NOT RECOMMENDED F OR F ULL-TEXT PUBLICATION F ile Nam e: 13a0360n.06 No. 12-5857 UNITED STAT ES COURT OF AP P EALS F OR THE S IXTH CIRCUIT

LM INSURANCE CORPO RATION; LIBE RTY MUTUAL F IRE INSURANCE COMP ANY, P laintif fs-App ellees,

v. CANAL INSURAN CE COMP ANY, Defendan t-Appellant. ) ) ) ) ) ) ) ) ) ) ) ) ON AP P EAL F ROM THE UNITED STAT ES DIS TRICT COURT F OR THE EASTE RN DISTRICT OF K

ENTUCKY O P I N I O N

BEFORE: M ARTIN, G UY, and McK EAGU E, Circuit Judges. McK EAGU E, Circuit Judge. Wil liam Hende rson’s truck collided with Charles Henne y ’s vehicle in Oc tober 2008. Charles Henne y died as a result of the a ccide nt, and his estate br oug ht a suit ag ainst Hende rson and the company for which he was hauling ag g reg ate, Hinkle Contracting Corporation. Prior to the acc ident, Hende rs on had purcha sed an automobile insurance policy throug h Ca

n a l I n s u r a n c e Co mpany (“Cana l”), Def endants-A

ppellants, that listed Hinkle Contracting

as a desig nated insured. Hinkle Contracting was also cover ed by two policies issued by PlaintiffsAppellee s, L iberty

Mutual Fire I nsuranc e Company and L M I nsuranc e Corpora tion. What ensued wa s a dispute betwe en Canal and Plaintiffs ove r whether Canal had a

duty to defe nd Hinkle Contracting ag ainst the vi ca rious-liability and independe nt-misconduct claims

asser ted by the Henne y estate ag ainst Hinkle Contracting

. Plaintiffs ultimately assumed the entiretyNo. 12-5857

LM Ins. Corp., et al. v. Canal Ins. Co. of Hinkle Contracting ’s defe nse in the Henne y estate action. They broug ht this diversity case in the Easter n District of Kentucky seeking a decla ratory judgme nt and the costs of defe nding Hinkle Contracting in the Henne y estate action. I n the end, the district court g rante d Plaintiffs’ motion for summary judgme nt and Canal a

ppeale d. We now aff

irm. I. A. I n May of 2006, Wil liam Hende rson, d/b/a Hende rson Trucking (“H ender son”), enter ed into

a contra ct (“ha

uling contra ct”) with Hinkle Contracting , wher eby Hende rson ag ree d to provide hauling service s to Hinkle Contracting

. The hauling contra ct stated that Hinkle Contracting “fr om time to time and at its discretion, may tender to Contractor [(Hender son)]

. . . construction materia ls for delivery ,” and that Hinkle Contracting had the rig ht to require Hende rson to deliver the materia ls by the shortest prac ticable route and within a specifie d time period. Hende rson was to use his own equipment, was responsible fo r any maintenanc e neede d as a result of hauling for Hinkle Contracting , and was to be paid by the weig ht hauled. The hauling contra ct require d Hende rson to procur e liability insurance that named Hinkle Contracting as an additional insured on a primary and non-contributory

basis, in an amount not less than $1 million. The hauling contra ct also provided that Hende rson would indemnify and hold har

mless Hinkle Contracting

. Hende rson obt ained a liability insurance policy throug h Canal; he paid an additional $200 premium to obtain a desig nated- insured endorse ment, which named Hinkle C o n t ra ct ing as an additional insured.

- 2 -No. 12-5857

LM Ins. Corp., et al. v. Canal Ins. Co. Hinkle Contracting also maintained its own insurance policies. L M I nsuranc e Corporation (“L M”) issued Hinkle Contracting a commerc ial g ener al liability insurance policy

. L iberty Mutual Fire I nsuranc e Corpora tion (“L iberty Mutual”) issued Hinkle Contra cting a business auto policy

.

