Trinity Contracting of Bowling Green, LLC v. Westfield Insurance Company

Filing 25

MEMORANDUM OPINION AND ORDER by Chief Judge Joseph H. McKinley, Jr on 1/17/2012 granting 14 Motion for Summary Judgment; and denying 16 Motion for Partial Summary Judgment. Defendant is entitled to a partial summary judgment as to to breach of co ntract claim. IT IS HEREBY ORDERED that Defendant Westerfield Insurance Company 's Motion for Partial Summary Judgment is GRANTED. IT IS FURTHER ORDERED that Plaintiff Trinity COntracting of Bowling Green, LLC 's Motion for Partial Summary Judgment is DENIED. cc:counsel (PHB)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
BOWLING GREEN DIVISION
CIVIL ACTION NO. 1:11-CV-00050-JHM
TRINITY CONTRACTING OF
BOWLING GREEN, LLC

PLAINTIFF

V.
WESTFIELD INSURANCE COMPANY

DEFENDANT

MEMORANDUM OPINION AND ORDER
This matter is before the Court on cross motions for partial summary judgment by Defendant
Westfield Insurance Company [DN 14] and by Plaintiff Trinity Contracting of Bowling Green, LLC
[DN 16]. Fully briefed, this matter is ripe for decision.
I. BACKGROUND
Plaintiff Trinity Contracting is a general contractor who bid on, and was subsequently
awarded, a contract to complete a water line project for the North Logan Water District in
Russellville, Kentucky (the “Project”). (Cates Aff. ¶ 4.) In connection with this contract, Plaintiff
was required to provide a payment and performance bond on the Project as well as to secure a general
liability insurance policy for the Project. (Id. at ¶¶ 4-5.) Defendant Westfield Insurance Company
issued a commercial package policy, numbered TRA4370130 (the “Policy”), to Plaintiff with
effective dates of June 30, 2008 to June 30, 2009. (Id. at ¶ 6.)
After winning the contract, Plaintiff retained Wrenn Excavating as a subcontractor to perform
the actual work on the Project. (Def.’s Mem. in Supp. of Mot. Summ. J. 2.) The necessary materials
for the Project were purchased and paid for by Plaintiff and then delivered to a staging area near the
Project work site. (Cates Aff. ¶ 8.) Once delivered, the materials were inventoried and Plaintiff was

reimbursed for the cost of the materials by North Logan Water District.1 (Id. at ¶ 9.) While Wrenn
was hired to perform the work on the water line, Plaintiff retained “exclusive access and control of
the Project site including the staging area” during the entire contract performance. (Id. at ¶ 10.)
Around May 2009, Plaintiff became unsatisfied with its subcontractor and dismissed Wrenn,
choosing to finish the remaining work on the Project itself. Once Plaintiff began to finish the
remaining work, it discovered that many of the materials it had purchased and inventoried at the
storage site were missing. (Id. at ¶ 12.) After making this discovery, Plaintiff conducted an
inventory of its remaining materials and compiled a list of the missing items. (Id.) The total cost of
the missing materials was $19,408.28. (Id.) Thereafter, Plaintiff filed a report with the Logan
County Sheriff’s Office for the theft of the materials. (Id. at ¶ 15.) It appears that the investigation
is ongoing but that there have been no arrests made. (See Pl.’s Supp. Ex. C [DN 17], Logan County
Sheriff’s Dept. Report 2-3.)
Following these actions, Plaintiff filed a claim with Defendant under the Policy for the cost
of the stolen materials. Defendant denied the claim. Plaintiff filed the instant suit alleging several
claims including breach of contract. The Parties have now filed cross motions for partial summary
judgment seeking to have the breach of contract claim adjudicated.
II. STANDARD OF REVIEW
Before the Court may grant a motion for summary judgment, it must find that there is no
genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of
law. Fed. R. Civ. P. 56(a). The moving party bears the initial burden of specifying the basis for its

1

Under the Project contract, ownership and title to the materials did not transfer to North
Logan Water District until the materials were installed and accepted by North Logan Water
District. (Cates Aff. ¶ 11.)
2

motion and of identifying that portion of the record which demonstrates the absence of a genuine
issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once the moving party
satisfies this burden, the non-moving party thereafter must produce specific facts demonstrating a
genuine issue of fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).
Although the Court must review the evidence in the light most favorable to the non-moving
party, the non-moving party is required to do more than simply show there is some “metaphysical
doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986). The rule requires the non-moving party to present specific facts showing that a genuine
factual issue exists by “citing to particular parts of materials in the record” or by “ showing that the
materials cited do not establish the absence . . . of a genuine dispute[.]” Fed. R. Civ. P. 56(c)(1).
“The mere existence of a scintilla of evidence in support of the [non-moving party’s] position will
be insufficient; there must be evidence on which the jury could reasonably find for the [non-moving
party].” Anderson, 477 U.S. at 252.
III. DISCUSSION
The issues raised in the parties’ motions for summary judgment are governed by the principles
of contract interpretation. The interpretation of an insurance contract is a question of law for the
Court to decide. Kemper Nat’l Ins. Cos. v. Heaven Hill Distilleries, Inc., 82 S.W.3d 869, 871 (Ky.
2002); Equitania Ins. Co. v. Slone & Garrett, P.S.C., 191 S.W.3d 552, 556 (Ky. 2006). “In
construing a contract, a court’s primary objective is to ascertain and to effectuate the intention of the
parties to the contract from the contract itself.” Logan Fabricom, Inc. v. AOP P’ship LLP, 2006 WL
3759412, at *2 (Ky. Ct. App. Dec. 22, 2006). “[I]n the absence of ambiguity, a written instrument
will be enforced strictly according to its terms, and a court will interpret a contract's terms by
assigning language its ordinary meaning and without resort to extrinsic evidence.” Frear v. P.T.A.

