Westfield Nat'l Ins. Co. v. Quest Pharms., Inc. ( 2023 )

RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 23a0008p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
┐
WESTFIELD NATIONAL INSURANCE COMPANY (21-6026);
│
MOTORISTS MUTUAL INSURANCE COMPANY (21-6043), │
Plaintiffs-Appellees, > Nos. 21-6026/6043
│
v. │
│
QUEST PHARMACEUTICALS, INC., │
Defendant-Appellant. │
┘
Appeal from the United States District Court for the Western District of Kentucky at Paducah.
Nos. 5:19-cv-00083; 5:19-cv-00187—Thomas B. Russell, District Judge.
Argued: October 20, 2022
Decided and Filed: January 13, 2023
Before: COLE, GIBBONS, and BUSH, Circuit Judges.
_________________
COUNSEL
ARGUED: James R. Coltharp, Jr., WHITLOW, ROBERTS, HOUSTON & STRAUB, PLLC,
Paducah, Kentucky, for Appellant. Richard M. Garner, COLLINS, ROCHE, UTLEY &
GARNER, Dublin, Ohio, for Appellee Westfield National Insurance Company. Patrick F. Hofer,
CLYDE & CO US LLP, Washington, D.C., for Appellee Motorists Mutual Insurance Company.
ON BRIEF: James R. Coltharp, Jr., WHITLOW, ROBERTS, HOUSTON & STRAUB, PLLC,
Paducah, Kentucky, for Appellant. Richard M. Garner, COLLINS, ROCHE, UTLEY &
GARNER, LLC, Dublin, Ohio, for Appellee Westfield National Insurance Company. Patrick F.
Hofer, Elderidge A. Nichols, Jr., CLYDE & CO US LLP, Washington, D.C., Jared K. Clapper,
CLYDE & CO US LLP, Chicago, Illinois, Richard L. Walter, BOEHL STOPHER & GRAVES
LLP, Paducah, Kentucky, for Appellee Motorists Mutual Insurance Company. Gary Johnson,
WESTON HURD LLP, Cleveland, Ohio, for Amici Curiae.
Nos. 21-6026/6043 Westfield Nat’l Ins. Co., et al. v. Quest Pharms., Inc. Page 2
_________________
OPINION
_________________
COLE, Circuit Judge. In the wake of a nationwide opioid epidemic, aggrieved
individuals, local governments, and other organizations are taking pharmaceutical companies to
task for their allegedly wrongful conduct in promoting and distributing prescription opioids.
Quest Pharmaceuticals, Inc. (“Quest”), a Kentucky-based distributor of generic drugs, now finds
itself on the receiving end of approximately 77 such lawsuits. Quest reported the litigation to its
insurers, Westfield National Insurance Co. (“Westfield”) and Motorists Mutual Insurance Co.
(“Motorists”), who promptly filed suit in federal court and sought declaratory judgments that
they were not required to defend or indemnify Quest in the underlying lawsuits. The district
court granted summary judgment to the insurers, reasoning that the relevant policy language,
which requires the insurers to defend Quest in lawsuits seeking damages “because of bodily
injury,” did not cover the claims brought against Quest. After its motion for reconsideration was
denied, Quest timely appealed and the cases were consolidated for argument and opinion.
Because we agree with the district court’s interpretation of the policies’ scope under Kentucky
law, we affirm.
I. BACKGROUND
Quest Pharmaceuticals, Inc. is a Kentucky-based wholesale distributor of pharmaceutical
products. Quest specializes in distributing generic versions of popular drugs, including opioids.
Like many other opioid manufacturers and distributors, Quest now faces an onslaught of
litigation related to its alleged contributions to the nationwide opioid epidemic. Relevant here
are approximately 77 lawsuits brought by cities, counties, a county health department, private
health clinics, and the state of Illinois, (collectively, “underlying plaintiffs”) all of which allege
that Quest engaged in misconduct that has contributed to a nationwide epidemic of opioid abuse.