B. On October 30, 2008, while t he above pol icies were e ffe ctive, He nderson wa s involved in

an acc ident with Charles Henne y , at a time when Hende rson was hauling ag g reg ate for Hinkle Contracting

. Henne y died as a result of the acc ident. Hende rson g ave Canal notice of the acc ident

on October 31, 2008. Hinkle Contracting notified L iberty Mutual of the acc ident. L iberty Mutual undertook Hinkle Contracting ’s defe nse. I n the spring of 2009, L iberty Mutual informed Canal that Hende rson was hauling ag g reg ate for Hinkle Contracting at the time of the acc ident. L iberty Mutual also reque sted that Canal take over the defe nse of Hinkle Contracting in the Henne y estate action. I n ear ly J une 2009, Canal’s counsel advised L iberty Mutual that the Canal policy provided

no co v er age to Hinkle Contracting beca use there was no evidenc e that Hinkle Contracting was vicar iously liable. Nonethele ss, even if there wer e such a claim, Canal stated that the L iberty Mutual auto policy

and Cana l policy

would be co- primary

. I n late J une 2009, the Henne y estate’ s attorney informed L iberty Mutual that the estate would pursue non- automobile theories of liability ag ainst Hinkle Contracting

. C. On Octobe r 28, 2009, the He nney estate f iled suit ag ainst inter alia Hende rson and Hinkle Contracting

. The complaint alleg ed six counts ag ainst Hinkle Contracting and Hende rson. Count I stated that He nderson ne g lige ntly or grossly neg lige ntly opera ted hi s truck as an age nt of Hinkle

- 3 -No. 12-5857

LM Ins. Corp., et al. v. Canal Ins. Co. Contracting

. The Henne y estate alleg ed that Hinkle Contracting was vicar iously liable f o r th e s e acts. Count I I stated that Hende rson, with the knowledg e of Hinkle Contracting , neg lige ntly or knowing ly opera ted his truck while it was overloa ded and that Hinkle Contract i n g wa s vicar iously liable for Hende rson’s acts. Count I V alleg ed that Hinkle Contrac ting ne g lige ntly or knowing ly overloa ded Hende rson’s dump truck, which contributed to the acc ident. Coun t VI asser ted that all of the defe ndants wer e liable for intentionally , rec klessly , or g rossly neg lige ntly overse eing Hende rson’s truck, wh i ch entitled the Henney estate to punitive damag es. Finally , counts VI I and VI I I alleg ed that the def

endants e ng ag ed in a joint enter prise or c onspiracy

to overload the trucks. I n November 2009, L iberty Mutual’s adjuster wrote to Canal’s attorney and attemp t ed t o tender Hinkle Contracting ’s def ense a nd indemnification to Canal “on be half of Hinkle.” Canal’s counsel responde d in J anuar y 2010 by advising L iberty Mutual that Canal would ev al u at e what duties may

be owe d by

Canal to Hinkle Contrac ting ba sed upon the a lleg ations in the complaint. I n late Marc h 2010, Canal informed L iberty Mutual that Canal had never rec eived a reque st from Hinkle Contracting to tender its defe nse to Canal and that the tender was a non-dele g able task. Canal advised L iberty Mutual that if such a reque st wer e mad e, Canal would work with L iberty M u t u al on a co-pr imary basis. I n J une 2010, Canal rec eived a letter from Hinkle Contracting ’s attorney formally tender ing the def ense a nd indemnification to Hinkle Contrac ting. I n J une 2010, Canal ag ree d that Hinkle Contracting was an additional insured under Hende rson’s Canal policy but that Hinkle Contracting ’s cove rag e wa s limi ted to the vicar ious-liability claims. On J uly 9, 2010, Canal reiter ated its acc ept an ce of Hinkle Contracting ’s tender on a coprimary basis with L iberty Mutual. Canal also stated that it would be amena ble to discussing a “cost - 4 -No. 12-5857

