from materials being collected as part of any drop -off or
curbside recycling program implemented and operated by a COVERED
PARTY , or any Claim arising from materials collected by the COVERED
PARTY which were abandoned on public property; if the materials have
not been stored by the COVERED PARTY for a continuous period
exceeding ninety (90) days.
(5)Any Claim arising from sudden and accidental sanitary and storm sewer
backups on any property intended for use or occupancy.
(6)Any Claim arising from the sudden a nd accidental discharge, dispersal,
release, or escape of chlorine or other chemicals (gas, liquid or solid)
which are being used or being prepared for use in fresh or waste water
treatment or in water used in swimming pools, wading pools, or
decorative fo untains owned and operated by the COVERED PARTY .
11.2.3 .Any liability arising out of partial or complete structural failure of a Dam.
11.2.4 .Any liability arising out of the failure to supply or provide an adequate supply of
gas, water or electricit y when such failure is a result of the inadequacy or
interruption of a COVERED PARTY ’s facilities to supply or produce sufficient
gas, water or electricity to meet the demand.
11.2.5.Any liability :
(1)With respect to which a COVERED PARTY is also an in sured under a
nuclear energy liability Coverage Document issued by Nuclear Energy
Liability Insurance Association, Mutual Atomic Energy Liability
Underwriters or Nuclear Insurance Association of Canada, any similar
Coverage Document or would be an insured under any such Coverage
Document but for its termination upon exhaustion of its limit of liability; or
(2)Resulting from the ”hazardous properties” of Nuclear Material and with
respect to which:
(a)Any person or organization is required to maintain fina ncial
protection pursuant to the Atomic Energy Act of 1954, or any law
amendatory thereof; or
(b)The COVERED PARTY is, or had this coverage document not been
issued would be, entitled to indemnity from the United States of
MMIA Memorandum of Liability, July 1, 2009 20
America, or any agency thereof,under any agreement entered into
by the United States of America, or any agency thereof, with any
person or organization.
(3)With respect to expenses incurred resulting from the “hazardous
properties” of Nuclear Material and arising out of the operation of a
“nuclear facility” by any person or organization.
(4)Resulting from the “hazardous properties” of Nuclear Material, if:
(a)The Nuclear Material:
(i)Is at any “nuclear facility” owned by, operated by, or on behalf
of, a COVERED PARTY ; or
(ii)Has been discharged or dispersed therefrom;
(b)The Nuclear Material is contained in “spent fuel” or “waste” at any
time possessed, handled, used, processed, stored, transported or
disposed of by or on behalf of a COVERED PARTY ; or
(c)The injury or D amage arises o ut of the furnishing by a COVERED
PARTY of services, materials, parts or equipment in connection with
the planning, construction, maintenance, operation or use of any
“nuclear facility”, but if such facility is located within the United
States of America,its territories or possessions or Canada, this
EXCLUSION (iii) applies only to “property damage” to such “nuclear
facility” and any property thereat.
As used in this EXCLUSION :
(1)“Byproduct material, source material and special nuclear material ”have
t he meanings given them in the Atomic Energy Act of 1954 or in any law
amendatory thereof.
(2)“Hazardous properties ”include radioactive, toxic or explosive properties.
(3)“Nuclear facility ”means:
(a)Any “nuclear reactor”;
(b)Any equipment or device desi gned or used for:
(i)Any “nuclear reactor”;
(ii)Any equipment or device designed or used for:
(a)Separating the isotopes of uranium or plutonium;
(b)Processing or unitizing “spent fuel”; or
(c)Handling, processing or packaging “waste”;
(c)Any equipm ent or device used for the processing, fabricating or
alloying of a “special nuclear material” if at any time the total
amount of such material in the custody of the COVERED PARTY
at the premises where such equipment or device is located
consists of or con tains more than 25 grams of plutonium or
uranium 233 or any combination thereof, or more than 250 grams
of uranium 235;
(d)Any structure, basin, excavation, premises or place prepared or
used for the storage of disposal of “waste”; and includes the site
o n which any of the foregoing is located, all operations conducted
on such site and all premises used for such operations.
(4)“Nuclear material ”means “byproduct material”, “source material” or
MMIA Memorandum of Liability, July 1, 2009 21
“special nuclear material”.
(5)“Nuclear reactor ”means any ap paratus designed or used to sustain
nuclear fission in a self -supporting chain reaction or to contain a critical
mass of fissionable material.
(6)“Property damage ”includes all forms of radioactive contamination of
property.
(7)“Spent fuel ”means any fue l element or fuel component, solid or liquid,
which has been used or exposed to radiation in a “nuclear reactor”.
(8)“Waste ”means any waste material:
(a)Containing “byproduct material” other than the tailings or wastes
produced by the extraction or conc entration of uranium or thorium
from any ore processed primarily for its “source material” content;
and
(b)Resulting from the operation by any person or organization or any
“nuclear facility” included under the first two paragraphs of the
definition of “n uclear facility”.
11.2.6 .Any liability arising out of a publication or utterance concerning any
organization or business enterprise, or its products or services, made by or at
the direction of any COVERED PARTY with knowledge of the falsity thereof.
11.2.7 .Any liability arising out of the assessment of taxes, fees or other assessments,
or failure to refund taxes, fees or other assessments.
