RENDERED: MARCH 21, 2025; 10:00 A.M. NOT TO BE PUBLISHED
Commonwealth of Kentucky Court of Appeals NO. 2023-CA-1249-MR
HERCON CONSTRUCTION, INC. APPELLANT
APPEAL FROM SCOTT CIRCUIT COURT v. HONORABLE KATHRYN H. GABHART, JUDGE ACTION NO. 17-CI-00730
ARROWHEAD SYSTEMS, L.L.C. (F/K/A ARROWHEAD SYSTEMS, INC.); D&S CONSTRUCTION OF SCOTT COUNTY, L.L.C.; DAVID CANNON; PENNSYLVANIA NATIONAL MUTUAL INSURANCE COMPANY; QUALITY SYSTEMS, INC.; THOMAS YOUNG; AND ZURICH AMERICAN INSURANCE CO. APPELLEES
AND
NO. 2023-CA-1286-MR
ARROWHEAD SYSTEMS, L.L.C. (F/K/A ARROWHEAD SYSTEMS, INC.) AND THOMAS YOUNG CROSS-APPELLANTS CROSS-APPEAL FROM SCOTT CIRCUIT COURT v. HONORABLE KATHRYN H. GABHART, JUDGE ACTION NO. 17-CI-00730
HERCON CONSTRUCTION, INC.; D&S CONSTRUCTION OF SCOTT COUNTY, L.L.C.; DAVID CANNON; PENNSYLVANIA NATIONAL MUTUAL INSURANCE COMPANY; QUALITY SYSTEMS, INC.; AND ZURICH AMERICAN INSURANCE CO. CROSS-APPELLEES
NO. 2023-CA-1290-MR
APPEAL FROM SCOTT CIRCUIT COURT v. HONORABLE KATHRYN H. GABHART, JUDGE ACTION NO. 10-CI-01245
ARROWHEAD SYSTEMS, INC.; D&S CONSTRUCTION OF SCOTT COUNTY, L.L.C.; DAVID CANNON; PENNSYLVANIA NATIONAL MUTUAL INSURANCE COMPANY; QUALITY SYSTEMS, INC.; THOMAS YOUNG; AND ZURICH AMERICAN INSURANCE CO. APPELLEES
-2- NO. 2023-CA-1503-MR
ARROWHEAD SYSTEMS, L.L.C. (F/K/A ARROWHEAD SYSTEMS, INC.) AND THOMAS YOUNG APPELLANTS
APPEAL FROM SCOTT CIRCUIT COURT v. HONORABLE KATHRYN H. GABHART, JUDGE ACTION NO. 10-CI-01245
HERCON CONSTRUCTION, INC.; D&S CONSTRUCTION OF SCOTT COUNTY, LLC; DAVID CANNON; PENNSYLVANIA NATIONAL MUTUAL INSURANCE COMPANY; QUALITY SYSTEMS, INC.; AND ZURICH AMERICAN INSURANCE CO. APPELLEES
OPINION AFFIRMING
** ** ** ** **
BEFORE: THOMPSON, CHIEF JUDGE; ECKERLE AND A. JONES, JUDGES.
ECKERLE, JUDGE: This case involves consolidated appeals from summary and
declaratory judgments of the Scott Circuit Court holding that two insurers have no
obligation to insure or indemnify insureds from claims of breach of contract,
-3- negligence, defective workmanship, or fraud. For the foregoing reasons, we
affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. Underlying Facts
While the procedural history of this case is complicated, the factual
underpinnings are straightforward. Thomas Young purchased a large residence in
Scott County, Kentucky (the “Residence”). Almost 20 years ago, in 2006, Young
and his company, Arrowhead Systems, Inc., now known as Arrowhead Systems,
LLC [sic], (collectively referred to as “Young”), purchased PermaCrete from
Quality Systems Inc. (“QSI”), a Tennessee corporation that is now out of business.
