reasons one for this court to determine as a matter of law under the facts of this case whether the faulty workmanship alleged against kay that caused cracks in a wal mart  store constitute an occurrence under case c g l policy that it had with liberty both coverage for k and coverage for m w which are two separate things secondly we appeal because if you do find that there's a possibility of an occurrence there were issues that remained to be litigated under the agreement of the parties as acknowledged by the court and we didn't get to those issues  and if you're if you find that there's an occurrence we'd like to remain so that we can get to the exclusions and the issue of whether there was property damage and to what extent in any coverage actually don't expect us to find it to be an occurrence  we do not our primary argument is that this was not an occurrence and that therefore the exclusion issue becomes moot the heat in this action like any other coverage action it's important first off to define is and it's easy in a case like this to lose sight of what the claim is that the claim here is one that wal mart pursued for breach of contract wal mart told him that him debbie had breached the agreement because the site had was not done correctly that caused what you would expect to happen when the site prep wasn't done correctly which is some cracking in the wal mart store so this was in the i don't know what it means to be the liquor bin or the liquor section what if every you know expensive bottle of wine fell off the shelf would there be coverage of the c g l policy for that whether there is coverage for  the personal property that falls off the shelf is kind of a different question that's not what happened in this case what did happen was there but i understand it's a different question that's why i'm asking i'm trying to understand that the scope of your argument and how far it  let me get i guess straight to the bottom line on that here's where we suggest you draw the line if the duty that's been brooch is one that's been created by contract like it was here he was posted to a site  order to prevent cracking and things like that in the wal mart store from settlement if that duty that was breached was one that it is one created by contract that's faulty workmanship it's not an accident but if there's a tort duty that's been breached and causes damage then that can be an accident and that's where it makes logical sense to draw the line so if the liquor that falls off the store shelves it if that's deemed to be a breach of a duty that being created a common law in tort that might have coverage but in this particular situation what actually happened was there were some cracks in the walmart's but though they both stemmed from negligence i mean what does that blurry the little that this distinction that you'd like us to draw a contract in and tor well you have to draw the line at some point in and you have to decide where you're going to call it negligence and where they're going to call it faulty workmanship it's it may seem like similar activities but my point here is that the duty to wal mart and the duty to be that were not created by common law those duties were created by the contract and so i would not share classify that as a is your contract argument widen that goes to the contract exclusion and the policy or is it one that you believe underlies the whole of currents analysis or about it's it's the la we did not in any way argue any exclusion in fact there's not a breach of contract exclusion in the policy there's there's an exclusion for duties assumed under a contract which is different we didn't cite that provision we didn't argue that provision what we said is in the k f d versus lebanon's case the court the court of appeals of kentucky pretty clearly said that a breach of a contractually impose duty is not covered occurrence refers to tortious conduct and not breach of contract which is what eventually judge russell came to rule in the global beer case  both sides have cited here and argued he ultimately said breach of contract is a reasonably foreseeable result not an occurrence so when we were making that argument to the trial court and were making that argument to novell here this case is a breach of contract case and levin says that's not an occurrence that the spring is it is it your position that judge russell's whole discussion of occurrence is essential a directive because he finds that there were exclusion yes ok i mean he he could have started there he could have said let's look at the nature of the claim which is what i'm suggesting makes sense when you read the supreme court opinion in cincinnati insurance versus motors the court is saying that faulty workmanship is not in the current and then we have this footnote at the very end that we have to deal with that said there may be a general rule that in some circumstances provides otherwise i would suggest to the court that was justice met and trying to tell people hey if there's a tort duty if there's there might be some circumstance under which that faulty workmanship my constitute an occurrence but it's not in this kind of case it would be in the kind of case where let's say there are cracks in the parking lot at wal mart and there's a motorist out on the parking lot it hits the crack causes damage to the vehicle and bodily injury that would be a common that the money's been spent on but what portion of that that damages or the monies actually went to repairing cracks well they were repairing damage to the the facility as opposed to doing the work correctly in the first instance i mean it you know putting aside the argument that they didn't have the obligation to do it that way but right and that's the interesting thing here damages were never before the district  all we litigated all we dealt with was whether there was an occurrence if so what's covered and to what extent what happened here was cracking and some separation wal mart said you need to do these things in order to prevent that from happening again so this would preventive measures that were taken to do that what they did was they tore down the litter box the litter boxes what had the cracking they didn't fix the cracks in a normal tort situation the measure of damage would be the difference between the fair market value before and after in a contract situation here what they're saying is pure performance so they tore down the liquor box they tore down the cracked reed did the site preparation and then put the litter box back so the only way they fix the crack was by removing the whole store putting it back if you wanted to just repair the property damage then you just fix the cracks in part of what we never really got into damages in the district court but if we knew and when we do liberties present throughout has been what wal mart demanded was not compensation for property damage which is what a liability policy might provide for wal mart wanted to prevent future damage and that's what the work was done for and if you look at the damages aspect of this most of what's being claimed if you dig down into the documents would be consequential damages that you might expect out of a breach of contract attorney's fees consulting fees things like that there's not any discussion at all about the