11.2.8 .Any liability arising out of failure to perform, or breach of, a contractual
obligation.
This EX CLUSION also applies to liability arising out of defaulting on municipal
financing instruments , including but not limited to:
(1)Special Obligation Bonds
(2)Special Tax Bonds
(3)Special Assessment Bonds and Notes
(4)Revenue Bonds
(5)Industrial Revenu e Bonds
(6)Moral Obligation Bonds
(7)Short -term Debt Bonds
(8)Particular Obligations Issued Pursuant to Federal Programs
11.2.9 .Any liability arising out of estimates of probable costs or cost estimates being
exceeded or faulty preparation of bid o r contract specifications or plans
including architectural plans or failures to award contracts in accordance with a
statute or ordinance which under law must be submitted for bids.
11.2.10 .Any liability arising out of the Employee Retirement Income Sec urity Act of
1974, and any law amendatory thereof, or similar provisions of any federal,
state or local statutory law or common law.
11.2.11 .Any liability for failure to fund or to pay any principal or interest owed for any
retirement, health or welfare benefit provided by a COVERED PARTY whether
voluntarily or pursuant to any federal, state or local law, statute or ordinance.
MMIA Memorandum of Liability, July 1, 2009 22
11.2.12 .Any liability arising out of, or based on, principles of Quantum Meruit.
11.2.13 .Any liability arising out of any Claim for salary or hourly wages and benefits,
back wages and benefits, front wages, or overtime, future benefits, severance
obligations, or similar demands, even if liquidated damages under federal,
state, or local statute, rule or regulation .
11.2.14 .Any liability, including all Damages directly or indirectly arising out of or related
to the liability of a COVERED PARTY involved in or acting as Contractors for
Residential Construction.
11.2 .15 . Any liability arising, directly or indirectly, out of T errorism, including any action
taken in hindering or defending against an actual or expected incident of
terrorism regardless of any other cause or event that contributes concurrently
or in any sequence to the injury or damage.
11.2.16 .Any liability arising, directly or indirectly, out of War. This includes all Damages
directly or indirectly arising out of, resulting as a consequence of or related to
War.
This EXCLUSION shall apply whether or not there is another cause of injury or
Damages which may have contributed concurrently or in any sequence to an
injury or Damages .
11.2.17 .Any liability arising out of an Employment Practices C laim seeking damages or
other relief, direct or consequential, for or arising out of B odily I njury or loss of
consor tium .
11.2.18 .Any liability for any Employment Practices C laim seeking D amages or other
relief, direct or consequential, arising from physical injury to or destruction of
any tangible property, including loss of use thereof.
11.2.19 .Any liability ar ising out of the Federal Fair Labor Standards Act or similar state
laws.
11.2.20 .Any liability arising out of a lock -out, picket line, replacement or other similar
actions in connection with labor disputes or labor negotiations.
11.2.21 .Any liability arising out of the Workers' Adjustment and Retraining Act or any
similar federal, state, or local law.
11.2.22 .Any liability for any Employment Practices C laim seeking insurance benefits
which the claimant may have been entitled to receive pursuant to any federal or
state law or regulation regarding the continuation of insurance after termination
of employment.
11.2.2 3 .Any liability arising out of the ownership, loading or unloading, rental, lease,
borrowing, loaning, navigation, operation, piloting , use or maintenance of any
Aircraft or Air Navigation Facility, including skydiving, hot air ballooning, hang
gliding or other similar aerial activities.
11.2.2 4 .Any liability arising out of, or in connection with, the ownership or operation of
MMIA Memorandum of Liability, July 1, 2009 23
any h ospital, clinic,veterinary clinic, pharmacy,or established health care
facility , including but not limited to:
(1)The rendering of or failure to render:
(a)Medical, surgical, dental, X -ray or nursing service or treatment, or
the furnishing of food or be verages in connection therewith;
(b)Any service or treatment related to physical or mental health or of
a professional nature or;
(c)Any cosmetic or tonsorial service or treatment;
(d)Any veterinary service or treatment;
(2)The furnishing of or dispensing of drugs or medical, dental, or surgical
supplies or appliances.
This EXCLUSION shall not apply, however, to any professional activities
arising out of the performance of occupational physical examinations,
paramedics, emergency first aid, or emergency m edical technicians.
11.2.2 5 .Any liability arising out of the following special activities:
(1)Air shows involving the aerial display of Aircraft;
(2)Circuses;
(3)Rodeos;
(4)Fireworks involving the ignition of a commercial or COVERED PARTY
sponsored display;
(5)Animal racing;
(6)Carnival or amusement rides;
(7)Motorized vehicle racing;
(8)Water sports other than those associated with municipal swimming
pools, lakes or other municipal designated aquatic areas;
(9)The rental of any motorized vehic le or apparatus used for individual
conveyance or entertainment;
(10)Boxing or other martial arts competition.
11.2.2 6 .Any liability arising out of the use of a structure designed to facilitate the
operation or use of a skateboard, whether or not the st ructure is utilized for
skateboarding purposes.