Young alleges that QSI marketed PermaCrete as a stucco-like material, suitable for
finishing the Residence’s exterior. Young further claims that QSI represented that
it would arrange for its preferred “dealer,” Hercon Constructions Inc. (“Hercon”),
also a Tennessee company, to apply PermaCrete. Young avers that QSI
represented that it would supervise Hercon’s work. Young now believes that QSI
constituted a pyramid scheme.
Young directly contracted with Hercon to apply PermaCrete to the
Residence. Hercon’s work commenced in October of 2006. Hercon initially
installed concrete sheeting, but delayed application of PermaCrete until the Spring
of 2007. Hercon’s application of PermaCrete consisted of spraying the material on
-4- the structure’s brick veneer. Young claims that Hercon failed to protect areas of
the structure from the PermaCrete application, including doors, windows, soffits,
limestone columns, balustrades, trim, gutters, copper downspouts, weepholes, and
interior flooring. Due to the PermaCrete bonding agent, the material allegedly and
irreparably damaged those portions of the structure. Young further asserts that
Hercon misapplied PermaCrete by both over and under spraying areas of the
Residence. As a result, in the Summer of 2007, Young terminated Hercon.
Upon request, QSI then directed Young to a different PermaCrete
“dealer,” D&S Construction of Scott County, L.L.C. (“D&S”). As with Hercon,
Young contracted directly with D&S to complete application of PermaCrete to the
Residence. Young alleges that QSI agreed to supervise D&S’s work, as it had
done with Hercon. And as with Hercon, Young found D&S’s application of the
PermaCrete to be unsatisfactory and terminated the contract. Young also alleges
that QSI grossly underestimated the amount of PermaCrete necessary for proper
application, resulting in Young making additional purchases.
B. Young’s Lawsuit against QSI, Hercon, and D&S
On December 29, 2010, four years after Young first purchased
PermaCrete from QSI, Young filed suit in Scott Circuit Court against QSI, Hercon,
-5- and D&S, Case No. 10-CI-00245 (the “Underlying Action”).1 Young’s Complaint
asserted numerous causes of action, based in contract and tort. Four years after
that, on January 10, 2015, Young filed an Amended Complaint to assert additional
counts. As for QSI, Young alleged breach of warranty, breach of contract,
fraudulent inducement, fraudulent misrepresentations and omissions, negligent
misrepresentations, violations of Kentucky Consumer Protection Act, and
negligent supervision of Hercon and D&S. As to Hercon, Young alleged breach of
contract, breach fraudulent misrepresentations and omissions, and gross
negligence. Regarding D&S, Young alleged breach of contract. In addition to the
facts detailed above, Young included factual allegations that QSI and Hercon made
misrepresentations regarding the depth of Hercon’s training, experience, and
ability to apply PermaCrete properly.
During all relevant times, QSI maintained through Pennsylvania
National Mutual Insurance Company (“Penn National”) a commercial general
liability (“CGL”) policy of insurance (hereinafter referred to as the “Penn National
Policy”). QSI also purchased a commercial umbrella policy, which for purposes of
1 Four judges have presided over this lengthy dispute. Judge Paul Isaacs originally presided over the action. Upon his retirement, Judge Brian Privett presided over the case. However, Judge Privett subsequently resigned, and Judge Robert McGinnis served as special judge. Finally, Judge Kathryn Gabhart presided over the matter.
-6- our discussion simply supplemented the coverage limits of the CGL policy. Penn
National agreed to provide QSI with a defense under a reservation of rights.
Hercon was insured through a CGL policy of insurance issued by
Maryland Casualty Company (“MCC”). In 2011, upon notice of Young’s initial
Complaint, MCC supplied Hercon with a coverage denial determination, finding
that it owed neither a duty to defend nor to indemnify Hercon for the alleged
damage. MCC explained that Young’s allegations did not fall within the definition
of a covered “occurrence” under the subject policy; and, even if coverage was
triggered, exclusions precluded coverage. Consequently, Hercon retained defense
counsel at its own cost. Zurich American Insurance Company (“Zurich”) acquired
MCC, thereby assuming any obligations of the subject policy (hereinafter referred
to as the “Zurich Policy”). Zurich continued to deny any such obligation and to
decline a duty to defend Hercon in the Underlying Action. Yet it is directly
involved in the subsequent proceedings discussed below where it also argues
against coverage.
