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Century Surety Co. v. QSC Painting

March 8, 2010

CENTURY SURETY COMPANY, PLAINTIFF,
v.
QSC PAINTING, INC. AND JAMES WATERS, DEFENDANTS.



The opinion of the court was delivered by: Terrence F. McVerry United States District Court Judge

MEMORANDUM OPINION AND ORDER OF COURT

Pending now before the Court is PLAINTIFF, CENTURY SURETY COMPANY'S, MOTION FOR SUMMARY JUDGMENT, docket entry number 35 (Doc. # 35), with brief in support (Doc. # 36), and concise statement of material facts (Doc. # 37); QSC PAINTING, INC'S MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (Doc. # 39), with counter statement of material facts (Doc. # 38); and PLAINTIFF, CENTURY SURETY COMPANY'S, REPLY IN FURTHER SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT (Doc. # 40), with additional exhibits (Doc. # 41), and response to Defendant's concise statement of material facts (Doc. # 42). Argument was heard regarding the motion on December 7, 2009, and the motion is ripe for disposition. For the reasons that follow, the motion will be granted.

Statement of the Case

Plaintiff Century Surety Company ("Century Surety") filed its complaint for declaratory judgment against Defendants QSC Painting, Inc. ("QSC Painting") and James Waters seeking a declaration that it is not required to indemnify QSC Painting or any other person or entity in any of a number of lawsuits and claims arising from on-the-job injuries sustained by Waters on or about June 20, 2006 while Waters was working for QSC Painting. Doc # 1. Also originally named as defendants were Kentucky corporations E.ON U.S. Services, Inc., LG&E Energy, Inc., and Kentucky Utilities Company; which three were subsequently dismissed voluntarily by Century Surety. See Doc. ## 11 and 12.

Defendant QSC Painting is an industrial painting contractor engaged in the business of, inter alia, painting electrical transformers and related electrical equipment for power utility companies nationwide. Plaintiff Century Surety issued a commercial general liability insurance policy to QSC Painting beginning in March 2002, and continued to do so through March 2008, a period spanning the time relevant to the claims sub judice, with QSC Painting having renewed the policy every year. The policy at issue, number CCP402967, was effective from March 30, 2006 to March 30, 2007.

All policies issued by Century Surety to QSC Painting, including the policy at issue, included language in Section I, "Coverages", that Century Surety "will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies." All policies further note that Century Surety will "have no duty to defend the insured against any 'suit' seeking damages for 'bodily injury' or 'property damage' to which this insurance does not apply." With respect to defining the scope of the coverage, each policy included in relevant part:

b. This insurance applies to "bodily injury" and "property damage" only if:

(1) The "bodily injury" and "property damage" is caused by an "occurrence" that takes place in the "coverage territory"; [and]

(2) The "bodily injury" or "property damage" occurs during the policy period; ...

In Section V, "Definitions", the term "occurrence" was defined as "an accident, including continuous or repeated exposure to substantially the same harmful conditions."

Also included in Section I, Century Surety set forth a number of exclusions, including an exclusion for employer's liability. With respect to employer's liability, all policies, beginning with the first policy issued in 2002 and continuing without change through all policies issued to and renewed by QSC Painting, included an Action Over Exclusion provision with the following language:

THIS ENDORSEMENT CHANGES THE POLICY, PLEASE READ IT CAREFULLY.

ACTION OVER EXCLUSION

This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART It is agreed that the following change is made to Coverage A.

2. Exclusion

Exclusion e. Employer's Liability is deleted in its entirety and replaced with the following:

e. Employer's Liability

"Bodily injury" to:

(1) An employee of the named insured arising out of and in the course of:

(a) Employment by the named insured; or

(b) Performing duties related to the conduct of the named insured's business; or

(2) The spouse, child, parent, brother or sister of that "employee" as a consequence ...


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