SECTION 12 . EMPLOYMENT PRACTICES COVERAGE
12 .1.Employment Practices Coverage
The Authority agrees to pay on behalf of each COVERED PARTY which has completed
the qualifications for and has obtained an EN DORSEMENT with respect to Employment
Practices Coverage those sums as part of the Ultimate Net Loss up to the LIMITS OF
LIABILITY as set forth in the DECLARATIONS , which the COVERED PARTY shall
become obligated to pay by reason of liability imposed by law and caused by an
Occurrence for which a Claim is made during the COVERAGE PERIOD arising out of a
covered C laim for Employment Practices, under Coverage C , to which the Memorandum
applies. Coverage C for Employment Practices is subject to the per Occurren ce sublimit
MMIA Memorandum of Liability, July 1, 2009 24
Ultimate Net Loss and for the COVERAGE PERIOD as set forth in the
DECLARATIONS .
12 .2.Employment Practices Coverage Definitions
“Employment Practices ”with respect to Coverage C means any act relating to a past,
present, or prospective employ ee of a COVERED PARTY for or arising out of any actual
or alleged wrongful dismissal, discharge, or termination, either actual or constructive, of
employment, employment related misrepresentation, wrongful failure to employ or
promote, wrongful deprivation of career opportunity, wrongful discipline, failure to grant
tenure or negligent employee evaluation; or sexual or workplace harassment of any kind,
including, but not limited to, the alleged operation of a harassing workplace environment,
or unlawful dis crimination, whether direct, indirect, intentional or unintentional, or failure
to provide adequate employee policies and procedures.
Employment Practices Coverage shall include coverage for Claims brought under state,
local, or federal law, whether commo n or statutory, including but not limited to Equal
Employment Opportunity Commission and Montana Human Rights Commission
complaints. Employment Practices Coverage shall include, but is not limited to,
coverage for allegations of violations of the followin g federal laws, as amended,
including regulations promulgated thereunder to the extent that the Claim alleges an act
within the definition of Employment Practices and not otherwise excluded pursuant to
this Memorandum :
12 .2.1.Americans with Disabilities Act of 1992 (ADA )and ADA Amendments Act of
2008 ;
12 .2.2.Civil Rights Act of 1991;
12 .2.3.Age Discrimination in Employment Act of 1967 (ADEA), including the Older
Workers Benefit Protection Act of 1990;
12 .2.4.Title VII of the Civil Rights Law of 1964,as amended (1983), including the
Pregnancy Discrimination Act of 1978;
12 .2.5.Civil Rights Act of 1866, Section 1981; or
12 .2.6.Fifth and Fourteenth amendments of the U.S. Constitution.
12 .3.Employment Practices Coverage EXCLUSION S
In addition to the EXCLUSIONS stated in Section 9 of this Memorandum, t he following
EXCLUSION S apply to Employment Practices coverage provided by this Memorandum:
12 .3.1 .Any liability for Bodily Injury, Personal Injury, Property Damage, Automobile
Liability , Professional Liability, Public Officials Errors and Omissions,
Employee Benefit Liability, or Land Use Practices Liability.
12.3.2.Any liability arising out of Employment Practices where a COVERED PARTY
has not completed the qualific ations fo r and has not obtained an
ENDORSEMENT with respect to Employment Practices coverage .
12 .3.3 .Any liability arising out of any Claim for loss arising out of a lockout, strike,
picket line, replacement or similar actions in connection with labor disputes or
labor negotiations.
1 2 .3.4 .Any liability arising out of any C laim for loss arising out of the Workers
MMIA Memorandum of Liability, July 1, 2009 25
Adjustment and Retraining Notification Act, Public Law 100 -379 (1988), or any
amendment thereto, or any similar federal, state or local law.
12 .3.5 .Any liability arising o ut of any Claim for an Occurrence related to the
modification of any building or property in order to make said building or
property more accessible or accommodating to any disabled person. However,
Damages from failure to make such an accommodation shall be a covered
Employment Practice .
12.3.6 .Any liability arising out of any Claim ,other than a Claim alleging wrongful
Employment Practices as defined under S ection 12 .2, for salary or hourly
wages and benefits, back wages and benefits, front wages, o r overtime, future
benefits, severance obligations, or similar demands, even if liquidated
damages under federal, state, or local statute, rule or regulation .
12.3.7 .Any liability arising out of t he Employee Retirement Income Security Act of
1974, and any law amendatory thereof, or similar provisions of any federal,
state or local statutory law or common law.
12.3.8 .Any liability for failure to fund or to pay any principal or interest owed for any
retirement, health or welfare benefit provided by a COVERED PARTY whether
voluntarily or pursuant to any federal, state or local law, statute or ordinance.
SECTION 13 . EMPLOYEE BENEFIT LIABILITY COVERAGE
13 .1.Employee Benefit Liability Coverage.
The Authority agrees to pay on behalf of a COVERED PAR TY those sums as part of the
Ultimate Net Loss up to the LIMITS OF LIABILITY as set forth in the DECLARATIONS
page for Coverage which the COVERED PARTY shall become obligated to pay by
reason of liability imposed by law and caused by an Occurrence for whic h a Claim is
made during the COVERAGE PERIOD arising out of a covered Claim for Employee
Benefit Liability, under Coverage D , to which the Memorandum applies. Coverage D for
Employee Benefit Liability is subject to the per Occurrence sublimit Ultimate Net Loss
and for the COVERAGE PERIOD as set forth in the DECLARATIONS .
