Wales et al v. Farmers Stockyards, Inc.
MEMORANDUM OPINION & ORDER: (1) GRANTING Auto-Owners Insurance Company's 86 MOTION for Summary Judgment; (2) DENYING Abner Construction Company's 139 Cross-MOTION for Summary Judgment. Signed by Judge Joseph M. Hood on 3/25/16.(KJR)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
ANTHONY WALES, SR. and
TONYA WALES, Individually
and as parents & guardians
of an unmarried infant,
Next Friend A.W., Jr.,
FARMERS STOCKYARDS, INC.,
MEMORANDUM OPINION AND ORDER
This matter is before the court upon Auto-Owners Insurance
Company’s motion for summary judgment, [DE 86].
The motion has
been fully briefed and Abner Construction Company filed a belated
cross-motion for summary judgment at docket entry 139.1
having fully considered the matter, will grant summary judgment in
favor of Auto-Owners Insurance Company.
Plaintiffs claim that A.W., Jr., was injured in October 2013,
when he fell from an elevated walkway located at Farmers Stockyards
Abner Construction Company filed its response to Auto Owners Insurance
Company’s motion for summary judgment on March 9, 2016—well within the time
provided by the Joint Local Rules of Civil Practice and this court’s scheduling
orders. That same day, however, Abner filed a motion for summary judgment,
well beyond the February 1, 2016 deadline for filing dispositive motions.
Because the motion was untimely and Abner was not granted leave to file the
untimely motion, the Court declines to consider any new arguments raised in the
in Flemingsburg, Kentucky.
Plaintiffs subsequently brought a
negligence suit against Farmers Stockyards who, in turn, filed a
indemnification, alleging that A.W., Jr.’s harm, if any, was caused
by Abner’s negligence in its construction of the walkway.
November 17, 2015, Plaintiffs filed an amended complaint, adding
negligence claims against Abner Construction. At the time of A.W.,
Jr.’s alleged injuries, Abner Construction was covered by AutoOwners Insurance Company policy 114614-52942312-13.
connection with A.W., Jr.’s injuries.
Tod and Kelly Barhorst owned Abner Construction, which ceased
construction activity in 2009.2
Although Abner was not conducting
its usual business and had no employees, it still owned equipment,
which it stored at 150 Old Cranston Road in Morehead, Kentucky.
In September 2011, Tod Barhorst went to the Jack Roe Insurance
Agency in Morehead, Kentucky, seeking new insurance for Abner
Construction and his other business, Barhorst, LLC, a rental and
storage facility located at 150 Old Cranston Road.
deposition, Barhorst reported that he was attempting to insure
“the equipment, the storage facility, the rental, the warehouse,
He stated that he never had a conversation with
According to the Kentucky Secretary of State’s website, Abner Construction
was administratively dissolved on September 28, 2013.
When asked why he thought Abner Construction
would have past operations coverage when he never asked for it,
Barhorst explained that it was common in the industry and he simply
“thought we were covered.”
As it turns out, Abner Construction was covered, for a while.
Although Barhorst did not request discontinued business operations
concedes would have covered the claims at issue.
that he was not aware of Abner’s precise coverage at the time,
however, as he never read any of the policies prior to this
In 2011 and 2012, the policies were renewed with the same
comprehensive general liability coverage.
Prior to the renewal of
the policy for the 2013-14 term, however, Claudia Claussen, a
Senior Underwriter at Auto-Owners, reviewed Abner Construction’s
policy. She noted that that the only classifications on the policy
were buildings and, most importantly, there were no construction
classes on the policy.
She telephoned Jack Roe who informed her
unilaterally made the decision to “correct” the policy by adding
a clarifying endorsement, which limited the coverage to events
occurring on the property at 150 Old Cranston Road.
policy was issued on July 18, 2013, and did not become effective
until September 8, 2013.
Barhorst testified that he received a
copy of the renewal policy in August, allowing him to review it
prior to its effective date in September.
Both Roe and Barhorst
stated in their depositions that they had failed to read the
renewal policy, which included the following provision on page
seven out of 103:
LIMITATION OF COVERAGE TO DESIGNATED PREMISES OR PROJECT
This endorsement modifies insurance provided under the
COMMERCIAL GENERAL LIABILITY COVERAGE PART.
Premises: 150 OLD CRANSTON RD
(If no entry appears above, information required to
complete this endorsement will be shown in the
Declarations as applicable to this endorsement.)
This insurance applies only to “bodily injury,”
“property damage,” “personal injury,” “advertising
injury” and medical expenses arising out of:
The ownership, maintenance or use of the premises
shown in the Schedule and operations necessary or
incidental to those premises; or
The project shown in the Schedule.