LM Ins. Corp., et al. v. Canal Ins. Co. sharing ag ree ment for Hinkle Contracting ’s defe nse as of J une 7, 2010.” Sealed App. at 40. Canal

rec eived no further communications from Hinkle Contracting or L iberty Mutual about a cost-shar ing agre ement. Canal did not make any eff orts, howeve r, to assist in Hinkle Contracting ’s d ef en s e. Canal was not co n s u l t ed about choice of defe nse counsel or provided with a single invoice for Hinkle Contracting ’s defe nse costs and expenses until afte r the prese nt lawsuit was initiated. L iberty Mutual never informed Canal that L M was providing some part of Hinkle Contracting’s d efe nse costs. Canal has not contributed or reimburs ed Plaintiffs for the cost of defe nding Hinkle Contracting in the Henne y estate a ction. I n J anuar y 2011,the Henne y estate’ s clai m s ag ainst Hinkle Contracting wer e dismiss ed as settled. D. As a result, Plaintiffs filed this suit, seeking a decla ratory judgme nt that Canal had a duty to defe nd Hinkle C ontrac ting f or the c laims asserted in the H enney estate action (both the vi car iousliability and independe nt-misconduct claims) and t h at t h e L M and L iberty Mutual policies wer e

excess to the Canal policy . Plaintiffs also sought re imbursement from Cana l for the de fense costs and expenses paid in def

ending the Henne y

estate a ction, along with prejudg ment interest. I n J anuar y 2012, Plaintiffs filed a motion for summary judgme nt, arg uing that Plaintiffs paid $421,925.51 in attorney s’ fee s an d c o s ts in d e f e n d in g the claims asser

ted ag ainst Hinkle Contracting

. They soug ht a judgme nt in that amount plus prejudg ment interest. On the same date, Canal crossfiled for partial summary judgme nt. Whil e Canal conce ded that it was liable for twenty -five perc ent

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LM Ins. Corp., et al. v. Canal Ins. Co. of Hinkle Contracting ’s valid defe nse costs and expenses incurre d afte r J une 7, 2 0 1 0 (t h e date of Hinkle Contracting ’s tender ), it soug ht summary judgme nt on the rema inder of Plaintiffs’ Claims. The district cou rt g rante d L iberty Mutual summary judgme nt. I t found (1) Canal had the p ri m ar y duty to defe nd Hinkle Contracting on both the vicar ious-liability and independe nt

misconduct claims; (2) Canal’s duty to defe nd beg an at the inception of the case ; (3) L iberty Mutual

was entitled to reimburse ment of its defe nse costs; and (4) the defe nse costs incurre d wer e liquidated damag es and, the ref

ore, a n awa rd of pr ejudg ment interest wa s require d. This appea l followed.

II. There are three issues in this appea l. First, we must c onsider the extent of Canal’s liability for Hinkle Contracting ’s defe nse costs under the terms of the Canal policy

. S ec o n d , we must deter mine from what date Canal is responsible for Hinkl e C o ntrac ting’ s defe nse costs. Third, we
must decide whether the awa rd of prejudg m ent interest by the district court was an abuse of discretion. We discuss eac h of these in turn, afte r outlining the standards of revie w and detailing the rele vant provisions of the Cana l policy

. A. We revie w the district court’s g rant of summary judgme nt de novo . Smith v. W al-Mart Stores, Inc. , 167 F.3d 286, 289 (6th Cir. 1999). Summary judgme nt is proper “if the movant shows that there is no g enuine disput e as to any materia l fac t and the movant is entitled to judg ment as a matter of law.” Fe d. R. Civ. P. 56( a). The parties ag ree that Kentucky law applies in this diversity

case .

- 6 -No. 12-5857

LM Ins. Corp., et al. v. Canal Ins. Co. The interpre tation of an insurance policy is a question of law appropr iate for deter mination at the summary

judgme nt stag e. Stone v. Ky. Farm Bureau Mut. Ins. Co. , 34 S.W .3d 809, 810-11 (Ky

. Ct. App. 2000). We will g ive the terms of an insurance policy their plain and ordinary meaning , and when the terms of the policy are clea r and unambig uous, we must enfor ce them as draf ted. City of Louisvill e v. McD onald , 819 S.W .2d 319, 320-21 (Ky

. C t

. App. 1991); Osborne v. Uniguard Indem

. Co. , 719 S.W .2 d 7 3 7 , 740 (Ky

. Ct. App. 1986). We will interpre t ambig uous terms in an insurance contra ct “in favor of the insured’s rea sonable expectations and construed as an aver ag e person would construe them

. . . . I nsuranc e policies should be construed acc ording to the parties’ mutual understanding at the time t hey enter ed int o the contract, with this mutual understanding to be deduced, if at all possible, from the langua g e of the contra ct i tself.” Hugenbe rg v. W

