Atic Enterprises, Inc. v. Cottingham & Butler Insurance Services, Inc.
Docket: Civil Action No. 1:14-cv-132-DJH-HBB
Court: District Court, W.D. Kentucky; September 20, 2016; Federal District Court
Atic Enterprises, Inc. filed a lawsuit against Cottingham, Butler Insurance Services after the latter denied an insurance claim for stolen copper, citing an exclusion for copper theft in Atic's new policy. Atic had previously been covered under a policy that included copper losses, but upon renewal, the new policy specifically excluded such coverage. Cottingham, Butler contended that they had adequately notified Atic about the policy change, a claim Atic disputed, arguing the notice was insufficient. The court determined that under Kentucky law, formal notification of policy changes is not required unless the contract is ambiguous, which it found was not the case here as the contract explicitly excluded copper. Consequently, the court granted Cottingham, Butler's motion for summary judgment. The background indicates that Atic, a trucking company based in Bowling Green, Kentucky, did not list copper as a transported commodity even though it had transported it and had a prior insurance policy covering such losses. Cottingham, Butler's sales agent sold Atic the previous policy, and Atic acknowledged receiving a notice regarding potential changes to the insurance policy prior to its expiration.
In July 2013, Cottingham, Butler proposed a new insurance policy to Atic, which explicitly excluded coverage for copper. Atic acknowledged receiving and reviewing this proposal but claimed it did not notice the copper exclusion. In September 2013, Cottingham, Butler sent the final 2013-2014 policy to Atic, which included a specific endorsement highlighting the copper exclusion. Atic contended it never received this policy and continued transporting copper without reviewing the terms. Following the theft of copper on November 9, 2013, Atic requested the policy from Cottingham, Butler, which then informed Atic of the copper exclusion. Despite this, Atic submitted a claim, which was denied. Atic subsequently sued Cottingham, Butler for negligence, alleging failure to inform it about the exclusion. Cottingham, Butler moved for summary judgment, arguing it had no duty to further inform Atic about the policy change, and the court agreed, citing the clear communication of the copper exclusion in the policy. The court granted summary judgment to Cottingham, Butler, concluding that no genuine dispute of material fact existed regarding its duty to inform Atic. The court emphasized that the moving party must establish the absence of material fact, and the non-moving party must demonstrate a genuine issue for trial, which Atic failed to do.
To establish a negligence claim against Cottingham, Butler, Atic must demonstrate three elements: (1) a duty of care owed by Cottingham, Butler to Atic; (2) a breach of that duty; and (3) that this breach caused Atic’s damages. While Cottingham, Butler indeed owed Atic a standard duty of care, it was not obligated to notify Atic of changes to the policy, as the relevant Kentucky law specifies that explicit contract language suffices without additional notification unless the change misleads the insured. The 2013-2014 policy's copper exclusion was clearly articulated on a dedicated page labeled “COPPER EXCLUSION,” which indicated that it modified the policy and urged Atic to read it carefully. Therefore, no additional notification was mandated. Moreover, Cottingham, Butler did provide formal notification by sending Atic a proposal that explicitly excluded copper, and Atic also received notice from Westchester regarding the non-renewal of the old policy and the potential differences in the new policy. Atic acknowledged receipt of these documents. Consequently, even if a notification duty existed, no evidence indicates that Cottingham, Butler breached such a duty.
Atic's claim that Cottingham, Butler's agent, Zeal, had a duty to inform it of the copper exclusion in the insurance policy was rejected by the Court. Under Kentucky law, an insurance agent's duty to advise is a legal question; merely establishing an agency relationship does not create an affirmative duty to advise. An agent may assume a duty to advise only if they expressly or impliedly undertake such responsibility. Indicators of implied duty include additional consideration beyond premium payment, a long-standing relationship indicating reliance on advice, or a clear request for advice.
In this case, Zeal did not undertake an advisory role as there was no evidence of extra payment for advice, an extended course of dealings, or a specific request from Atic. Although Atic pointed to Zeal's licensing, claims of being a transportation consultant, attempts to sell insurance, and advice for obtaining better quotes, these actions did not demonstrate an assumption of an advisory duty. Consequently, Zeal owed only a standard duty of care, which was deemed sufficient regarding the 2013-2014 insurance policy that clearly excluded copper.
As a result, Cottingham, Butler's Motion for Summary Judgment was granted, while its Motion in Limine was denied as moot. Atic's Motion for Leave to File Sur-Reply was granted, and the Court found no need for oral argument on the matter, denying Atic's request for a hearing. Atic has abandoned several claims against Cottingham, Butler, and Westchester was dismissed by stipulation. A separate judgment will be issued following this ruling.