C. Young’s Declaratory Action
During the pendency of the Underlying Action, QSI and D&S
declared bankruptcy. Consequently, on November 3, 2016, Young filed a Second
Amended Complaint to add Penn National as party defendant, seeking declaratory
-7- relief based on insurance coverage, third-party beneficiary status, and the right to
enforce the Penn National Policy.
On October 5, 2017, the Trial Court ordered the declaratory counts to
be severed into a separate action, Case No. 17-CI-0730 (the “Dec Action”) and
held the Underlying Action in abeyance pending a determination of coverages. In
April of 2018, Penn National filed a Motion for Summary Judgment.
On August 15, 2018, Young amended the Complaint to add Zurich as
party defendant. On October 21, 2020, Hercon filed a crossclaim against Zurich
on the issue of coverage under the Zurich Policy.
In June of 2020, Young filed a Motion for Declaratory Judgment,
seeking declarations that Penn National was obligated to continue defending QSI
and indemnify QSI for damages as alleged in the Underlying Action. Likewise,
Young’s Motion for Declaratory Judgment also sought declarations that Zurich is
obligated to defend and indemnify Hercon in the Underlying Action. Shortly
thereafter, Zurich filed a Cross Motion for Declaratory Judgment and Summary
Judgment. Hercon also filed a Cross Motion for Declaratory Judgment.
On February 8, 2021, with these dispositive motions and cross
motions pending, the Trial Court issued an Order ruling that Tennessee law
governs the issue of coverage under the Penn National Policy and the Zurich
-8- Policy. The Trial Court allowed the parties to file supplemental briefs in support
of their respective positions under Tennessee law.
Having been fully briefed on the matter, on August 3, 2022, the Trial
Court, with Special Judge Robert McGinnis presiding, entered an Order granting
Penn National and Zurich summary judgment and declaratory judgment, thereby
dismissing both parties with prejudice. Judge McGinnis’ succinct Order was one
page in length and did not provide any legal reasoning for his ruling.
On August 12, 2022, Hercon filed a Motion to Vacate the Order. On
August 15, 2022, Young filed a Motion to Alter, Amend, or Vacate the Order, or in
the alternative, Young requested that the Trial Court provide reasoning for its
summary judgment and declaratory judgment rulings. On September 1, 2022,
arguments were held. On September 29, 2023, the Trial Court, under the fourth
consecutive presiding judge in this case, Judge Kathryn Gabhart, entered a detailed
Opinion and Order denying Young’s and Hercon’s Motions pursuant to Kentucky
Civil Rules of Procedure (“CR”) 59.05. Judge Gabhart granted Young’s Motion
for the Trial Court to state its reasoning in support thereof, and thus, the Trial
Court provided an extensive analysis of the facts and applicable law.
As for its analysis, the Trial Court applied the governing case of
Travelers Indemnity v. Moore & Associates, 216 S.W.3d 302 (Tenn. 2007). The
Trial Court found that Hercon’s misapplication of PermaCrete in the form of over
-9- spraying, under spraying, or spraying improper areas did not constitute an
occurrence under the Zurich or Penn National Policy because the alleged damage
was not only foreseeable, but also seeable, or plainly visible, at the time of
application. The Trial Court styled its Opinion and Order with both the Dec
Action and Underlying Action case numbers, and the clerk entered it into both
actions.
Young and Hercon filed Notices of Appeal from both the summary
Order dated August 3, 2022, and the longer Opinion and Order dated September
29, 2023. As a result, there are four appeals at issue.2 On January 21, 2024, this
Court’s Motion Panel, denied consolidation, but placed all of the appeals before
this same Merits Panel for the issuance of a single opinion.