The underlying plaintiffs plead violations of the RICO Act, violations of state statutes, and
common law claims of public nuisance and negligence. The underlying plaintiffs’ damages
include “significant expenses for police, emergency, health, prosecution, corrections,
rehabilitation, and other services.” (Summit Cnty. Compl., R. 35-80, PageID 12158.) Many of
Nos. 21-6026/6043 Westfield Nat’l Ins. Co., et al. v. Quest Pharms., Inc. Page 3
the complaints also clarify that the plaintiffs’ claims “are not based upon or derivative of the
rights of others” and that the plaintiffs “do not seek damages for death, physical injury to person,
emotional distress, or physical damages to property[.]” (See, e.g., id. at PageID 12159.)
Quest reported these lawsuits to Westfield, its insurer from 2015 to 2017, and Motorists,
its insurer from 2004 to 2015. The Westfield and Motorists insurance policies contain the same
language in their relevant portions:
We 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. We will have the right and duty to defend the insured against any “suit”
seeking those damages. However, we will have no duty to defend the insured
against any “suit” seeking damages for “bodily injury” or “property damage” to
which this insurance does not apply.
(Westfield Commercial Gen. Liab. Coverage Form, R. 36-2, PageID 684 (hereinafter “Westfield
CGL”); Motorists Commercial Gen. Liab. Coverage Form, R. 1-12, PageID 1706 (hereinafter
“Motorists CGL”).)
The policies go on to explain that “[d]amages because of ‘bodily injury’ include damages
claimed by any person or organization for care, loss of services or death resulting at any time
from the ‘bodily injury.’” (Westfield CGL, PageID 684; Motorists CGL, PageID 1706.)
“Bodily injury” is then defined as “bodily injury, sickness or disease sustained by a person,
including death resulting from any of these at any time.” (Westfield CGL, PageID 696;
Motorists CGL, PageID 1718.)
After learning of the pending litigation against Quest, Westfield and Motorists filed
separate actions in the Western District of Kentucky, seeking declaratory judgments that they
had no duty to defend or indemnify Quest in the underlying lawsuits.
Westfield and Motorists each moved for summary judgment under Federal Rule of Civil
Procedure 56. The district court granted both summary judgment motions in separate but almost
identical decisions, concluding that the policies’ coverage of damages “because of bodily injury”
did not extend to the claims alleged in the underlying lawsuits. In so ruling, the district court
consulted the few relevant cases from Kentucky state courts and similar cases from other
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jurisdictions. Given that the court found that the policies did not require either insurer to defend
or indemnify Quest in the underlying litigation, it never reached Westfield’s alternative argument
that the policies’ “known-loss” provision, which excludes injuries the insured knew of before
purchasing the policy, also precluded coverage of the underlying lawsuits.
Quest then filed timely motions to amend, alter, or vacate judgment in each case pursuant
to Federal Rule of Civil Procedure 59. The district court denied each motion, again in separate
but almost identical writings. Quest filed a timely notice of appeal in each case. The cases were
then consolidated for argument and opinion.
II. ANALYSIS
A. Legal Standards
We review de novo a district court’s decision on the interpretation of an insurance
contract. Answers in Genesis of Ky., Inc., v. Creation Ministries Intern., Ltd., 556 F.3d 459, 465
(6th Cir. 2009). We likewise review de novo a grant of summary judgment. Branham v.
Gannett Satellite Info. Network, 619 F.3d 563, 568 (6th Cir. 2010). Summary judgment is
appropriate only where there is no genuine dispute of material fact, entitling the moving party to
judgment as a matter of law. Fed. R. Civ. P. 56(a).
As a federal court sitting in diversity, we must apply Kentucky law to this question of
contract interpretation. See United Specialty Ins. Co. v. Cole's Place, Inc., 936 F.3d 386, 402
(6th Cir. 2019). Absent controlling authority from the Kentucky Supreme Court, we look to the
decisions of Kentucky appellate courts and other relevant “data” to predict how the Kentucky
Supreme Court would rule if presented with the question before us. OneBeacon Am. Ins. Co. v.
Am. Motorists Ins. Co., 679 F.3d 456, 460 (6th Cir. 2012).