measure of damage and tort which is what a c g l policy is intended to provide or do you think that you was broad enough to request that district court separate out the measure of damages yes and no and the reason i say it that way is we were we were going to the coverage issues about whether there was coverage and our position was that there's not an occurrence if there an occurrence there are exclusions that apply and we didn't raise the issue of damage and i don't recall the issue of damages being raised in the counterpoint for coverage this was entirely a coverage issue and we didn't get into if so what so more importantly the the court should keep in mind that the issue of whether his faulty workmanship caused this problem is not before this court it's before another court when this case was decided wal mart never sued kate before we brought the coverage issue and when this issue was decided there was no litigation concerning that issue then only him this is a declaratory judgment action correct so essentially you came into federal court just to have your cup the coverage issue determined  to enforce mechanics lying in state court knowing that that would draw counter claims saying we don't owe you the money because you caused the problem but we tried to to cut that off passed with this action that one last question what does it mean for m w to be an additional insured under this policy does it step in the shoes of k or does have an independent right out of the path i've found no authority that indicates that you steps in the shoes of k in fact what has not discussed in any way the terms of the additional insured indorsement in this court all it said is that it exists then m w wants to take the next not necessarily logical step that says we step in the shoes of k without citing any authority and when we research it we can find authority that supports that instead we've cited a case that suggests that no once you get the status of an insured livery has to treat you as a first party insured not as someone broad enough to address damages and that is a two part answer the complaint itself was not was for declaratory judgment on behalf of liberty mutual the counter claim back wasn't back for declaratory judgment as well as damages resulting from their failure to provide coverage when the claim was made essentially seeking not just and demi a defense of that action but also damages that resulted to k from their failure to pick up coverage from the beginning such as attorneys fees et properly and two that liberty mutual opened the door to the exclusions in its briefs her arguments on that rejected those arguments heard a motion to partially alterman of a case again reject those arguments that sort of like let sleeping dogs lie we were fine with the coverage that's the question is crossed my mind your honor we have taken no steps at all to pursue that in the district court because it is our belief that once this court found that to came to liberty mutual credit they immediately or soon thereafter provided coverage in what is now a separate any action and therefore the amount of quote damages were of such an amount that at that point in time it just didn't make economic sense to continue to try to litigate that once the coverage issue was but now you're telling us that but then the day i could doesn't reflect that everybody said no harm no foul well that the the court dismissed the complaint it issued a final judgment the language did not reflect either of our counter claims that liberty mutual in fact opened the door and argued the exclusion  in the actual briefs on the case liberty mutual sought summary judgment on that and it's address the politics school gyms in its memorandum of support which is the district court record thirty five one  steinmetz argued here which is that the question of whether it's really a contract duty vs a tort duty is underlies the occurrence question you can't separate those things well if that's possible but the distinction is what he wanted to do is to argue the exclusions is why the court shouldn't bind the occurrence and the analysis from the cases that have addressed the cincinnati clearly draw distinctions says you can do issue well actually i do have your exact quote from that transcript where you talked about this and you said that they went and they're briefing you felt that they went beyond the issues and you said we're not going to argue that we're not here for that you said the question before the court today is simply this is what i am and i view and wal mart alleged against ken k does it constitute an occurrence under the policy and and you went out of your way to say to the district court we're not arguing in an absolute can't exist with yours that if you read the rest of the really struggling with finding where it was briefed by the parties give me your period again liberty mutual raise that is in the district record page record thirty five dash one pages four five and seven which is the eighty seven twenty seven twenty one seven twenty three we addressed it in our response and required a summary judgment which is the district court record forty eight just two and four and the record on appeal here page seven seventy  the coming back to the the first issue i think there's three issues before the court there's the issue of the currents there's the issue of did the district court properly grant summary judgment regarding exclusions and the third one is the motion to certify back the supreme court  back to the first issue this court issued an opinion in january of this year by different panels an unpublished decision called the mcbride the acuity in you know you spend a lot of time on mcbride and you spend a lot of time discussing the sub contractor exception but how is this even a subcontractor exception case we're talking about the activities of the subcontractor in connection with the sub contractors own c g m policy well  some contractor exception was the phrase that this court used in the mcbride and that had not been used in any of the about ten either kentucky or right but in that case the policy had been issued to the general class act that's right but here is what the that case it says which  critical we think to this court's resolution of our issue today as concerns coverage became k it said that already construed cincinnati to strongly suggest that kentucky courts would permit coverage and this is the quote say that the general contractors policy wouldn't cover anything that had to do with the project because of the general contractor was in charge of the project as a whole i would i would respectfully say that the new ones that kay said that the general contractors p does not cover claims for defective work that was the scope of the general contractor not the subcontractor in the reason i would say that is that let's read it as someone else again mcbride was that the general contractor as it was in cincinnati was that the scope of the general contractors working could everything that's correct for the general but not the sub and this is what's happened in all of these cases is cincinnati had a had a very very clear phrase they said defective workmanship standing alone almost all of the cases have dropped or ignored that stand in a low standalone goes in reference footnote forty five