D. The Insurance Policies
For purposes of our analysis, the Zurich Policy and Penn National
Policy (collectively referred to as the “Policies”) have identical insuring
agreements and definitions.3 Specifically, the Policies provide that the insurers
2 Hercon’s appeals are numbered No. 23-CA-01249-MR (from 17-CI-00730) and No. 23-CA- 01290-MR (from 10-CI-01290). Young’s appeals are numbered No. 23-CA-01286-MR (from 17-CI-00730) and No. 23-CA-01503-MR (from 10-CI-01245). 3 While the Policies also include several exclusions that arguably apply, such as those entitled “Damage to Property,” “Damage to Your Product,” and “Damage to Your Work,” we will not quote or discuss those exclusions because we ultimately find that subject damage does not constitute an occurrence.
-10- will “pay those sums that the insured becomes legally obligated to pay as damages
because of ‘bodily injury’ or ‘property damage’ to which” the insurance applies.
The Policies define “[p]roperty damage” as “[p]hysical injury to tangible property”
or “[l]oss of use of tangible property that is not physically injured.” For the
insurance to apply, there must be “bodily injury” or “property damage” caused by
an “occurrence” within the coverage territory and during the policy period. The
Policies define “Occurrence” as “an accident, including continuous or repeated
exposure to substantially the same general harmful conditions.”
STANDARD OF REVIEW
CR 56.01 allows as follows: “[a] party seeking to . . . obtain a
declaratory judgment may, at any time . . . move with or without supporting
affidavits for a summary judgment in his favor . . . .” See also Schmidt v.
Halpin, 351 S.W.2d 57, 58 (Ky. 1961). As here, where summary judgment has
been granted in a declaratory judgment action, and no bench trial held, we utilize
the summary judgment standard of review. Foreman v. Auto Club Prop.-Cas. Ins.
Co., 617 S.W.3d 345, 349 (Ky. 2021) (citing Ladd v. Ladd, 323 S.W.3d 772, 776
(Ky. App. 2010)). The parties seem to agree that there are no genuine issues of
material fact. Therefore, we need only conduct a de novo review of the Trial
Court’s interpretation of the Policies and its application of the law. Bruner v.
-11- Cooper, 677 S.W.3d 252, 269 (Ky. 2023) (footnote omitted); Cincinnati Ins. Co. v.
Motorists Mut. Ins. Co., 306 S.W.3d 69, 73 (Ky. 2010).
ANALYSIS
Prior to embarking on our analysis, we note that Zurich puts forth an
alternative coverage analysis under Kentucky law. However, no party has
appealed the Trial Court’s application of Tennessee law to the substantive issues of
coverage pursuant to the standard articulated in Grange Property and Casualty
Company v. Tennessee Farmers Mutual Insurance Company, 445 S.W.3d 51 (Ky.
App. 2014). Therefore, we will not disturb the Trial Court’s application of
Tennessee law.
An insurer’s duty to defend its insured, which is broader than the duty
to indemnify, is triggered if the underlying complaint alleges damages that are
within the risk covered by the insurance contract. St. Paul Fire & Marine Ins. Co.
v. Torpoco, 879 S.W.2d 831, 835 (Tenn. 1994). Under Tennessee law, any doubt
regarding whether a cause of action, or the allegations thereto, falls within an
insurance policy’s coverages, is an issue a court must resolve in favor of the
insured. Dempster Bros., Inc. v. United States Fid. & Guar. Co., 388 S.W.2d 153,
156 (Tenn. Ct. App. 1964).
Tennessee law also requires us to examine the insuring agreement
prior to any exclusions “to avoid confusion and error.” Moore & Assocs., 216
-12- S.W.3d at 306 (citing Naifeh v. Valley Forge Life Ins. Co., 204 S.W.3d 758, 768
(Tenn. 2006)). In doing so, we must construe the insurance contract “fairly and
reasonably, giving the language its usual and ordinary meaning.” Naifeh, 204
S.W.3d at 768.