In accordance with Kentucky law, we interpret the policies “according to the parties’
mutual understanding at the time they entered into the contract[s]” based solely—where
possible—on the plain language of the contract. Nationwide Mut. Ins. Co. v. Nolan, 10 S.W.3d
129, 131–32 (Ky. 1999). And we resolve any ambiguities in the policies’ language in favor of
the insured’s “reasonable expectations.” True v. Raines, 99 S.W.3d 439, 443 (Ky. 2003).
Nos. 21-6026/6043 Westfield Nat’l Ins. Co., et al. v. Quest Pharms., Inc. Page 5
Because the plain language of the policies shows that they do not cover the underlying claims,
and alternatively, no insured would reasonably expect the policies to cover the kind of lawsuits at
issue in this case, we affirm the district court’s grants of summary judgment in favor of the
insurers.
B. Plain Meaning
Broadly speaking, terms in an insurance policy are given their plain and ordinary
meaning, such that words with no “technical meaning in law” are interpreted in accordance with
common use and understanding. Bituminous Cas. Corp. v. Kenway Contracting, Inc.,
240 S.W.3d 633, 638 (Ky. 2007). Clear and unambiguous policy terms are enforced as drafted.
See Holzknecht v. Kentucky Farm Bureau Mut. Ins. Co., 320 S.W.3d 115, 118 (Ky. Ct. App.
2010).
The policies here require the insurers to defend Quest against lawsuits seeking “damages
because of bodily injury” and indemnify Quest for any such damages that Quest becomes
“legally obligated to pay[.]” (Westfield CGL, PageID 684; Motorists CGL, PageID 1706.) An
insurer’s duty to defend arises whenever an allegation in an underlying complaint “might” fall
within the policy’s purview. Kentucky Ass’n of Cntys. All Lines Fund Tr. v. McClendon,
157 S.W.3d 626, 635 (Ky. 2005). The duty to defend is broader than the duty to indemnify,
meaning that if the insurers have no duty to defend Quest in the underlying lawsuits, they also
have no duty to indemnify it for any damages it becomes obligated to pay in those lawsuits. See
James Graham Brown Found., Inc. v. Saint Paul Fire & Marine Ins. Co., 814 S.W.2d 273, 279–
80 (Ky. 1991).
All agree that the underlying lawsuits seek “damages” within the meaning of the policy;
they also agree that the lawsuits do not seek damages directly “for bodily injury.” The sole
disagreement is whether the damages sought are “because of bodily injury.” As such, in
accordance with Kentucky law, we first consider the plain meaning of the language “because of
bodily injury” to determine if the underlying lawsuits trigger the insurers’ duty to defend Quest.
See Bituminous Cas. Corp., 240 S.W.3d at 638.
Nos. 21-6026/6043 Westfield Nat’l Ins. Co., et al. v. Quest Pharms., Inc. Page 6
1. “Because Of”
Generally, the phrase “because of” means “on account of” or “by reason of.”
See Webster’s Third New International Dictionary 194 (2002); Acuity v. Masters Pharm., Inc., --
N.E.3d --, 2022 WL 4086449, at *7 (Ohio 2022); see also Gross v. FBL Servs., Inc., 557 U.S.
167, 176 (2009) (citing Webster’s Third New International Dictionary 194 (1966)). Quest
argues that the underlying lawsuits are “because of bodily injury” where they would not have
been brought but for injuries caused by opioid abuse and addiction, and thus exist by reason of or
on account of those underlying injuries.1 The insurers argue that the claims are not “because of
bodily injury” where they fail to allege any particular bodily injury and seek only economic
damages for costs the underlying plaintiffs incurred in addressing the opioid epidemic.
There is no Kentucky case law directly addressing this question, but the relevant data
from similar cases points us toward the insurers’ position that “because of” is not so broad as to
encompass the underlying lawsuits against Quest. To begin, in Kentucky Central Insurance Co.
v. Schneider, the Kentucky Supreme Court determined that punitive damages do not constitute
damages “because of bodily injury.” 15 S.W.3d 373, 376 (Ky. 2000). The court reasoned that
punitive damages are intended to punish a wrongdoer rather than compensate “for bodily injury.”