. Am. Ins. Co. , 249 S.W .3d 174, 185-86 (Ky . Ct. App. 2006). We revie w the district court’s g rant of preju d gm en t i n t erest for an abuse of discretion. Travelers Prop. Cas. Co. of Am. v. Hillerich & Bradsby Co. , 598 F.3d 257, 274 (6th Cir. 2010). We will on l y reverse the district court if it applied an incorre ct leg al standard, misapplied the corr ect leg al standard, or relied upon clea rly err oneous finding s of fac t. Getsy v. Mitchell , 495 F.3d 295, 310 (6th Cir. 2007). B. This case revolve s around the terms of the Canal policy

. There fore , we must take some car e in detailing the rele vant provisions. Nea r the beg inning o f t h e Canal policy ’s Coverag e For m, it

rea ds, “Throug hout this policy the words ‘y ou’ and ‘y our’ ref er to the Named I nsured shown in the Dec lara tions.” R. 21-3 at 41, Pag e I D # 907. Refer ring back to the policy decla rations, I tem One - 7 -No. 12-5857

LM Ins. Corp., et al. v. Canal Ins. Co. of the Canal policy ’s “Common Policy Dec lara tions” names “Willi am Hende rson DB A Hende rson T ru ck i ng ” as the “Na

med I nsured.” R. 21-3 at 1, Pag e I D # 868. I tem One also provides a chec kbox , which is followed by “F or additional named insureds see I L 04 CW 0906.” Id. The series of letters and numbers ref ers to a particula

r form, which presumably would be attache d to the policy i f ad d i t i o n al named insureds wer e intended. The Canal policy does not include form I L 04 C W 0906. Section I I .A. of the C o v er age For m, entitled “L iability Coverag e,” provides t hat “W e will pay all sums an ‘insured’ lega l l y must pay as damag es beca use of ‘bodily injury ’ or ‘prope rty damag e’ to which this insurance applies, cause d by an ‘ac cident’ and resulting from the owner ship, maintenanc e or use of a cover ed ‘auto.’” Id. at 42, Pag e I D # 908. The plan also states that Canal has “the rig ht and duty to defe nd any ‘insured’ ag ainst a ‘suit’ asking for such damag es or a ‘cove red pollution cost or ex pense.’ ” Id. Section I I .A.1. entitled “Who I s An I nsured” rea ds as follows: The following are “insureds” : a. You f or any cover ed “a

uto”. b. Any one else while using with y our permission a cover ed “auto” y ou own, hire or borrow e x cept: (1) The owner or any one else from whom y o u hire or borrow a cover ed “a

uto”. This exception doe s not a pply if the cove red “ auto” is a “tra iler” c onnecte d to a cove red “ auto” y ou own. . . . (5 ) A partne r (if y ou are a partne rship), or a member (if y ou ar e a limit ed liability company

) for a cover ed “auto” owned by him or her or a me mber of his or he r household. c. Any one liable for the conduct of an “insured” descr i b ed ab o ve but only to the extent of that liabili ty

. Id. at 42-43, Pag e I D ## 908-09.

- 8 -No. 12-5857

LM Ins. Corp., et al. v. Canal Ins. Co. Section I V.B

. 5

. , enti tled “Other I nsuranc e,” states, “F or any cover ed ‘auto’ y ou own, this Coverag e F orm provides primar y insurance

. For

any cover ed ‘a

uto’ y ou don’t own this Coverag e For m is ex cess ove r any

other c ollectible insuranc e.” Id. at 49, Pag e I D # 931. Finally , two endorse ments are rele vant to this appea l. The first, entitled “D es i gn at ed I nsured,” “identifies

. . . org anization(s) who are ‘insureds’ under the Who I s An I nsured Provision of the Cover ag e F orm.” The endorse ment lists Hende rson as the named insured and list s “Hinkle Contracting ” under the heading “Na me of Person(s) or Org anization(s).” The premium for adding Hinkle C o n t ra ct i n g is listed as $200. The endorse ment ends with the following : “Ea ch

. . . org anization shown in the Schedule is an ‘insured’ for L iability Coverag e, but only to the extent that