In conformity with Tennessee law, we begin our analysis by
examining whether Young’s Amended Complaint alleges damage covered within
the terms of the Policies’ insuring agreements.4 Accordingly, we must determine if
Young’s alleged damages constitute “property damage” resulting from an
“occurrence.” The parties agree that Travelers Indemnity v. Moore, supra, is
controlling and instructive as to both requirements. The facts of Moore are
uncomplicated. There, the plaintiff contracted with Moore, a construction
company, to design and build a hotel. 216 S.W.3d at 304. In turn, Moore hired a
subcontractor to install windows. Id. Plaintiff later discovered water damage,
including mold and structural deterioration, caused by water penetration through
the windows. Id. Arguing against coverage, Moore’s insurer argued that the
damage caused by the subcontractor’s improper window installation failed to
qualify as either “property damage” or an “occurrence” as defined in the subject
policy. Id. at 308, 309. The Tennessee Supreme Court rejected both arguments,
4 We note initially that there is no dispute that the alleged damage to Young’s Residence happened within the coverage territory and during the Policies’ effective periods.
-13- finding that coverage was triggered by an occurrence that caused property damage.
Id. at 309, 310.
Turning first to the issue of damage, the Policies define “[p]roperty
damage” as “[p]hysical injury to tangible property” or “[l]oss of use of tangible
property that is not physically injured.”5 Here, Young alleges damages arising
from QSI’s representations and supply of PermaCrete, along with Hercon’s
application of PermaCrete. In Moore, the Tennessee Supreme Court recognized
that a claim solely “for replacement of a defective component or correction of [a]
faulty installation[,]” without more, may not qualify as “property damage.” 216
S.W.3d at 310. However, as Moore illustrated, where the alleged faulty work
results in more than the “mere inclusion of a defective component” and causes
physical damage to otherwise non-defective property, such damage constitutes
“property damage” under a CGL policy of insurance. Id. We find that Young’s
Amended Complaint goes beyond alleging the mere inclusion of a defective
product or faulty workmanship, and adequately alleges physical injury to Young’s
otherwise undamaged Residence.
Moving on to the next step of our analysis, we focus on whether the
alleged damage resulted from an “occurrence.” Like most modern, form-CGL
5 To the extent that Young alleged damage in the form of purchasing more PermaCrete than QSI estimated, we find that such excess cost does not fall within the definition of “property damage” or “physical injury.”
-14- policies, “occurrence” is defined as an “accident, including continuous or repeated
exposure to substantially the same general harmful conditions.” While the Policies
do not define the term “accident,” the Tennessee Supreme Court in Moore provided
clear guidance on the term’s meaning. 216 S.W.3d at 308. Specifically, the
Tennessee Supreme Court explained the ordinary meaning of “accident” is “an
event not reasonably to be foreseen, unexpected and fortuitous[,]” including
“damage which is undesigned and unexpected.” Id. at 308 (quoting Gassaway v.
Travelers Ins. Co., 222 Tenn. 649, 439 S.W.2d 605, 608 (1969)). Consistent with
its prior applications, the Tennessee Supreme Court interpreted the term “accident”
as used in the CGL policy as “an unforeseen or unexpected event.” Id. Whether
an event is foreseeable is viewed from the perspective of the insured. Id. (citing
Gassaway, 439 S.W.2d at 608-09).
To comprehend fully the Tennessee Supreme Court’s application of
the above-detailed definition of the term “accident,” we must delve into its
reasoning. In Moore, based on the arguments advanced by the CGL insurer, the
Tennessee Supreme Court held that the foreseeability of damages must be analyzed
under an assumption that the subcontractor’s work was completed properly. Id. at
310-11. In formulating its conclusion, the Tennessee Supreme Court clarified that
the negligent completion of a project cannot demonstrate foreseeable damages;
otherwise, “negligent acts of the insured will almost never be ‘accidents’ because,
-15- by definition, negligence requires that damages be foreseeable.” Id. at 308
(citations removed). Instead, the Tennessee Supreme Court considered “whether
damages would have been foreseeable if the insured had completed the work
properly.” Id. at 309. Ultimately, the Tennessee Supreme Court concluded that the
water damage resulted from an occurrence, as Moore could not have foreseen
damage from water penetration sans the subcontractor’s improper installation. Id.