Id. As Quest notes, the court never explicitly stated that “because of” is synonymous with “for,”
which would give it a narrower definition than the one suggested by dictionaries and other cases
interpreting the phrase. Nevertheless, Schneider is analogous: The underlying plaintiffs seek
purely economic damages, which, like punitive damages, are not meant to compensate for a
particular bodily injury. Thus, like the punitive damages sought in Schneider, they are detached
from any underlying physical harm and, therefore, arguably not “because of bodily injury.”
The case of Aetna Casualty & Surety Co. v. Commonwealth, 179 S.W.3d 830 (Ky. 2005),
offers additional data. In Aetna, the Kentucky Supreme Court suggested that “because of” was
equivalent to “arising out of” in the context of an insurance policy. See id. at 838. But the key
issue in that case was whether clean-up costs for radioactive waste—a form of property damage
explicitly covered by the policy—qualified as “damages” within the meaning of the policy. Id.
1
No party disputes that opioid abuse and addiction can constitute or lead to bodily injuries.
Nos. 21-6026/6043 Westfield Nat’l Ins. Co., et al. v. Quest Pharms., Inc. Page 7
at 839. Causality is less clear here, where the underlying plaintiffs seek economic damages not
to compensate an explicitly covered injury, but rather to cover the costs of activities conducted in
relation to many indeterminate injuries. Thus, Aetna’s apparently broader definition of “because
of” still does not clearly encompass the underlying lawsuits against Quest.
Quest also points to Hoskins v. Kentucky Farm Bureau Mutual Insurance Co., in which a
Kentucky appellate court determined that an insurance policy that excluded claims “for” bodily
injuries sustained in an uninsured vehicle nevertheless covered a loss of consortium claim arising
from such an injury where the policy covered claims “because of” but not “for” bodily injuries.
See No. 2011-001454, 2012 Ky. App. LEXIS 213 (Ky. App. Ct. Oct. 12, 2012). The Hoskins
court interpreted “because of” to be broader than “for,” supporting Quest’s assertion that the
underlying lawsuits may be covered even though they are not brought to compensate for any
particular bodily injury. But the Kentucky Court of Appeals has since rejected Hoskins’s
rationale in a published decision concluding that an insurance policy did not cover a loss of
consortium claim based on an explicitly excluded bodily injury. See Cheatwood v. Kentucky
Farm Bureau Mut. Ins. Co., 654 S.W.3d 720, 724 (Ky. Ct. App. 2022).
More to the point, in both Aetna and Hoskins, by virtue of the claims at issue, the
underlying plaintiffs had to plead and prove that the relevant bodily injury or property damage
occurred in order to recover on their claims. In Aetna, the costs at issue were caused by
explicitly covered property damage—radioactive waste. 179 S.W.3d at 834–35, 839. And in
Hoskins, the underlying plaintiff brought a loss of consortium claim arising from her spouse’s
bodily injury, the existence of which had to be proved for her to recover. 2012 Ky. App. LEXIS
213, at *4–5. Thus, the interpretation of “because of” adopted in those cases is not necessarily
broad enough to encompass the lawsuits here; unlike the claims in Aetna and Hoskins, the
underlying plaintiffs need not plead and prove the existence of a covered bodily injury to recover
against Quest. As a result, we agree with the district court that the lawsuits against Quest are not
“because of bodily injury” within the meaning of the policies.
Our conclusion is bolstered by recent decisions from other jurisdictions addressing the
same question presented here. Most recently, the Ohio Supreme Court ruled that lawsuits
brought against Masters Pharmaceutical, Inc. by government entities seeking to recover public
Nos. 21-6026/6043 Westfield Nat’l Ins. Co., et al. v. Quest Pharms., Inc. Page 8
service costs related to the opioid epidemic were not “because of bodily injury” under Masters’s
insurance policy. Acuity, 2022 WL 4086449, at *1. Like the lawsuits against Quest, Masters
faced lawsuits seeking damages for expenses “caused by the opioid epidemic, including
increased emergency response costs, law enforcement and incarceration costs, addiction
treatment costs, and medical costs, as well as accelerated economic blight[.]” Id. at *2 (internal
marks omitted). The Acuity court determined that the lawsuits were not “because of bodily
injury” where they lacked “more than a tenuous connection” to any individualized bodily injury
and did not require proof of such injury to recover the economic damages alleged. Id. at *9–10;
see also ACE Am. Ins. Co. v. Rite Aid Corp., 270 A.3d 239, 241 (Del. 2022) (concluding that
lawsuits brought by local government plaintiffs to recover opioid epidemic-related costs were not
“because of bodily injury” under the relevant insurance policies).