of cincinnati which is what this case is about and that but no acknowledges that the general rule exists where the policy applies if all the workmanship and of course you will read this  week there's not enough actual binding on that what the cost of the pilots to do which is the things were driven down into the ground underneath the structure that was the approximate cost of the rest of the cost with respect to repairing the structure itself but i see the time know is we were named in this litigation for some reason we have no direct contractual ation ship with liberty other than through the additional relief insured relationship yet this is just a factual query on my part because i don't that's not an issue that we that the lower court devoted a whole lot of time to nor did we because frankly we didn't see any way that liberty could dispute our additional status in good faith and also we're not immune and in a position in a position of an additional insured we're not entitled to any more any less in my mind than his k in k and in terms of the damages there's some confusion on that the three million dollars figure the reason why i think you probably saw two point five or so in in w s brief and over three million dollars that's probably because ours through you know in discovery and and through the mediation phase in trying to get this phase settled wal mart's claim of a little over half million dollars is also thrown into that number and that includes their actual engineering and things that nature so that's why it's a little bit higher but just to cut to the heart of this f perspective in my perspective in this litigation to be absolutely candid with this panel if the court does not accept the distinction that we have drawn in this in this case between a sub contractor and a general contractor and the fact that the analysis here has to begin at the subcontractor level and because of that that distinguishes this case from cincinnati is secondary to that when cincinnati insurance came out i would prefer with the representing a whole lot of contractors both residential and commercial there was a whole lot of consternation in the industry what are we going to do because it's we've always kind of understood that that damage to it that we caused our own work is not going to be covered by c d o policy but if that if that if i were causes damage to another portion of the building or whatnot that would be covered well here comes the doctor supreme court wedeman general contractor this whole project is yours and so therefore there is no coverage under seige policy for faulty workmanship and whether there's damage for quality workmanship workmanship that causes some is make sure that our sub contractors all have their own sea g l policy so when we get into this situation where the damage occurs at the sub contractor level we can make the argument that we've made in this case but the performance bond is supposed to cover their failure to actually perform correct well i mean even if we accept your argument that collateral damage and your briefs you know the argument you made at the district court is very different than the argument that's being made here because the district court you are saying everything was covered here if you're saying you're not asking to have the repair of the site covered you're aware of with all due respect we didn't get into the damages aspect at the district court in that always a transcript you if if if at some point there is a damages determination here what is covered is going to be the same for both of us but the performance bond is supposed to cover a lack of performance correct well agreements with personal guarantees that's why saying hey jump in here and did the right thing and stepped up and perform this remediation because if there bonding company had done it then as i said in district where the district court level  just like every other insurance company that's fighting this battle across the country sold a policy the expectation of that policy was coverage for damages caused by faulty workmanship to other property and that  this particular case that's what we have that's where the case has been pled that's the way the case has been argued like i said if if if this panel does not want to recognize it stinks between worked on a general contractor level  sub contractor level there's nothing we can do about that that's our that's where we are thank you counsel thank you there's a lot that i could talk about but let me try to hit through three real quick points why isn't this other property maybe start their counsel i mean because kelso closed with two other property i wondering what you say about that when when when the court and mcbride talked about other property talked about another's property ok that's the best way you would understand that phrase correct and it's not talking about but that was another visa v the general contractor that the argument here is that another's property visa via the sub contractor is the general crap and i would submit to the court that doesn't really make total sense when you talk about another property that should be someone else property and not the building that's under construction  you follow the if there's an auto accident on the on the site or the is that the kind of thing that answers if there's an auto accident on the job at least question if there's somebody that's walking in the parking lot of ins inside the store on the trip on a crack that might be covered that the kentucky supreme court focuses on if you follow kentucky recovery for tort claimants they don't necessarily focus on recovery for people  say don't care that's probably strong that's not the the remedies that are springboards try to fashion which suggests that in this kind of case if there is a breach of contract that's not what the general liability policy is supposed  there's there is a case out of north dakota that was decided after all everything was done it's k in our homes versus american family insurance company a twenty nine northwest section seven twenty four decided in april and that's a case where north dakota had the same kind of concept that judge russell followed in the global gear case in his what i would call dictum there was a virgin smith case where the court drew the distinction between damages the insured work and faulty workmanship the damages someone else's work on the same project and the supreme court revisited that said that you know that distinction doesn't make sense and said to focus on the nature of the property damaged to define whether there's been an occurrence has been criticised by the courts and the commentators reason that it's been criticised is to get to that point if you dig down into the cases the court's had to look at exceptions that your work exception in order to decide whether there's coverage honoring the ensuring agreement and the architect supreme court has said we're not going to do that that's not how you construe contracts so the north dakota supreme court said it doesn't make sense to draw a line in there which is why when you talk about property it's another's property it's not property that's being constructed what happened here was the foreseeable natural consequence of failing to do the psych prep work the way you're supposed to do it the only