13 .2.Employee Benefit Liability Coverage Definitions.
“Employee Benefit Liability “under Coverage D shall mean legal liability which a
COVERED PARTY shall become obligated to pay becaus e of any Claim made against
the COVERED PARTY due to any wrongful act, error or omission of the COVERED
PARTY for whose acts the COVERED PARTY is legally liable in the administration of
the COVERED PARTY ’s Employee Benefits Programs as defined herein.
“Em ployee Benefits Programs ”means group life insurance, group accident or health
insurance, pension plans, workers’ compensation, unemployment insurance, social
security benefits, disability benefits, retirement plans, dependent care assistance plans
and any other similar benefit program.
“Administration “under Coverage D shall mean one of the following actions performed by
MMIA Memorandum of Liability, July 1, 2009 26
a COVERED PARTY of the Entity :
13.2.1.giving counsel to employees with respect to the Employee Benefits Programs;
13.2.2.interpreting the Empl oyee Benefits Programs;
13.2.3.handling of records in connection with the Employee Benefits Programs;or
13.2.4.affecting enrollment, termination or cancellation of employees or omission of
the Entity or COVERED PARTY in the A dministration (as defined herein) of t he
Entity’s or COVERED PARTY’s Employee Benefits Program (as defined
herein) occurring during the COVERAGE PERIOD .
13 .3.Employee Benefit Liability Coverage EXCLUSION S
In addition to the EXCLUSIONS stated in Section 9 of this Memorandum, t he following
a re not covered under Coverage D , Employee Benefit Liability:
13.3.1.Any liability f or Bodily Injury,Personal Injury ,Property Damage , Automobile
Liability,Professional Liability , Public Officials Errors or Omissions,
Employment Practices, or Land Use Pract ices Liability.
13.3.2.Any liability for advice given by a COVERED PARTY to an employee to
participate or not in any investment or savings plan .
13.3.3.Any liability for any act, error or omission occurring before the Effective Date of
this Memorandum .
13.3.4.Any liability for any Claim which results from an activity, act or omission of a
third party administrator, a firm or person, other than an employee of the
COVERED PARTY , who administers the COVERED PARTY ’s Employee
Benefit Program;
13.3.5.Any liability for any Claim for benefits that are lawfully paid or payable to a
beneficiary from the funds of an Employee Benefit Program that results from
not having adequate insurance or bonds to protect the assets of an Employee
Benefit Program;
13.3.6.Any liability b ased upo n changes in the ultimate cost or level of any benefit
program available to any employee of a COVERED PARTY or changes made
to any benefit program resulting from efforts of the COVERED PARTY to
comply with any tax laws or other laws which results in change s to the benefits
available to any employee of the COVERED PARTY ;
13.3.7.Any liability for any Claim for failure or performance of a contract by any
Insurer, or to any Claim based upon failure of stocks, bonds or other securities
to produce financial gain, pr ofit or growth as represented by a COVERED
PARTY ;
13.3.8.Any liability arising out of the Employee Retirement Income Security Act of
1974, and any law amendatory thereof, or similar provisions of any federal,
state or lo cal statutory law or common law:
13.3.9.An y liability for any Claim based upon a COVERED PARTY ’s failure to comply
with any law concerning workers’ compensation, unemployment insurance,
MMIA Memorandum of Liability, July 1, 2009 27
social security or disability benefits ;
13.3.10.Any liability for any Claim, other than a Claim alleging a wrongful ac t, error or
omission in the administration of an Employee Benefit Program as defined
under Section 13 .2 due to back wages and benefits, front wages, or overtime,
future benefits, severance obligations, or similar demands, even if liqu i dated
Damages under f ederal, state, or local statute, rule or regulation ..
13.3.11.Any liability for failure to fund or to pay any principal or interest owed for any
retirement, health or welfare benefit provided by a COVERED PARTY whether
voluntarily or pursuant to any fe deral, state or local law, statute or ordinance.
SECTION 14 . LAND USE PRACTICES
14 .1.Land Use Practices Coverage.
The Authority agrees to pay on behalf of a COVERED PARTY those sums as part of the
Ultimate Net Loss up to the LIMITS OF LIABILITY as s et forth in the DECLARATIONS
which the COVERED PARTY shall become obligated to pay by reason of liability
imposed by law and caused by an Occurrence for which a Claim is made during the
COVERAGE PERIOD arising out of a covered Claim for Land Use Practices,under
Coverage E , to which the Memorandum applies. Coverage E for Land Use Practices is
subject to the per Occurrence sub limit Ultimate Net Loss and for the COVERAGE
PERIOD as set forth in the DECLARATIONS .
14 .2.Land Use Practices Definitions.
“Land Use Practices Liability ”under Coverage E shall mean legal liability which a
COVERED PARTY shall become obligated to pay because of any Claim made against
the COVERED PARTY , including Property Damage or diminution of property value,
arising out of, or base d upon, land use regulation, interim takings, takings, down -zoning,
zoning, general planning regulations, easements, nuisance, or annexation, including
deprivation of constitutional or civil rights related thereto .
14 .3.Land Use Practices EXCLUSION S
In addition to the EXCLUSIONS stated in Section 9 of this Memorandum, t he following
are not covered under Coverage E , Land Use Practices:
14.3.1.Any liability for Bodily Injury, Personal Injury ,Property Damage , Automobile
Liability, Professional Liability, Pu blic Officials Errors or Omissions,
Employment Practices, or Employment Benefit Liability.