Quest correctly notes that the only decision from a federal court of appeals considering
this precise issue reached the opposite conclusion, but we are not convinced that the reasoning in
that case applies here.2 In Cincinnati Insurance Co. v. H.D. Smith, the Seventh Circuit held that
the policy at issue required the insurer to defend a lawsuit brought by West Virginia to recover
costs from an opioid manufacturer. 829 F.3d 771, 775 (7th Cir. 2016). Critically, the Seventh
Circuit understood Illinois law to distinguish between coverage “for bodily injury” as opposed to
“because of bodily injury.” Id. at 774 (citing Medmarc Cas. Ins. Co. v. Avent Am., Inc., 612 F.3d
607, 616 (7th Cir. 2010)). It is not apparent that such a distinction exists under Kentucky law,
or, even if it does, that Kentucky courts would interpret “because of” to be so broad as to cover
the underlying lawsuits here.
Additionally, the Seventh Circuit analogized West Virginia’s claims to a scenario where
a mother seeks reimbursement for costs she incurred while caring for her sick child and
explained that the mother’s damages would be covered even though they represented her own
expenses, not compensation for the child’s injury itself. Id. at 774. Yet the mother in H.D.
Smith’s analogy still would have to prove the existence of her child’s injuries to recover her
2
In Travelers Property Casualty Co. of America v. Anda, Inc., the Eleventh Circuit affirmed a decision
denying insurance coverage to a pharmaceutical company for a lawsuit brought by West Virginia to recover costs
related to the opioid epidemic, but its analysis relied on policy exclusions not present here. 658 F. App’x 955, 958
(11th Cir. 2016).
Nos. 21-6026/6043 Westfield Nat’l Ins. Co., et al. v. Quest Pharms., Inc. Page 9
caregiving costs, while the underlying plaintiffs here do not. See also Acuity, 2022 WL
4086449, at *10 (disagreeing with H.D. Smith’s analysis).
In short, we conclude that lawsuits brought by local governments and other entities to
recover costs incurred due to the opioid epidemic—but not to recover for any specific bodily
injuries—do not trigger the insurers’ duties to defend or indemnify Quest.
2. “Bodily Injury”
Our conclusion as to the meaning of “because of” also accords with the policies’
definition of “bodily injury.” The policies define “bodily injury” as “bodily injury, sickness or
disease sustained by a person, including death resulting from any of these at any time.”
(Westfield CGL, PageID 696; Motorists CGL, PageID 1718). This definition—particularly the
phrase “sustained by a person”—further grounds our interpretation of the policy, emphasizing
that the lawsuits must be tied to an individual’s (or individuals’) bodily injury or injuries.
All parties agree that the lawsuits allege no particular injury to any particular person. The
allegations instead broadly describe societal harms caused by opioid addiction, such as
diminished productivity and increased healthcare costs (Okla. City Compl., R. 35-25, PageID
5049–50), which the underlying plaintiffs tie to Quest’s (and other pharmaceutical companies’)
“saturation of communities with prescription opioids . . . fueling illicit opioid addiction,” (id. at
PageID 4994). As such, the underlying lawsuits against Quest are not “because of bodily injury”
and the insurers have no duty to defend Quest or indemnify it for any damages it may owe.