. . . org anization qualifies as an ‘insured’ under the Who I s An I nsured Provision contained in Section I I of the Cover ag e F orm.” Id. at 53, Pag e I D # 919. The second endorse ment, enti t l ed “Truc kers Endorseme nt,” adds two subsections to the C o v er age For

m. The endorsement adds subsection b.(6) to the W ho I s An I nsured Provisi on; th e added subsection provides that “No cover ag e is aff orded to any person, firm, or org anization using the descr ibed ‘auto’ pursuant to any lease , contra ct of hire, bailment, renta l ag ree ment, or any simil ar contra ct or ag ree ment either written or oral, expressed or implied.” The endorse ment also added subsection I V.B .5.e. to the Other I nsuranc e Provision. The additional subsection states, “Reg ardle ss of the provisions of para g raph a. above, in the event the ‘auto’ descr ibed in this policy is being used

or maintained pursuant to any lease , contra ct of hire, bail m en t , re n t al ag ree ment, or any simil ar contra ct or ag ree ment, either written or oral, expressed or implied, the insurance aff orded y ou shall be excess insuranc e over

any other insura

nce.” Id. at 78, Pag e I D # 944. - 9 -No. 12-5857

LM Ins. Corp., et al. v. Canal Ins. Co. C. T urning to the extent of Canal’s liability for Hinkle Contracting ’s defe nse costs, befor e delving into the contested issues in this case , it is worthwhile to detail what is not contested. First, the parties ag ree that the L iberty Mutual and L M policies provided Hinkle Contracting cover ag e on the vicar ious-liability and independe nt-misconduct claims asser ted in the Henne y estate action and that the coverag e provide d would be excess to any other insura

nce. Second, the parties ag ree that the Canal policy provided Hinkle Contracting cover ag e on the vicar ious-liability claims asser ted in the Henne y

estate a ction. The parties’ dispute revolve s around the extent of Hinkle Contracting ’s cover ag e under the Canal policy

. To deter

mine the scope of Hinkle Contracting ’s cover ag e under the Canal policy , we must consider whether the Canal policy was primary or co-e x cess over the vicar ious-liability claim. We then must define “contr act of hire” und er t h e terms of the Canal policy

. Finally , we must consider what does it mea n to “ use” a cover ed auto under the omnibus c lause of the Canal policy

. Be fore turning to these considerations, howeve r, t here is an ini tial hurdle: What ty pe of insure d is Hinkle Contracting under the terms of t h e Canal policy , i.e., is it a named insured or otherwise entitled to first-class c overa g e? 1. The question is easily answe red by t u rn i ng to the rele vant policy provisions of the Canal policy

. To beg in with, the “Common Policy Dec lara tions” do not list Hinkle Contracting as a named insured; indeed, the form nec essar y for na ming a dditional insureds is a bsent from the policy . Nor does the desig nated- insured en d o rs em ent add an additional subsection to the Who I s An I nsured - 10 -No. 12-5857

LM Ins. Corp., et al. v. Canal Ins. Co. Provision that would entitle Hinkle Contracting to first-cla ss co vera g e. Fur ther, the desig natedinsured endorse ment listed Hende rson as the named insured and ended with “[e]ach

. . . org anization shown in the S ch ed u l e i s an ‘insured’ for L iability Coverag e, but only to the extent that

. . . org anization qua lifies as an ‘insured’ under the Who I s An I nsured Provision conta ined in Section I I of the Coverag e For

m.” I f Hinkle Contracting wer e supposed to be a named insured (i.e., a “y ou” under the Canal policy

) or if Hinkle Contracting wer e otherwise entitled to first-cla ss cover ag e, the qualify ing lang uag e at the end of the Desig n at ed I n sured endorse ment would be superf luous. Be cause Hinkle Contracting is not a named insured or otherw ise entitled to first-cla ss cover ag e, it only q u al i fi es for cover ag e to the extent that it meets the criter ia under the omnibus (sec tion I I .A.1.b.) a

nd vicar ious-liability

clause s (sec tion I I .A.1.c.) of the Cana l policy

.