14.3.2.Any liability for a Claim arising out of or in connection with the principles of
eminent domain, mandamus to compel eminent domain,precondemnation
activities,condemnation proceedings , or inverse condemnation by whatever
name regardless of whether such Claims are made directly against a
COVERED PARTY or by virtue of any agreement entered into, by or on behalf
of the COVERED PARTY .
MMIA Memorandum of Liability, July 1, 2009 28
14.3.3.Any liability for a Claim as a result of subsidence. “Subsidence”,with respect
to Coverage E hereunder means any earth movement, including but not limited
to settling, expansion, earth sinking, earth rising or shifting, slipping, falling
away, tilting, caving in, eroding, mud flo ws and any other movement of land or
earth. This EXCLUSION does not apply to Property Damage arising out of
subsidence proximately caused by the negligent act or omission of a
COVERED PARTY .
14.3.4.Any liability, including all Damages , directly or in directly arising out of or related
to the liability of a COVERED PARTY involved in or acting as Contractors for
Residential Construction.
SECTION 15 . CONDITIONS
15 .1.Payment of Assessments .
The COVERED PARTY agrees to pay all risk assessment s , risk a ssessment
adjustments, deferred risk assessment adjustments, debt service assessments and
supplemental debt service assessments as specified in the Liability Coverage Program
Agreement, as the same may be amended from time to time.
15 .2.Inspection of COV ERED PARTY ’s Property and Operations.
The Authority shall be permitted but not obligated to inspect a COVERED PARTY ’s
property and operations at any time. Neither such right to make inspections nor the
making thereof nor any report thereon shall constit ute an undertaking on behalf of, or for
the benefit of, the COVERED PARTY or others to determine or warrant that such
property or operations are safe. The Authority may examine the COVERED PARTY ’s
books and records at any time during the COVERAGE PERIOD a nd extensions thereof
and within eight years after the final termination of this Memorandum as they relate to
the subject matter of this Memorandum.
15 .3.A COVERED PARTY ’s Duty in the Event of any Occurrence or Claim.
15 .3.1.In the event of an Occurre nce reasonably likely to involve the Authority, written
notice containing particulars sufficient to identify the COVERED PARTY and
reasonably obtainable information with respect to the time, place and
circumstances thereof, and the names and addresses of t he COVERED
PARTY (ies) and of available witnesses, shall be given by or for the COVERED
PARTY to the Authority or any of its authorized agents as soon as practicable.
15 .3.2.If a C laim is made or brought against a COVERED PARTY , the COVERED
PARTY shall ti mely forward to the Authority every demand, notice, summons or
other process received by the COVERED PARTY or the COVERED PARTY ’s
representative.
15 .3.3.A COVERED PARTY shall cooperate with the Authority and upon its request
assist in making settlements,in the conduct of suits, and in enforcing any right
of contribution or indemnity against any person or organization who may be
liable to the COVERED PARTY because of an Occurrence with respect to
MMIA Memorandum of Liability, July 1, 2009 29
which coverage is afforded under this Memorandum; and the C OVERED
PARTY shall attend hearings and trials and assist in securing and giving
evidence and obtaining the attendance of witnesses. The COVERED PARTY
shall not, except at its own cost, voluntarily make any payment, assume any
obligation or incur any expen se.
15 .4.Bankruptcy or Insolvency.
Bankruptcy or Insolvency of a COVERED PARTY shall not relieve the Authority of any of
its obligations hereunder.
15 .5.Insurance Coverage Separately Maintained by a COVERED PARTY .
If a COVERED PARTY has collectible i nsurance for an Ultimate Net Loss also covered
hereunder (whether primary, excess, contributory, contingent or otherwise), the
coverage provided by this Memorandum shall be in excess of and shall not contribute
with such insurance. This clause does not app ly with respect to excess insurance or
reinsurance purchased by the Authority .
15 .6.Reimbursement from Entity or a COVERED PARTY .
In the event the Authority has paid any amounts in settlement or satisfaction of C laims ,
judgments, or awards, including in terest, or for C laim expenses in excess of the
applicable LIMITS OF LIABILITY, or within the amount of the applicable DEDUCTIBLE,
or if the Authority in good faith has paid any amounts for which the Authority has no
liability under this Memorandum, the Ent ity and any COVERED PARTY shall be jointly
and severally liable to the Authority for any and all such amounts, and upon demand,
shall pay such amounts to the Authority. The Authority shall inform the Entity and any
COVERED PARTY in writing of its request f or reimbursement. In the event an Entity or
COVERED PARTY contests a request for reimbursement from the Authority ,Section
15.10 will be the manner for resolution of the matters contested by the Entity or a
COVERED PARTY .
15 .7 .Opportunity to Remedy in Event of Breach.
In the event the Authority considers a COVERED PARTY in breach of a term or
condition of this Memorandum, the Interlocal Agreement creating the Montana Municipal
Interlocal Authority, or the Liability Coverage Program Agreement, the Auth ority shall
first give notice to the COVERED PARTY of the alleged breach and allow the
COVERED PARTY the opportunity to remedy the same. In the event the COVERED
PARTY considers the Authority in breach of a term or condition of this Memorandum, the
Interl ocal Agreement creating the Montana Municipal Interlocal Authority, or the Liability
Coverage Program Agreement, the COVERED PARTY shall first give notice to the
Authority of the alleged breach and allow the Authority the opportunity to remedy the
same.
