United States District Court, W.D. Kentucky
Decided: October 22, 2014.
For Cincinnati Insurance Company, Plaintiff, Counter Defendant: K. Roger Schoeni, Kimberly A. Kyle, LEAD ATTORNEYS, Kohnen & Patton LLP, Cincinnati, OH.
For Bargain Supply Company, Inc., Defendant, Counter Claimant: Matthew F. Coogle, Ackerson & Yann PSC Louisville, KY.
MEMORANDUM OPINION AND ORDER
John G. Heyburn II, Senior United States District Judge.
Bargain Supply Company, Inc. (" Bargain Supply" ) purchased a commercial liability insurance policy from The Cincinnati Insurance Company (" Cincinnati" ). tat policy includes provisions obligating Cincinnati to provide legal defense and indemnification for Bargain Supply in certain lawsuits. There are, however, significant coverage exclusions. The issue here is whether one of those exclusions is applicable in these circumstances.
In 2010 Raphael Nunez, a California citizen, was injured while using an industrial saw at work. He believed that Bargain Supply was responsible for selling, manufacturing, or distributing the saw. So he brought suit against Bargain Supply in
California state court. Initially, Cincinnati agreed to defend Bargain Supply. However, it believed Bargain Supply's insurance did not cover the lawsuit. Now that the California suit is at an impasse, Cincinnati would have this Court grant summary judgment and declare that it is not obligated to provide legal defense or indemnification.
The facts in the light most favorable to Bargain Supply are as follows. Bargain Supply entered into an insurance agreement, Common Policy, Policy No. CPP 087 99 35, effective April 1, 2009 to April 1, 2012, that included Commercial General Liability (the " Policy" ) and Commercial Umbrella Liability Coverage (" Umbrella Coverage" ) provisions. The Policy states that " [Cincinnati] 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. [Cincinnati] will have the right and duty to defend the insured against any 'suit' seeking those damages." DN 1, Page ID # 54. It goes on to state, " [h]owever, [Cincinnati] will have no duty to defend the insured against any 'suit' seeking damages for 'bodily injury' or 'property damage' to which the insurance does not apply." Id. Among other things, the Policy excludes " directly imported power tools" from coverage. DN 1, Page ID # 66. The Umbrella Coverage provision also specifies that Cincinnati " will have no duty to defend the insured against any 'suit' seeking damages for 'bodily injury'. . . for which this insurance does not apply." DN 1, Page ID # 79. Included amongst the Umbrella Coverage's exclusions are suits for bodily injury by directly imported power tools. DN 1, Page ID # 97.
Raphael Nunez worked with power tools. One day at work, while using a Northtech CS 18-10 saw, Nunez was injured. He later brought suit, Nunez v. Bargain Supply Company, Inc., et. al., S.Ct. CA, Orange County, Case No. 30-2012-00545536, against Northtech Industrial Machinery, LCC (" Northtech" ) " and/or" Bargain Supply. Nunez alleged that the Taiwanese company Yuh Farn Machinery Co., Ltd. (" Yuh Farn" ) manufactured the saw in Taiwan then sold it to Northtech " and/or" Bargain Supply. In his complaint, Nunez referred to the tool as " the Northtech Machine." He further alleged that either Northtech or Bargain Supply sold the saw to California Woodworking Machinery Company " and/or" Cal Wood Machinery, Inc., which, finally, sold the saw to his employer, Custom Coolers, in 2006.
In its answer, Bargain Supply contended that Northtech, not Bargain Supply, was the U.S. retailer of the Northtech Machine. It has maintained during all proceedings that it never designed, manufactured, distributed, or marketed the saw. Bargain Supply moved for summary judgment in state court, arguing that it could not be liable for a machine it had no role in
producing, selling, or marketing. Interestingly, Nunez admitted that Bargain Supply did not manufacture the Northtech Machine. Rather, he contended that Bargain Supply was legally responsible for the sale of Northtech goods because it renewed the Northtech trademark in 2001. He further alleged that Bargain Supply had taken credit for Northtech's products--that Bargain Supply had talked of them as if they were ...