2. This definition of “y ou” quickly resolves the parties dispute over whether the Canal policy provided primary or co-e x cess cover ag e over the claims. The Other I nsuranc e Provision states “for any cover ed ‘auto’ you own, this Coverag e F orm provides primary insurance .” Be cause the claim

arose from a c overe d auto owned by Hende rson (i.e., “ y ou”) the cover ag e is primary

. Canal arg ues that the Section I V.B .5.e. of the Trucke rs Endorseme nt prese nts a wrinkle, but this arg ument quickly falls apart by looking to the pl ain terms of the pol icy

. J ust as i t was above, the key is the word “y ou,” in the phras e, “t h e i n s u ranc e aff orded you shall be excess.” As was discussed above, Hin k l e C o n t ra ct ing is not “y ou” under the terms of the policy

. To deter mine otherwise would rea d an inconsistency into the policy : Hinkle Contracting would be a “y ou” under the “Truc kers Endorseme nt” but not a “y ou” under th e W h o I s An I nsured Provision. Section - 11 -No. 12-5857

LM Ins. Corp., et al. v. Canal Ins. Co. I V.B .5.e. does not a

pply to Hinkle Contracting , and as a result, the Canal policy

provided primar

y

cover ag e for

the Henne y

estate a ction. 1 3. Turning to whether this was a “contr act of hire” under Section I I .A.1.b(6), if the ag ree ment betwee n Hinkle Contracting and Hende rson wer e a “cont r a c t o f h ir e , ” th e n H in

kle Contracting would be entitled to no cover ag e under the omnibus clause

. The Coverag e For m does not define “contr act of hi re,” and we have found no Kentucky or S ix th Circuit case s defining t h e term. There fore , we have tur ned to the most releva

nt case s from other jur isdictions. The most re l ev an t case s involve two of the parties curr ently befor e this court and simil ar Trucke rs Endorseme nts. I n Liberty Mutual Fire Insurance Co

. v. Ca n a l Insurance Co. , No. A.1:96cv261–D–D, 1997 WL 786760 (N.D. Miss. Nov. 13, 19 9 7 ) an d L iberty Mutual Fire Insurance Co. v. Canal Insurance Co. , 50 F. Supp. 2d 591 (S.D. Miss. 1998), the courts found that the term “contr act of hire” as used in a Canal p o l i cy i s an ambig uous term and then narr owly construed “ contra ct of hire ” in fa vor of the insure d. I t is plain from [t he] definitions of “hire ” that a contract of hire mi g ht be for either the use of a thing or for the labor or service s of an individual. The question is whether the phrase as used in the endorseme nt is so broad. One rea ding, that of the defe ndant, is tha t it indeed means any sort of contra ct for hire. When looking to the context of the endorse ment and in light of the policy as a whole, another more narr ow rea ding of the term comes to light. I n this vein, it is rea sonable to rea d the provision as being satisfied only when “pursua nt to any lease , contra ct of hire, bailment, renta l ag ree ment or any simil ar contra ct or ag ree ment” of the in s u r ed automobile. This

This cre ates a bit of an absurdity , as Canal point s o u t : Hinkle Contracting , under the 1 vicar ious-liability clause , is seeming ly entitled to more cover ag e than Hende rson. Howeve r, as the draf ter of the policy , the absurdity was within Canal’s c ontrol.

- 12 -No. 12-5857

LM Ins. Corp., et al. v. Canal Ins. Co. would distinguish betwee n the two ty pes of contra cts of hire—i.e., those for the use of a c hattel and those f

or the pe rsonal ser

vices or la

bor of a n individual. Liberty Mut. Fire Ins. Co. , 1997 WL 786760, at *6; see also Liberty Mut. Fire Ins. Co. , 50 F. Supp. 2d at 599 (“A TCO mere ly hired McConnell to pe rfor m a service , and the trucks wer e incidental to that service .”), aff’d 177 F.3d 326 ( 1999). An additional considera

tion pe rsuade s us to a

pply the narr ow interpre tation of “contr act of hire.” Be fore the issuance of the Canal policy in dispute, Canal was on notice that “contr act of hire” could be interpre ted in at least two differ ent way s. Liberty Mut. Fire Ins. Co. , 1997 WL 786760, at *6; Liberty Mut. F

i r e In s . C o . , 50 F. Supp. 2d at 599, aff’d 177 F.3d 326. Canal chose not to eliminate the ambig uity