1 5.8 .Assignment of Counsel.
The Authority shall have sole discretion in the assignment of legal counsel to defend any
Claim brought against a COVERED PARTY which is covered by this Memorandum. In
selecting legal counsel, the Authority may take into consi deration such factors as the
geographic area in which the Claim originates, the judicial district in which the Claim may
MMIA Memorandum of Liability, July 1, 2009 30
be venued, the experience, skill and competence of potential legal counsel in handling
similar or identical Claims, the preference, if any, expressed by the COVERED PARTY
for representation by a particular attorney or law firm, and the existence of or potential
for a conflict of interest which would affect the ability of the attorney to represent the
interests of the COVERED PARTY; provid ed, however, that none of the factors listed
herein shall diminish the Authority’s ability to select legal counsel. Any concerns of the
selection of coun sel by a COVERED PARTY must be expressed prior to the
commencement of the defense.
15.9 .Authority to Settle Claims.
15.9.1.The Authority will not pay for more than the Ultimate Net Loss as specified in
Section 2 and the DECLARATIONS ; and
15.9.2.If the Authority recommends a settlement to a COVERED PARTY which is
acceptable to a claimant and the COVERED PARTY does no t agree to such
settlement, then :
(1)The LIMITS OF LIABILITY as specified in the DECLARATIONS shall be
reduced to the sum of the amount of Damages for which the Claim
could have been settled plus the amount of reasonable Defense Costs
incurred up to the time the Authority made such recommendation; and
(2)The A uthority will not pay any prejudgment or postjudgment interest
based upon that period of time after such recommendation is made.
15.9 .3.In cases in which a COVERED PARTY is obligated to pay a portion of
indemnity and/or file expense because a portion of an award to a claimant is
not covered under the Authority’s Memorandum of Coverage, the COVERED
PARTY shall also pay its allocable share of D efense C osts .I f such costs can
be reasonably allocated ,t he CO VERED PARTY shall pay the same
percentage of attorney ’s fees and file expense as it is obligated to pay for
indemnity expense. Upon finalization of all known expenses, the Authority will
apportion the Damages and Defense Costs with the COVERED PARTY , then
subtract the amount of the Entity Deductible from the Authority portion and
invoice the COVERED PARTY for reimbursement. If the COVERED PARTY
contests its allocated share of Damages and Defense Costs in the request for
reimbursement as noted here and in Se ction 15 .6,the COVERED PARTY may
appeal said request by the process outlined in Section 15.10 hereunder.
15.10 .Dispute Resolution for Contested Coverage Determinations, settlement or satisfaction of
Claims, judgments, or awards, including interest, or Claim expenses in excess of the
applicable LIMITS OF LIABILITY, or within the amount of the applicable DEDUCTIBLE,
and reimbursement requests made of a COVERED PARTY by the Authority.
15.10 .1.Scope of Coverage
The Dispute Resolution Procedures set forth in this Section shall be followed in
resolving any dispute, claim, or controversy arising between the Authority and a
COVERED PARTY concerning determinations of coverage, settlement or
satisfaction of Claims, judgments, or awards, including interest, or C laim
expenses in excess of the applicable LIMITS OF LIABILITY, or within the
amount of the applicable DEDUCTIBLE, and reimbursement requests made of
a COVERED PARTY by the Authority, under the applicable Memorandum of
MMIA Memorandum of Liability, July 1, 2009 31
Liability Coverage, including both det erminations to deny coverage and/or
defense or to provide a defense subject to a reservation of rights (“Coverage
Determination”).
15.10.2 .Procedure for Resolving Disputes
(1)Appeal to Underwriting Committee.
(a)In the event that a COVERED PARTY is ag grieved by a Coverage
Determination, request for reimbursement, or settlement
determination, the COVERED PARTY shall initially appeal any
adverse determination to the Underwriting Committee of the Board
of Directors within thirty (30) calendar days of rece iving the adverse
determination.
(b)This appeal shall be initiated by sending written notification of the
desire to appeal and the basis for the appeal to the Chief Executive
Officer.
(c)The Chief Executive Officer or a designee shall, within three (3)
b usiness days o f receipt of the appeal submit the documents
received from the COVERED PARTY , together with such additional
explanatory material as the Chief Executive Officer or a designee
deems appropriate, to the members of the Underwriting Committee
in w riting.
(d)T he Committee shall be convened within ten (10) business days
after the Chief Executive Officer or a designee has sent to the
Committee the appeals materials. Such meeting shall be conducted
either by telephone conference call or in person at t he discretion of
the Committee Chair. Representatives of the COVERED PARTY
and the Chief Executive Officer or a designee shall participate in
any such conference call or meeting of the Committee and shall
have an opportunity to be heard.
(e)The Committee may accept, reject, or modify in whole or in part the
initial coverage determination which is the subject of the appeal and
shall render its decision at the time such meeting is held .
