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Pryor v. Colony Insurance

Court of Appeals of Kentucky

February 1, 2013

Bonnie PRYOR, Appellant

Discretionary Review Denied by Supreme Court Dec. 11, 2013.

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[Copyrighted Material Omitted]

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Donald Lee Nageleisen, Ft. Mitchell, KY, Sherrill Hondorf (argued), Batavia, OH, for appellant.

Thomas A. Sweeney, Crescent Springs, KY, William F. Stewart (argued), Blue Bell, PA, for appellee.

Before CLAYTON, COMBS, and NICKELL, Judges.



Bonnie Pryor appeals the Pendleton Circuit Court's decision that granted Colony Insurance Company's motion for summary judgment. In its decision, the trial court determined that the language in the commercial general liability insurance policy excluded coverage for Glenn Pryor's death. After careful review, we affirm.


Greg Rucosky owns and operates an excavating, hauling, and logging business called Newcastle Hauling, LLC (hereinafter " Newcastle Hauling" ). On November 4, 2009, Glen Pryor was hauling timber for Newcastle Hauling on a farm, which is owned by Melvin and Linda Seiter. He was operating a skidder, which rolled over and crushed him, tragically resulting in his death. Although Glenn Pryor's status in performing this work is disputed, it is acknowledged that he was not an employee of Newcastle Hauling.

To provide insurance coverage for Newcastle Hauling, Rucosky had purchased a commercial general liability (hereinafter " CGL" ) insurance policy from Colony Insurance Company (hereinafter " Colony Insurance" ). The main liability coverage language in the insurance policy included an " employer's liability" exclusion, which precludes coverage for liability arising out of injuries to employees. Later, after the initial procurement of the insurance policy, Colony Insurance broadened the policy's exclusion by the addition of a " contractors coverage limitations" endorsement. This endorsement expressly barred coverage for liability arising out of injury to anyone " performing duties related to the conduct of the insured's business."

On November 4, 2010, Bonnie Pryor, the wife of Glenn Pryor, individually, and as executrix of his estate, instituted a lawsuit against Newcastle Hauling, Greg Rucosky, Melvin and Linda Seiter, and Colony Insurance. In the complaint, she alleged that Glenn Pryor was working as

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an independent contractor for Newcastle Hauling to haul timber away from the Seiters' farm when he was killed in the accident. The lawsuit alleges two types of claims. First, it seeks to impose liability in tort against Rucosky, Newcastle Hauling, and the Seiters. Additionally, Pryor asks for a declaration that Colony Insurance owes coverage, not to her, but to Rucosky and Newcastle Hauling. The complaint lists eight counts, of which Counts VI-VIII are directed specifically toward Colony Insurance. Counts VI and VII are styled as requests for declaratory relief and Count VIII alleges that Colony Insurance violated the Kentucky Unfair Claims Settlement Practice Act (hereinafter " UCSPA" ) by refusing to provide coverage under the policy.

After the action was filed, Colony Insurance filed a motion for summary judgment asserting that Pryor's suit was an impermissible direct action, the claims were barred by a " no action" clause in the policy, and coverage was precluded by the " contractors coverage limitations" endorsement. Following the parties' briefing of the issues, the trial court heard oral arguments.

The trial court granted Colony Insurance's motion for summary judgment on Counts VI-VIII on December 28, 2011. Based on the language in the " contractors coverage limitations" endorsement, the trial court decided that, even applying a liberal construction to the pertinent language, the incident, which is the subject of this action, is not covered under the policy. Further, in making this decision, the trial court determined that the exclusionary language in the " contractors coverage limitations" endorsement was dispositive and did not address whether it was an impermissible direct action or whether the claims were barred by the policy's " no action" clause. It is from this decision that Pryor now appeals.


In general, the proper interpretation of insurance contracts is a matter of law to be decided by a court; and, thus, an appellate court uses a de novo, not a deferential, standard of review. Hugenberg v. West American Ins. Co./Ohio Cas. Group, 249 S.W.3d 174, 185 (Ky.App.2006). Similarly, when an appellate court reviews a trial court's decision to grant summary judgment, as in this case, the appellate court must determine whether the trial court correctly found that there were no genuine issues of material fact. Kentucky Rules of Civil Procedure (CR) 56.03. And, because findings of fact are not at issue, the trial court's decision is entitled to no deference. Schmidt v. Leppert, 214 S.W.3d 309, 311 (Ky.2007)


On appeal, Pryor maintains that the trial court erred in its decision because the " employer's liability exclusion" language is deceptive, susceptible to two interpretations, and ambiguous; and also, the trial court erred because it did not consider Glenn Pryor's status as an independent contractor in the context of the " employer's liability" exclusion, failed to note that an independent contractor cannot be an employee under Kentucky law, and hence, did not properly interpret the ramifications of the " employers' liability" exclusion as it relates to an independent contractor. In essence, she contends that an independent contractor is not analogous to a temporary worker as defined in the " employer's liability" exclusion and, since Glenn Pryor was an independent contractor, he was covered by the CGL policy.

In contrast, Colony Insurance argues that the trial court correctly granted the

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summary judgment motion because Pryor's claim of coverage falls squarely within the scope of the " contractors coverage limitations" exclusion and, further, constitutes an impermissible direct action against the insurance company.


1. Exclusionary language in the policy and ...

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