In the current case, the Trial Court applied the definition of “accident”
as articulated in Moore and determined that Hercon’s misapplication of the
PermaCrete was a foreseeable and expected event, thereby not qualifying as an
accident or occurrence. The Trial Court also distinguished the instant facts from
those in Moore, noting that the damage in Moore was not immediately seeable at
the time of the window installation, and damaged other areas beyond the windows
due to repeated water penetration. We agree with the Trial Court’s thoughtful
analysis.
Pursuant to Moore, our inquiry into foreseeability must be viewed
from the standpoint of the insured, in this case Hercon, who itself performed the
work that visibly, immediately, and allegedly caused the alleged damage. To this
point, unlike Moore, this case does not involve a fortuitous event that caused
damage, such as rainwater intrusion caused by the negligence of a third party;
rather, Hercon itself, as the insured of MCC and then Zurich, directly produced the
-16- alleged damage the moment it sprayed PermaCrete to the Residence. And those
obvious actions are exactly what Young complains of here. The alleged
negligence was so evident – even to a layperson – that Young did not allow Hercon
to finish the job; hence, the Trial Court’s reference to “seeable” damage. Rather,
Young requested that QSI use a different company that led to similar involvement
of D&S, which Young also fired.
In this situation, the alleged damage is imminently and completely
foreseeable. Even the most novice of contractors – and laymen insureds – can
decipher that spraying permanent adhesive material directly to a structure with no
barrier to protect it will result in the material sticking to the structure. If we
assume the facts that Young alleged are true, as we must in a de novo standard of
appellate review, that is precisely what occurred in the case before us. The
resulting damage from Hercon’s actions was clearly foreseeable to Hercon. To
hold that damages from Hercon intentionally spraying PermaCrete to areas of the
structure that were not protected with a barrier as an accidental occurrence is
simply nonsensical.
At oral argument, Hercon and Young criticized the Trial Court’s
usage of the term “seeable” and tried to differentiate that term from the meaning of
legal foreseeability. According to them, if the work was done correctly, the
-17- damage would never be foreseeable,6 and it would always be covered. They
complained flatly that damages from work done that was clearly incorrect is
always foreseeable and would never be covered. Those parties took issue with the
Trial Court’s observation that patent, and not latent, defects occurred.
And yet, that is precisely the point that the Trial Court correctly made,
regardless of the terms used. Obvious damage that is intentionally inflicted
directly by a contractor is patent, seeable, and legally foreseeable. It makes sense
that insurers would decline coverage for such damage because it is not accidental
or fortuitous, but rather inherently evident, conspicuous, and knowable. Similarly,
we find no legal support for Young’s attempted distinction at oral argument
between over-spraying or under-spraying – clear damage for which he sought
coverage – versus spraying too thinly or too thickly, which he claimed would be
within the scope of work and not covered. Thus, and simply put, it is quite logical
that insurers would not cover contractors who knowingly watched themselves
directly damage projects.
In the same vein, and as Penn National aptly noted at oral argument, a
big part of the damage complained of herein resulted from Hercon’s failure to
prepare the surfaces adequately before spraying. If one such as Hercon fails to
tape off and cover areas that should not be sprayed, i.e., not undertake any
6 It would also not be seeable, although Hercon and Young do not accept the usage of that term.
-18- preventative measures to avoid over-spraying, damage from improper spraying
upon surfaces that were not meant to be sprayed will obviously and foreseeably
ensue. And they will not be covered by insurance because failing to do the hard
work of preparation is not accidental.
Moreover, in evaluating Hercon’s foreseeability of damages, we find
that it would strain reason to extend a presumption that it performed its work in a
workman-like manner. Similar to the Trial Court’s analysis, we must give weight
to the distinguishing facts of Moore. One such fact that stands out prominently is
that Hercon was not a subcontractor and did not have a contract with another
company to perform the work, as in Moore. Rather, Hercon performed the work
itself as a result of a direct contract with Young to apply PermaCrete. Therefore,
there is no question as to whether Hercon could foresee the damage of its own
alleged intentional failure to perform the job in a workman-like manner. Said
differently, we reject the notion that Moore requires this Court to disregard
Hercon’s intentional spraying of PermaCrete on areas not protected by a barrier,
clearly resulting in damages. This Court’s common-sense determination that
Hercon’s actions did not constitute an “occurrence” triggering CGL coverage is
also consistent with the Tennessee Supreme Court’s construction of the term
“accident” as something unexpected. Moore, 216 S.W.3d at 308.