(f)The Chief Executive Officer or a designee shall prepare a written
st atement of the reason(s) for the decision of the Underwriting
Committee within five (5) business days after the Committee has
made its decision. This statement of decision shall be provided to
the COVERED PARTY .
(2)Appeal of the Decision of Underwriting Committee to the Board of
Directors.
(a)If the COVERED PARTY is aggrieved by the decision of the
Underwriting Committee, that decision may be appealed to the
Board of Directors of the Authority.
(b)The aggrieved party shall file a written notice of appea l, together
with the basis for the appeal, with the Chief Executive Officer of the
Authority within thirty (30) calendar days of the date of receipt of the
written decision of the Underwriting Committee.
(c)In the event of an appeal to the Board, the Chi ef Executive Officer
or a designee shall have seven (7) business days from receipt of
the notice to submit to the Board any additional information
concerning the decision of the Underwriting Committee together
MMIA Memorandum of Liability, July 1, 2009 32
with the material received from the appealing COVERED PARTY .
(d)T he Board of Directors shall be convened within ten (10) business
days after the Chief Executive Officer or a designee has sent to the
Board of Directors the appeals material. Such meeting shall be
conducted either by telephone confere nce call or in person at the
discretion of the Board Chair. Representatives of the parties shall
participate in any such conference call or meeting of the Board of
Directors and shall have an opportunity to be heard.
(e )The Board of Directors may accept,reject, or modify in whole or in
part the Coverage Determination of the Underwriting Committee and
shall render its decision at the time of such meeting .
(f )The Chief Executive Officer or a designee shall prepare a written
statement of the reason(s) for the decision of the Board of Directors
within five (5) business days of the Board of Directors’ determination
which shall be provided to the appealing COVERED PARTY within
such five (5) day period .
All elements of the Dispute Resolution Procedure must be satisfied before an
aggrieved COVERED PARTY may take further legal action against the
Authority.
(3)Voluntary Submission to Binding Arbitration.
(a)In the event that the COVER E D PARTY is aggrieved by the
decision of the Board of Directors, the matter m ay be voluntarily
submitted to binding arbitration.
(b) If the COVERED PARTY seeks to invoke binding arbitration,a
request for binding arbitration shall be submit ted within fourteen (14)
calendar days of the date of receipt of the written decision of the
Board.
(c)The request for binding arbitration shall be sent to the Chief
Executive Officer of the Authority.
(d)The agreement between the COVERED PARTY and the Chief
Executive Officer to submit to arbitration shall be in writing .In
entering into an agreement to submit to arbitration, both parties
must certify that they are voluntarily submitting to binding arbitration
for that particular dispute, and that both parties voluntarily agree that
the arbitrator’s decision is binding upon both parties.
(e )Once an agreement to submit to arbitration is made, the Authority
and the COVERED PARTY shall agree upon a single arbitrator
within ten (10) business days of the filing of an agreement to submit
to arbitration. In the event that the Authority and the COV ERED
PARTY cannot agree on the choice of an arbitrator, each party shall
designate in writing within five (5) business days thereafter an
arbitrator and the two arbitrators shall select a single arbitrator
within five (5) business days thereafter who alone shall preside at
the hearing and render a decision. In selecting an arbitrator,
consideration may be given to a candidate’s prior experience with,
and knowledge of, matters related to insurance coverage disputes.
(f )The arbitrator shall commence a hearin g within forty -five (45)
calendar days of his/her designation.
(g )The Authority and the COVERED PARTY shall each pay one -half of
the fees and costs of the arbitrator; and, each party shall pay its own
MMIA Memorandum of Liability, July 1, 2009 33
fees and costs for representation at the arbitration.
(h )Discovery shall be limited to an exchange of documents, list of
expert and lay witnesses, a statement of the substance of the facts
and opinions to which the expert is expected to testify and a
summary of the grounds for each opinion as contemplated by
Montana Rules of Civil Procedure 26(b)(4)(A)(I), and a list of
exhibits to be used at the hearing.
(i )Written interrogatories, requests for admission, and depositions
shall not be permitted unless the parties stipulate otherwise, and
such discovery is co mpleted within the time set for the arbitration
hearing.
(j )Upon appointment, the arbitrator shall convene as soon as
practicable a preliminary prehearing conference, at which time the
parties shall submit their respective Statement of Facts,
Contentions,Issues of Law, and preliminary disclosure of witnesses
and documents relevant to the arbitration.
(k )At the preliminary hearing, the arbitrator and the parties shall
identify factual and legal issues and establish a schedule for the
exchange of documents , reports, and other prehearing matters.
Thereafter, the arbitrator shall issue a prehearing order setting forth
agreed facts, facts in dispute, legal issues, and the timetable for
further proceedings.
(l )The parties may stipulate to a determination by t he arbitrator by way
of summary judgment rather than hearing if there are no material
facts in dispute.
(m )The arbitrator may require the filing of prehearing memoranda by
the parties, which shall set forth the contested facts, the summary of
applicable l aw, anticipated evidentiary issues which may arise at the
hearing, and any other matters which the arbitrator may identify.
(n )The hearing shall be governed by the Montana Rules of Civil
Procedure and the Montana Rules of Evidence. Testimony shall be
unde r oath administered by the arbitrator; however, there shall be
no stenographic transcript or other “official” record of hearing.
(o )Post hearing briefs shall not be permitted except by agreement of
the parties and the arbitrator .