C. Context and Purpose
Because the policy language is clear and its plain meaning shows that the underlying
lawsuits do not trigger the insurers’ duty to defend, our analysis can end there. See United
Specialty Ins. Co., 936 F.3d at 402–03. Even if the relevant provision could be considered
ambiguous, however, the surrounding context and overall purposes of the policies make clear
that an insured would not reasonably expect coverage of the underlying lawsuits. Although
ambiguous policies are construed in favor of an insured’s reasonable expectations, see Aetna
Cas. & Sur. Co., 179 S.W.3d at 837, they must be applied “consistent[ly] with the parties’ object
Nos. 21-6026/6043 Westfield Nat’l Ins. Co., et al. v. Quest Pharms., Inc. Page 10
and intent” as “expressed in the plain meaning and/or language of the contract.” Saint Paul Fire
& Marine Ins. Co. v. Powell-Walton-Milward, Inc., 870 S.W.2d 223, 226–27 (Ky. 1994).
At the threshold, the context surrounding the relevant provision, which explains that the
insurers have a duty to defend Quest in lawsuits seeking damages for bodily injury, shows that
our narrower interpretation comports with an insured’s reasonable expectations. As the insurers
note, the policies use both “because of bodily injury” and “for bodily injury” interchangeably;
even if the terms are not equivalent, this mixed usage informs an insured’s expectations by
hinting that those terms are at least comparable.
Reading these terms as fungible also accords with the Kentucky rule of contract
interpretation that inconsistencies in a policy are to be harmonized where possible. See Kemper
Nat. Ins. Cos. v. Heaven Hill Distilleries, Inc., 82 S.W.3d 869, 875–76 (Ky. 2003) (citing 43 Am.
Jur. 2d, Insurance, § 275). Here, reading “for” and “because” to have different meanings
introduces confusion rather than clarity into provisions that use both phrasings, such as one
stating that the policy covers claims for damages “because of bodily injury” but that the insurer
has “no duty to defend the insured against any ‘suit’ seeking damages for ‘bodily injury’ . . . to
which this insurance does not apply.” (Westfield CGL, R. 36-2, PageID 684.)
Furthermore, the policies’ use of definite articles before “bodily injury” suggests that an
insured would reasonably expect coverage only for claims requiring proof of an actual bodily
injury, not all claims tangentially related to bodily injuries. The definition of “bodily injury”
refers to injuries “sustained by a person.” (Westfield CGL, PageID 696; Motorists CGL, PageID
1718 (emphasis added).) Likewise, the so-called known-loss provision bars coverage of what
would otherwise be a covered injury if the insured knew of “the ‘bodily injury’” prior to the
policy period. (Westfield CGL, PageID 684 Motorists CGL, PageID 1720 (emphasis added).)
Such definite articles indicate that the policies extend coverage only to claims seeking
compensation related to specific, identifiable injuries, rather than claims based on social harms
from a public health crisis.
The definition of “damages” likewise informs our understanding of the policies’ scope
and purpose—namely, covering tort claims. “Damages because of ‘bodily injury’ include
Nos. 21-6026/6043 Westfield Nat’l Ins. Co., et al. v. Quest Pharms., Inc. Page 11
damages claimed by any person or organization for care, loss of services or death resulting at any
time from the ‘bodily injury.’” (Westfield CGL, R. 36-2, PageID 684; Motorists CGL, R. 1-12,
PageID 1706.) Quest contends that this definition shows that the policies were intended to
extend to lawsuits like those at issue here, where entities that could be considered
“organizations” are seeking to recover costs related to providing medical treatment to people
suffering from opioid addiction or abuse, among other expenses. This argument has some
intuitive appeal, but in the grander scheme of things, it becomes apparent that this definition was
meant to include derivative claims, like loss of consortium claims by family members, and
subrogation claims, often brought by “organizations” such as insurance companies, that are
directly related to and dependent on the existence of a particular bodily injury or injuries. See,
e.g., Daley v. Reed, 87 S.W.3d 247, 250 (Ky. 2002) (noting that loss of consortium claims derive
from personal injury claims and are covered based on a policy’s inclusion of “damages for care
and loss of services”); Wine v. Globe Am. Cas. Co., 917 S.W.2d 558, 560–61 (Ky. 1996)
(describing a subrogation action by an insurance company to recover from a tortfeasor in a
personal injury case).
