Westfield Insurance Company v. B.H. Green & Son, Inc. et al

Filing 23

MEMORANDUM OPINION & ORDER denying 18 Motion to Stay. Signed by Chief Judge Thomas B. Russell on 5/18/2011. cc:counsel (KJA)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
PADUCAH DIVISION
CIVIL ACTION NO: 5:11-CV-00010
WESTFIELD INSURANCE COMPANY

PLAINTIFF

v.
B.H. GREEN & SON, INC., et al.,

DEFENDANT

MEMORANDUM OPINION AND ORDER
Before the Court is Defendant’s motion to stay this action until discovery has been
completed in the state court case (DN 18). Plaintiff has filed a response (DN 20). Defendant has
filed a reply (DN 22). This matter is ripe for adjudication. Accordingly, the motion to stay is
DENIED.
BACKGROUND
This action is based on an underlying state court action. Defendant B. H. Green & Son, Inc.,
was a contractor for Lyon County Board of Education. Defendant was contracted to construct a
middle school. After construction, cracks started to develop in the concrete of the middle school.
Lyon County Board of Education filed suit against multiple parties, including B. H. Green.
Plaintiff Westfield is B. H. Green’s insurance company. Westfield has been defending
B. H. Green under a reservation of rights in the state court litigation. Westfield now sues in federal
court for a declaratory judgment on whether B. H. Green’s insurance policy covers the current case.
Multiple issues have been raised in the underlying action. Originally, the damage was
assumed to be the result of a chemical reaction in the concrete known as an alkali carbonate reaction
(“ACR”). This reaction is allegedly the result of certain impurities present in the concrete supplied
to B. H. Green. Recently, the concrete supplier has filed a counter-claim, alleging that the problem
was not in the concrete, but was a design defect from the architect.

GOVERNING LAW
Plaintiff has filed this declaratory judgment action on the basis of the Kentucky Supreme
Court’s decision in Cincinnati Ins. Co. v. Motorists Mut. Ins. Co., 306 S.W.3d 69 (Ky. 2010). In
that case, the Kentucky Supreme Court opined on what counts as an ‘occurrence’ in a commercial
general liability (“CGL”) policy. Id. By the plain language of the policy, to be an occurrence, the
events precipitating the claim must be an accident. In insurance law, the word ‘accident’ is accorded
no special meaning. Id. at 74. “Inherent in the plain meaning of “accident” is the doctrine of
fortuity.” Id. In turn, fortuity involves intent and control.1
A fortuitous event is one that cannot be controlled by the insured because it is “beyond the
power of any human being to bring to pass, or is within the control of third persons” – a “chance
event.” Id. at 76 (internal quotations and edits omitted). Using this definition, it is axiomatic that
poor workmanship is within the control of the contractor and therefore not an occurrence. Id.
However, the Court distinguished and considered still valid a case where a contractor accidently
destroyed the wrong portion of a home in a “flurry of activity” was considered on occurrence. Id.
at 77.
STANDARD
“[D]istrict courts possess discretion in determining whether and when to entertain an action
under the Declaratory Judgment Act, even when the suit otherwise satisfied subject matter
jurisdictional prerequisites.” Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995). A court should
“examine the scope of the pending state court proceeding and the nature of defenses open there.”

1

Intent is not seriously contested in this proceeding, so this Court will focus on the law
governing control.
2

Id. at 283 (internal quotations omitted). Important to this case, a court should consider “whether the
claims of all parties in interest can satisfactorily be adjudicated in [the state] proceeding.” Id.
(internal quotations omitted).
ANALYSIS
The issue that is going to govern in the declaratory judgment case is control. Answering the
question of control, however, is not significantly tied to the legal and factual determinations of the
state court. In fact, Westfield is not even a party to the underlying state court action, and therefore
Westfield’s rights will not be adjudicated. While the factual discovery in the declaratory judgment
case will overlap with factual issues in the state court litigation, any discovery taken in this case can
be used in the state court case, and vice versa. Any factual determinations required by this Court
would not seem to overlap with factual determinations of the state court. Accordingly, this Court
can see no advantage to entering a stay in the case at this time. Accordingly, the motion for a stay
is DENIED.
IT IS SO ORDERED.

May 18, 2011

3