(p )The arbitrator shall render his or her decision in writing within thirty
(30) calendar days of the close of the hearing.
(q )All decisions on appeals, whether by the Board of Directors (after
the time to request arbitration has expired) or by the arbitrator shall
be final and binding upon the Authority and the COVERED PARTY.
(4)General Provisions
(a)Admissibility of Certain Statements.
The deliberations of the Underwriting Committee and the Board of
Directors concerning any such appeal shall be deemed to be
settlement discus sions within the meaning of Rule 408 of the
Montana Rules of Evidence and no statements of any committee
member or board member or any other participant to such appeals
shall be admissible in any subsequent proceedings, and only the
final written decision of the Committee or the Board of Directors, as
may be the case, shall form the basis for any subsequent appeal.
(b)Funding of Defense and Claims Pending Resolution of Dispute.
MMIA Memorandum of Liability, July 1, 2009 34
During the course of any appeal to the Underwriting Committee or to
the Board o f Directors or during the arbitration proceedings provided
herein, the COVERED PARTY will be responsible for all fees and
expenses for the defense or litigation of the C laim or lawsuit, the
coverage of which is the subject of the appeal as provided herein.
In the event that the final decision of the appeal proceedings as set
forth herein is that a duty to defend exists, the Authority will
reimburse the COVERED PARTY for defense costs incurred during
the pendency of the appeal for the defense of the underly ing claim
or lawsuit.
15.11 .Cancellation.
This Memorandum may be canceled by the Authority for non -payment of assessments in
accordance with the Liability Coverage Program Agreement. The Authority shall mail
written notice to the Entity at the address s hown in this Memorandum stating when such
cancellation shall be effective.
The mailing of notice as aforesaid shall be sufficient proof of notice. The time of
surrender or the effective date and hour of cancellation stated in the notice shall become
the end of the COVERAGE PERIOD. Delivery of such written notice by the Authority
shall be the equivalent to mailing.
15.12 .Action against Authority.
No action shall lie against the Authority unless, as a condition precedent thereto, there
shall have been f ull compliance with all the terms of this Memorandum,including the
Dispute Resolution procedures set forth in Section 15.10 above, nor until the amount of
a COVERED PARTY ’s obligations to pay shall have been finally determined either by
judgment against t he COVERED PARTY after actual trial or by written agreement of the
COVERED PARTY , the claimant and the Authority. Any person or organization or the
representative thereof who has secured such judgment or written agreement shall
thereafter be entitled to r ecovery under this Memorandum to the extent of the coverage
afforded by this Memorandum. No person or COVERED PARTY shall have any right
under this Memorandum to join the Authority as a party to any action against the
COVERED PARTY to determine the COVERE D PARTY ’s liability, nor shall the Authority
be impleaded by the COVERED PARTY or its legal representative.
15.13 .Subrogation.
The Authority shall be subrogated to the extent of any payment hereunder to all a
COVERED PARTY ’s rights of recovery thereof,and the COVERED PARTY shall do
nothing to prejudice such right and shall do everything necessary to secure such right.
Any amount so recovered shall be apportioned as follows:
The highest layer of coverage shall be reimbursed first and if there are suffi cient
recoveries, then the next highest layer until all recoveries are used up.
The expenses of all such recovery proceedings shall be paid before any reimbursements
are made for the highest layer of coverage. If there is no recovery in the proceedings
c onducted by the Authority, it shall bear the expenses thereof.
15.14 .Assignment.
MMIA Memorandum of Liability, July 1, 2009 35
No party may assign its interest under this Memorandum without the prior consent of the
other. Nothing in this Section shall preclude the Authority from entering into such Quota
Share Agreement, Reinsurance Treaty, or other agreement with an excess insurer,
reinsurer, or self -insurance pool for purposes of obtaining excess insurance or
reinsurance .
15.15 .Notice.
Notice to any agent or knowledge possessed by any agent or by any other person shall
not effect a waiver or change in any part of this Memorandum or stop the Authority from
asserting any right under the terms of this Memorandum, nor shall the terms of this
Memorandum be waived or changed, except by ENDORSEMENT iss ued to form a part
hereof.
15.16 .Memorandum to Conform to Statutes, Case Law, Regulations, Rules.
Any and all provisions of this Memorandum which are in conflict with the statutes, case
law, regulations, or rules of the United States or the State of Mon tana wherein this
Memorandum is issued are understood, declared and acknowledged by the Authority
and Member Entity to be amended to conform to such statutes, case law, regulations, or
rules.
15.17 .Entire Contract.
By acceptance of this Memorandum, the Entity agrees that the Entity’s statements in the
MMIA Exposure Survey, in the DECLARATIONS, and in the application for this
Memorandum are true and correct, and the MMIA Exposure Survey, DECLARATIONS,
and application form a part of this Memorandum, that t his Memorandum is issued in
reliance upon the truth of such representations, and that ENDORSEMENT S issued by
the Authority are part of this Memorandum. The Memorandum, together with the
Interlocal Agreement creating the Montana Municipal Interlocal Author ity ,the Liability
Coverage Program Agreement,and the Policies and Procedures of the Authority
embody all agreements and constitute the entire contract existing between the Authority
and the Entity pertaining to this coverage as provided herein .