-19- It stands to reason that the allegations against QSI also fail to qualify
as an occurrence. Perhaps Moore would be more favorable to coverage under the
Penn National Policy had QSI acted as the general contractor and directly hired
Hercon. In that situation, an argument could be made that the damage was
unforeseeable because QSI must presume that Hercon properly applied PermaCrete
to Young’s residence. However, there is no allegation that QSI was contractually
obligated or tasked with applying PermaCrete to Young’s residence. The
allegations against QSI are not for its own faulty workmanship; rather Young’s
allegations against QSI are derivative to its claims against Hercon for faulty
workmanship and therefore cannot qualify as a covered occurrence. It is important
here that Young directly contracted with Hercon itself. QSI is not the contractor,
and any representations that it made – if there were misrepresentations – do not
qualify as occurrences.
The only other case Young relies on to support its proposition is Blake
& Veatch Corp. v. Aspen Insurance Limited, 882 F.3d 952, 966 (10th Cir. 2018).
That case is not controlling precedent, and we find no basis to apply it to the facts
before us. Thus, we find no coverage for the alleged damage under the QSI’s
Policy as the damage occurred from Hercon’s non-accidental application as
detailed above.
-20- CONCLUSION
The Trial Court correctly concluded that Young’s Amended
Complaint failed to allege an “occurrence” under the Policies as a matter of law.
As such, Zurich and Penn National are not obligated to defend or indemnify their
respective insureds in the Underlying Action. Having found no error, we affirm
the Scott Circuit Court’s Order dated August 3, 2022, and Opinion and Order dated
September 29, 2023.
ALL CONCUR.
-21- BRIEFS FOR BRIEFS FOR APPELLANT/APPELLEE/CROSS- APPELLANTS/CROSS- APPELLEE HERCON APPELLANTS/APPELLEES CONSTRUCTION, INC.: ARROWHEAD SYSTEMS, L.L.C. (F/K/A ARROWHEAD SYSTEMS, Douglas L. Hoots INC.) AND THOMAS YOUNG: Susan Y.W. Chun Lexington, Kentucky John N. Billings Richard J. Dieffenbach BRIEFS FOR APPELLEE/CROSS- Zachary G. Cato APPELLEE ZURICH AMERICAN Lexington, Kentucky INSURANCE COMPANY: ORAL ARGUMENT FOR Robert E. Stopher APPELLANTS/CROSS- Robert D. Bobrow APPELLANTS/APPELLEES Louisville, Kentucky ARROWHEAD SYSTEMS, L.L.C. (F/K/A ARROWHEAD SYSTEMS, BRIEFS FOR PENNSYLVANIA INC.) AND THOMAS YOUNG: NATIONAL MUTUAL INSURANCE COMPANY, APPELLEE/CROSS- John N. Billings APPELLEE: Lexington, Kentucky
Donald M. Wakefield J. Stefan Bing Lexington, Kentucky
ORAL ARGUMENT FOR APPELLANT/APPELLEE/CROSS- APPELLEE HERCON CONSTRUCTION, INC.:
Douglas L. Hoots Lexington, Kentucky
-22- ORAL ARGUMENT FOR APPELLEE/CROSS-APPELLEE ZURICH AMERICAN INSURANCE COMPANY:
Robert E. Stopher Robert D. Bobrow Louisville, Kentucky
ORAL ARGUMENT FOR APPELLEE/CROSS-APPELLEE PENNSYLVANIA NATIONAL MUTUAL INSURANCE COMPANY:
Donald M. Wakefield Lexington, Kentucky
-23-