3

Indus., Inc., 103 S.W.3d 99, 106 (Ky. 2003) (quotation and citation omitted); see also York v. Ky.
Farm Bureau Mut. Ins. Co., 156 S.W.3d 291, 293 (Ky. 2005) (“The clear and unambiguous words
of an insurance contract should be given their plain and ordinary meaning.”). However, “[i]f the
contract language is ambiguous, it must be liberally construed to resolve any doubts in favor of the
insured.” Wolford v. Wolford, 662 S.W.2d 835, 838 (Ky. 1984). “A contract is ambiguous if a
reasonable person would find it susceptible to different or inconsistent interpretations.” Cantrell
Supply, Inc. v. Liberty Mut. Ins. Co., 94 S.W.3d 381, 385 (Ky. Ct. App. 2002).
As the Kentucky Supreme Court states “[t]he reasonable expectation doctrine ‘is based on the
premise that policy language will be construed as laymen would understand it’ and applies only to
policies with ambiguous terms - e.g., when a policy is susceptible to two or more reasonable
interpretations.” True v. Raines, 99 S.W.3d 439, 443 (Ky. 2003) (quoting Simon v. Cont’l Ins. Co.,
724 S.W.2d 210 (1986)). If an ambiguity does exist, “the ambiguous terms should be interpreted
in favor of the insured’s reasonable expectations. However, ‘the mere fact that a party attempts to
muddy the water and create some question of interpretation does not necessarily create an
ambiguity.’” Id. (quoting Sutton v. Shelter Mut. Ins. Co., 971 S.W.2d 807, 808 (Ky. 1997)).
The Policy at issue provides that Defendant “will pay for direct physical loss of or damage
to Covered Property at the premises described in the Declaration caused by or resulting from any
Covered Cause of Loss.” (Def.’s Mem. in Support of Mot. Summ. J., Ex. 2 Commercial Property
Policy, Building and Personal Property Coverage Form CP 00 10 04 02(A) (hereinafter “Coverage
Form”)). Covered Property includes raw materials “located in or on the building described in the
Declarations or in the open . . . within 100 feet of the described premises[.]” (See Coverage Form
A(1)(b)(3), H(3).) It is undisputed that the materials at the storage site location do not qualify for
coverage under this provision, as the storage site is more than 100 feet from the described premises.

4

(Def.’s Mem. in Support of Mot. Summ. J. 4.) Furthermore, the storage site does not qualify for
coverage under a provision extending coverage to materials within 1,000 feet of the described
premises. (Id.) Accordingly, coverage in the instant case is dependent on the applicability of the
Property Off-Premises extension. (See Coverage Form A(5)(d).)
The Property Off-Premises provision extends coverage to Plaintiff’s “Covered Property while
it is away from the described premises, if it is: [t]emporarily at a location [Plaintiff] do[es] not own,
lease or operate.” (Coverage Form A(5)(d)(a).) Defendant contends that the materials located at the
storage site are not covered under this provision because they were not “temporarily” located there
and because the storage site was a location that was “operated” by Plaintiff. The Court will first
address whether Plaintiff “operated” the storage site. Because the term “operate” is not defined under
the Policy, the Court will interpret the term according to its ordinary meaning. See Frear, 103 S.W.3d
at 99. While the term “operate” has several definitions, under these circumstances, the best definition
is as follows: “to put or keep (a factory, industrial system, ranch, etc.) working or in operation: to
operate a coal mine.” Random House Unabridged Dictionary 1357 (2d ed. 1993) (emphasis in
original).
Plaintiff boldly states, on multiple occasions, that it had possession, exclusive rights and
access to, and control of the storage site and Project site during the entire performance of the contract.
(See Cates Aff. ¶ 10, Pl.’s Mem. in Support of Mot. Summ. J. 3, 7.) The facts before the Court
demonstrate that Plaintiff had exclusive control of the site at issue and that it was responsible for the
work at the location. In fact, when the work was not being completed to its satisfaction, Plaintiff
discharged its subcontractor and assumed the remaining work. Furthermore, Plaintiff took out a
performance bond on the Project, guaranteeing that the work would be completed as required and on
time. Under these circumstances, the Court finds that Plaintiff was in charge of keeping the Project

5

site working, or in operation. Given Plaintiff’s admission that it had exclusive control and access to
the site, and its exercise of that power to evict Wrenn, there is no other conclusion that can be drawn.
The Court finds that under the terms of the Policy, the materials at the storage site were at a location
operated by Plaintiff. Therefore, the loss of the materials is not covered under the Property-Off
Premises provision.2
Plaintiff having relied solely upon this provision to establish coverage under the Policy, and
the Court having found this provision does not apply, Defendant is entitled to partial summary
judgment as to the breach of contract claim.
IV. CONCLUSION
For the reasons set forth above, IT IS HEREBY ORDERED that Defendant Westfield
Insurance Company’s Motion for Partial Summary Judgment [DN 14] is GRANTED.
IT IS FURTHER ORDERED that Plaintiff Trinity Contracting of Bowling Green, LLC’s
Motion for Partial Summary Judgment [DN 16] is DENIED.

January 17, 2012

cc: counsel of record

2

As this is dispositive of the current issue, the Court makes no ruling regarding the
Defendant’s remaining arguments.
6