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Owners Insurance Co. v. Frontier Housing, Inc.

United States District Court, E.D. Kentucky, Northern Division, Ashland

November 28, 2017

OWNERS INSURANCE COMPANY, PLAINTIFF,
v.
FRONTIER HOUSING, INC., STEPHEN BURTON and PAMELA BURTON, DEFENDANTS.

          MEMORANDUM OPINION AND ORDER

          HENRY R. WILHOLT UNITED STATES DISTRICT JUDGE.

         This matter is before the Court upon Owners Insurance Company's and Frontier Housing, Inc.'s cross motions for summary judgment [Docket Nos. 22 and 24]. The motion has been fully briefed by the parties [Docket Nos. 24-1, 25, 26, 27 and 28] and for the reasons stated herein, the Court finds that Owners Insurance Company is entitled to summary judgment and does not owe Frontier Housing Inc. a duty to defend or indemnify as to the claims asserted against Frontier Housing Inc. by Stephen Burton and Pamela Burton.

         I.

         This case arises from a construction contract between Defendants Frontier Housing, Inc. ("Frontier") and Stephen and Pamela Burton ("The Burtons") for the construction of their home in West Liberty, Kentucky. The original contract set the price of constriction around $200, 000. However, a result of alleged change orders and upgrades, the legitimacy of which are hotly contested by the Burtons, the ultimate price of the construction was upwards of $400, 000. According to Frontier, the Burtons owe it $250, 000. According to the Burtons, they owe Frontier about $17, 000.

         The matter resulted in litigation. On December 10, 2014, Frontier filed a mechanics lien against the Burton's property. Subsequently, Frontier filed its breach of contract action in the Morgan Circuit Court against Stephen Burton and Pamela Burton, styled Frontier Housing Inc., v. Stephen Burton and Pamela Burton, Commonwealth of Kentucky, Morgan Circuit Court, Civil Action No. 15-CI-0062.

         In response to the Complaint filed against them, the Burtons asserted a counterclaim against Frontier, alleging breach of contract, negligent misrepresentation, negligent infliction of emotional distress, fraud, forgery, intentional misrepresentation, intentionally filing Mechanics and Materialman's Lien based on false information, the intentional infliction of emotional distress, intentional violations of the Kentucky Consumer Protection Act KRS §§ 367.110, et. seq., the tortuous breach of contract and abuse of process and slander of title.

         Owners Insurance Company ("Owners") issued a commercial policy of general liability insurance Policy No. 52454382, ("Policy") to Frontier, which was in effect from October 2014 to October 2015. [Docket No. 24-3].

         On July 10, 2015, counsel for Frontier, John Ellis, sent a letter to Plaintiff giving notice of the Burtons' claim against Frontier presented in Counterclaim.

         On August 18, 2015, Owners advised Frontier that it intended to provide a defense under a reservation of rights but also advised that some or all of the allegations contained in the Counterclaim may not be covered under the policy. Specifically, Owners asserted that the alleged misrepresentations by Frontier, as well as other intentional acts, are not covered under the policy it issued to Frontier.

         Pursuant to that policy, Owners filed this declaratory judgment action, seeking a judicial determination as to whether it owes a duty of defense or indemnity to Frontier for the Burtons' counterclaim.

         Both Owners and Frontier seek summary judgment.

         II.

         Whether a defense or coverage is owed under an insurance policy is a question of law. The basic principles governing the interpretation of an insurance policy as well established. Clear an unambiguous terms must be construed according to the "plain and ordinary" meaning. Ambiguities are to be construed in favor of the insured, yet there is no requirement that every doubt be resolved against the insurer. Further, a court may not enlarge or restrict coverage under the guise of contract construction; exceptions and exclusions should be construed to make insurance ...


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