Last, other insurance-related cases from this court and from Kentucky courts suggest that
insured parties cannot avail themselves of the insurer’s duty to defend—or by extension its duty
to indemnify—where the claims alleged in an underlying complaint are purely economic and
thus too attenuated from a specific covered injury. In Lenning v. Commercial Union Insurance
Co., for example, we determined that a policy providing coverage for lawsuits seeking damages
“because of” bodily injury or property damage did not require an insurer to defend an insured
against claims for faulty workmanship. 260 F.3d 574, 582–83 (6th Cir. 2001). In that case, the
underlying plaintiff sought damages not for property damage but for the “tremendous expense”
of finishing a shoddy construction job that the insured had promised to complete. Id. at 582.
The underlying plaintiff in Lenning—like the underlying plaintiffs suing Quest—thus sought
purely economic damages that were related to but did not directly implicate the covered injury of
property damage.
The Kentucky Court of Appeals approved of Lenning and its application of Kentucky law
in Kentucky Farm Bureau Mutual Insurance Co. v. Blevins, 268 S.W.3d 368 (Ky. Ct. App.
Nos. 21-6026/6043 Westfield Nat’l Ins. Co., et al. v. Quest Pharms., Inc. Page 12
2008). There, the Kentucky court agreed with Lenning’s conclusion that a claim for breach of
contract did not trigger an insurer’s duties to defend or indemnify based on an insurance policy
that covered claims “because of” property damage. Id. at 374–76; accord Preferred Auto. Sales
Inc. v. Motorists Mut. Ins. Co., 652 F. App’x 312, 315 (6th Cir. 2020) (Moore, J., concurring in
the judgment) (noting that claims for fraud, breach of contract, violations of state statutes, and
negligence in selling a faulty automobile were not “because of” bodily injury or property
damage).
Likewise, in cases related to business losses caused by the COVID-19 pandemic and
related government restrictions, we have found that such losses are not covered where the
claimants allege only economic harm from loss of use rather than damage to property itself. See
Estes v. Cincinnati Ins. Co., 23 F.4th 695, 700–01 (6th Cir. 2022) (finding Kentucky law did not
require insurers to cover claims for business losses that did not allege property damage); Brown
Jug, Inc. v. Cincinnati Ins. Co., 27 F.4th 398, 403–04 (6th Cir. 2022) (same under Michigan
law); Santo’s Italian Café LLC v. Acuity Ins. Co., 15 F.4th 398, 402–04 (6th Cir. 2021) (same
under Ohio law). Insurance “is not a general safety net for all dangers,” and courts must avoid
interpreting insurance coverage to exceed the limits of a policy’s plain language, lest they risk
disrupting the parties’ intentions or the risk assessments underlying insurance generally. Santo’s,
15 F.4th at 407.
The same logic translates to the claims against Quest and its insurance policies. Nothing
in the policies suggests that they were meant to cover lawsuits like the ones here, brought
primarily by local governments to recover purely economic damages. The plain language
instead indicates that claims must in some way derive from a particular bodily injury to a person.
Although some of the complaints plead tort claims such as nuisance or negligence, the
underlying theory of recovery is that Quest’s alleged misconduct resulted in economic harms to
the entities themselves. No complaint predicates recovery on a particular person’s bodily injury,
and so no complaint triggers the insurers’ duty to defend.
Nos. 21-6026/6043 Westfield Nat’l Ins. Co., et al. v. Quest Pharms., Inc. Page 13
***
Based on the plain language of the policies and their overall context and purpose, we
believe that the Kentucky Supreme Court would conclude that the insurers have no duty to
defend Quest in the underlying lawsuits because they do not seek damages “because of bodily
injury.” The claims, all of which are for economic damages, are simply beyond the policies’
scope. Because we conclude that there is no duty to defend, there is also no duty to indemnify.
Likewise, as the policies’ plain terms preclude coverage, we need not examine Westfield’s
alternative argument that it may deny Quest coverage based on the known-loss provision
excluding coverage for previously known injuries.
III. CONCLUSION
For the foregoing reasons, we affirm the district court’s grants of summary judgment in
favor of Westfield and Motorists and its denial of Quest’s motions for reconsideration.