The top of the page reads: “THIS ENDORSEMENT CHANGES THE POLICY.
PLEASE READ IT CAREFULLY.”
Presumably, after receiving the policy
in August, Barhorst made a payment toward the premium and the
policy went in effect on September 8, 2013.3
Under Rule Federal Rule of Civil Procedure 56(a), summary
judgment is proper “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”
In deciding a motion for summary
judgment, the factual evidence and all reasonable inferences must
be construed in the light most favorable to the nonmoving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Summers
v. Leis, 368 F.3d 881, 885 (6th Cir. 2004).
The judge's function on a summary judgment motion is not to
weigh the evidence, but to decide whether there are genuine issues
of material fact for trial.
Anderson, 477 U.S. at 249; Multimedia
2000, Inc. v. Attard, 374 F.3d 377, 380 (6th Cir. 2004). A material
fact is one that may affect the outcome of the issue at trial, as
determined by substantive law.
Anderson, 477 U.S. at 242.
genuine dispute exists on a material fact, and thus summary
judgment is improper, if the evidence shows “that a reasonable
jury could return a verdict for the nonmoving party.”
Id. at 248;
Summers, 368 F.3d at 885.
Barhorst testified in his deposition that he paid his premium in installments.
Generally, “the construction and legal effect of an insurance
contract is a matter of law for the court.”
Bituminous Cas. Corp.
v. Kenway Contracting, Inc., 240 S.W.3d 633, 638 (Ky. 2007). Where
the words of an insurance policy are not ambiguous, as in any
contract, the plain meanings of the words chosen by the drafter
are to be followed.
Id. (citing James Graham Brown Found., Inc.
v. St. Paul Fire & Marine Ins. Co., 814 S.W.2d 273, 279 (Ky.
As the facts recited above indicate, under the plain
language of the 2013-14 renewal policy, Abner Construction is not
covered under the terms of the policy.
Abner contends that coverage for Plaintiffs’ claims exist
because Jack Roe improperly modified the application for coverage.
The initial 2011 application provided that Abner Construction was
in the “construction” business, but that was crossed out at some
point and “Rental of Storage Fac.” was written in its place.
also indicated that there had been no discontinued operations
During his deposition, Tod Barhorst testified that he
might have signed the application with these modifications in
“construction” would have been an incorrect statement on the
It is undisputed that Abner and Roe were the only
individuals involved in application process.
Since Barhorst and
Roe do not recall the particular circumstances surrounding Roe’s
modifications and whether Barhorst had the opportunity to review
them before signing, no reasonable jury could conclude that Roe
impermissibly modified the application.
Abner also claims that it is entitled to coverage because
Auto-Owners made a substantive change to the 2013-14 renewal policy
without providing notice.
During her deposition, Claudia Claussen
reported that Auto-Owners’ standard practice is to mail renewal
policies to the local insurance agency so that the local agency
may provide the policy to the insured.
Tod Barhorst concedes that
he received a copy of the renewal policy sometime in August 2013—
prior to its effective date in September.
In Marcum v. Rice, 987
S.W.2d 789, 791–92 (Ky. 1999), the Kentucky Supreme Court made
formal notification is required to effectuate a policy provision.”
The limiting endorsement at issue is clear and concise.
policies are often lengthy, but it is notable that the endorsement
is located on page seven.
Additionally, bold letters at the top
of the page alert the insured to read carefully, as the policy is
This constitutes sufficient notice under Kentucky
Finally, Abner contends that its coverage under the 2013-14
renewal policy was illusory since, by that time, its only insurable
interest was its past operations.
Abner reports that, over the
years, it had been selling its equipment and by 2013, “most, if
not all” of the equipment had been sold.
Tod Barhorst was clear
in his deposition, however, that when he purchased the insurance
policy, he sought coverage for Abner’s equipment.
equipment that Abner possessed was covered by the policy, so the
coverage was not illusory.
And while Abner complains about the
premium increase for the 2013-14 renewal, one can speculate as to
what the increase might have been had the general liability
coverage been retained.
Ultimately, Mr. Barhorst received a copy
of the 2013-14 renewal policy and could have chosen to purchase
other coverage elsewhere, but he did not.
These are not grounds
for the court to contravene basic principles of contract law and
rewrite an insurance policy.
Accordingly, IT IS ORDERED:
that Auto-Owners Insurance Company’s motion for summary
judgment, [DE 86], is GRANTED; and
summary judgment, [DE 139], is DENIED.
This the 25th day of March, 2016.
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