Opinion
NO. 2012-CA-001023-MR
04-12-2013
MARK WRIGHT APPELLANT v. LARRY FRANKLIN; JUDY FRANKLIN; AND ACUITY MUTUAL INSURANCE COMPANY APPELLEES
BRIEF FOR APPELLANT: David B. Mour Louisville, Kentucky BRIEF FOR APPELLEES LARRY AND JUDY FRANKLIN: Ann B. Oldfather Richard V. Evans Louisville, Kentucky BRIEF FOR APPELLEE ACUITY MUTUAL INSURANCE COMPANY: Thomas B. Spille Erlanger, Kentucky
NOT TO BE PUBLISHED
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE MARY M. SHAW, JUDGE
ACTION NO. 09-CI-005348
OPINION
AFFIRMING
BEFORE: CLAYTON, COMBS, AND VANMETER, JUDGES. COMBS, JUDGE: Mark Wright, d/b/a Mark Anthony Remodeling and/or Mark Anthony Remodeling & Construction (Wright), appeals from an order of the Jefferson Circuit Court granting summary judgment in favor of Acuity Mutual Insurance Company, Wright's insurer under a commercial general liability (CGL) policy. After our review, we affirm.
In July 2007, Larry and Judy Franklin (the Franklins) contracted with Wright for a construction and remodeling project at their residence in Louisville. On September 10, 2008, the Franklins terminated that contract.
In May 2009, Wright filed a civil action against the Franklins claiming that they owed him more than $110,000.00 for work completed at the residence. The Franklins answered the complaint and filed a counterclaim.
In their counterclaim, the Franklins alleged that they had paid Wright more than $540,000.00 during the course of the construction and remodeling project. They also alleged that the project had not been completed in a workmanlike fashion and that Wright had misrepresented to them both the amount of time spent on the project and the value of materials supplied. They alleged further that the work on the residence was so poorly executed that repairs required to remedy Wright's defective work cost them in excess of $308,000. They sought compensatory damages and recovery of the overage that Wright had billed. Wright denied the allegations against him and discovery ensued.
Acuity insured Wright under a commercial general liability policy during the period that the construction and remodeling project was undertaken. It provided Wright's defense in the litigation under a reservation of rights.
In December 2010, Acuity filed a motion to intervene in the action, seeking a declaration that it did not owe a duty to defend or indemnify Wright. The trial court granted the motion, and Acuity moved for summary judgment.
In its motion for summary judgment, Acuity contended that its CGL policy did not provide coverage for the claims asserted against Wright. It argued that neither the billing dispute nor the claims of faulty and defective workmanship at the property constituted an "accident" or "occurrence" under provisions of the liability policy. The Franklins conceded that there was no coverage under the policy for their claims against Wright, and they did not oppose Acuity's motion for summary judgment. With respect to the claims arising from the allegedly substandard workmanship, Wright contended that he was entitled to coverage under the terms of the policy.
On January 3, 2012, the trial court granted summary judgment in favor of Acuity. Its judgment was made final and appealable by order entered May 21, 2012. This appeal followed.
On appeal, Wright argues that the trial court erred as a matter of law in granting Acuity's motion for summary judgment. Wright contends that Acuity had a duty to defend him in the litigation and to indemnify him against the Franklins' claims. Acuity maintains that the Franklins' claims concerning the material misrepresentations made to them by Wright and the shoddy work that he performed do not fall within the terms of the policy coverage. We agree with Acuity.
We review de novo a trial court's decision to grant summary judgment. Blevins v. Moran, 12 S.W.3d 698, 700 (Ky.App.2000). Summary judgment should be granted where the pleadings, the discovery, the admissions, the stipulations, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. Kentucky Rule[s] of Civil Procedure (CR) 56.03.
Acuity's policy contains the following relevant terms:
LIABILITY AND MEDICAL EXPENSES COVERAGESThe contract defines an occurrence as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." It defines the term property damage as "[p]hysical injury to tangible property, including all resulting loss of use of that property," or a "[l]oss of tangible property that is not physically injured."
1. Business Liability
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury, property damage or personal and advertising injury to which this insurance applies. We will have the right and duty to defend the insured against any suit seeking those damages. However, we will have no duty to defend the insured against any suit seeking damages for bodily injury, property damage or personal and advertising injury to which this insurance does not apply. . . .
* * * * *
b. This insurance applies:
(1) To bodily injury or property damage only if:
(a) The bodily injury or property damage is caused by an occurrence that takes place in the coverage territory; and
(b) The bodily injury or property damage occurs during the policy period. . . .
In Cincinnati Ins. Co. v. Motorists Mut. Ins. Co., 306 S.W.3d 69, 76 (Ky. 2010), the Supreme Court of Kentucky held unequivocally that "claims of faulty workmanship, standing alone, are not 'occurrences under CGL policies." In its analysis, the court concluded that "[i]nherent in the plain meaning of 'accident' is the doctrine of fortuity." Id. at 74. "Indeed, '[t]he fortuity principle is central to the notion of what constitutes insurance. . . .'" Id. The court observed that a loss was fortuitous only where it was "not intended. . . ." Id., citing Aetna Cas. & Sur. Co. v. Commonwealth, 179 S.W.3d 830, 836 (Ky. 2005). Since a contractor has control over his construction project -- either directly or through the subcontractors he chooses, the court concluded that substandard construction could not be considered unintended or fortuitous. Since faulty workmanship could not be deemed to have been undertaken accidently, the court determined that the homeowners' claim was not covered by the contractor's CGL policy.
The court's holding in Cincinnati Ins. Co. governs the issue before us. The Franklins alleged in their counterclaim that they had suffered financial injury because of "Wright's actions and/or omissions [that] resulted in a substantial amount of re-work in the construction and/or remodeling of [their home]." Counterclaim at 4. The Franklins did not allege that there had been an accident. They did not claim that they had suffered any personal injury or property damage. They alleged that substandard workmanship had caused them financial damage when costs were incurred to make the necessary repairs. Although Wright criticizes the holding in Cincinnati Ins. Co. as "far too narrow" and "not good law," we are not at liberty to alter it.
While ambiguities with respect to the parties' intent can sometimes present material issues of fact that preclude the entry of summary judgment, the interpretation of a contract is ordinarily a matter of law for a court's determination. See Cantrell Supply, Inc. v. Liberty Mutual Ins. Co., 94 S.W.3d 381 (Ky. App. 2002). Since the allegedly substandard workmanship undertaken in this case cannot be considered unintended or fortuitous as a matter of law, there are no material facts in dispute. Consequently, Acuity was entitled to summary judgment, and the trial court did not err by granting judgment in its favor.
ALL CONCUR. BRIEF FOR APPELLANT: David B. Mour
Louisville, Kentucky
BRIEF FOR APPELLEES LARRY
AND JUDY FRANKLIN:
Ann B. Oldfather
Richard V. Evans
Louisville, Kentucky
BRIEF FOR APPELLEE ACUITY
MUTUAL INSURANCE
COMPANY:
Thomas B. Spille
Erlanger, Kentucky