. Hinkle Contracting hired Hende rson for his service s—to haul ag g reg ate—a nd his truck was incidental to that service

. See Liberty Mut. Fire Ins. Co. , 1997 WL 786760, at * 6 (finding that defe ndant hauling lumber and lumber products was service and not contra ct of hire under simil ar trucke rs endorse ment); Liberty Mut. Fire Ins. Co. , 50 F. Supp. 2d at 599 (finding that cutting tree s and hauling lumber constituted service and not contra ct of hire under simil ar trucke rs endorse ment). The arr ang ement was not a lease -ty pe ag ree ment by which Hende rson was paid by the “amount of time the truck was used in the benef it of” Hinkle Contracting

. See Liberty Mut. Fire Ins. Co. , 1997 W L 7 8 6 7 6 0 , at * 6. This narr ow interpre tation avoids the unrea sonable result that “a plethora o f normally cover ed activities, if not the entire trucking opera tion of [ Hende rson], would be without primary cover ag e under

the policy .” See Liberty M ut. Fire Ins. Co. , 1997 WL 786760, at * 6.

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LM Ins. Corp., et al. v. Canal Ins. Co. I n light of these considera tions, the cover ed auto was not being used pursuant to a “contr act of hire,” and as a result, section I V.B .5.e. does not apply to Hinkle Contracting

. The only rema ining question with reg ard to Hinkle Contracting ’s cover ag e under the Canal policy is whether Hinkle Contracting was “ using” the vehicle when it was loa ding a g g reg ate. 4. The omnibus clause provides that Hinkle Contracting would be cover ed for the independe ntmisconduct claims asser

ted by the Henne y estate if the loading and unloading o f H e n d erson’ s vehicle constituted “using ” the vehic l e. T houg h the Kentucky courts do not appea r to have considere d whether “use” includes loading and unloading , “[t] he term ‘use’ is a broad catc hall desig ned to include all uses of the vehicle not falling within the terms ‘owne rship’ or ‘maintena nce,’ and involves simply employ

ment for the pur

poses of the use r.” 8A Couch on I ns. § 119:37. The term “extends to a

ny activity in utilizing the insured vehicle in the manner intended or contemplated by the insured.” Id. When an insurance plan is silent about whether unloading and loading are cover ed,
courts have at times define d “use” to include loading and unloading

. 8 Couch on I ns. § 111:38 n.2; see also Am. O il Co. v. Hardware Mut. Cas. Co. , 408 F.2d 1365, 1367- 68 (1st Cir. 1969). 2
Compli cating the matter somewhat, the Kentucky ’s Motor Vehicle Reparations Act define s 2 “use” to exclude loadi n g and unloading

. Ky

. Rev. Stat. Ann. § 304.39-020. The Motor Vehicle Reparations Act require s Kentucky drivers to procur e cer tain insurance and also establishes a rig ht to basic re para tion be nefits for those who suffe r loss f rom injury arising out of

the maintenanc e or use of a motor vehicle. Id. §§ 304.39-010, .030. There is nothing in the statute, howeve r, that would appea r to require that the Canal policy must or should define “use” as it is define d in the statute. The terms of the insurance policy control, unless the terms contra vene public policy

. Ky. Farm Bureau Mut. Ins. Co. , 326 S.W .3d at 811. We see no principled basis to conclude that it would contra vene public policy

to define “ use” to include loading and unloading on the fa cts of this case

. Canal cites Hartford Ins. Co. of Am. v. Ky. Sch. Bds. Ins. Trust , 17 S.W .3d 525, 527 (Ky

. Ct. - 14 -No. 12-5857

LM Ins. Corp., et al. v. Canal Ins. Co. The appellants cite Kentucky W ater Servic e Co. v. Selec tive Insurance Co. , 406 S.W .2d 385 (Ky

. Ct. App. 1966), as a case rele vant to the deter mination of whether loading a vehicle constitutes “use.” I n that case , J asper was a customer of Kentucky Water. He drove hi s truck int o Kentucky Water’s loading rac k. J asper place d a hose connec ted to an overhe ad pipe into his truck’s tank. A Kentucky Water employ ee beg an pumping water into the hose. The hose detac hed from t h e overhe ad pipe and inj ured J asper . J asper sued Kentucky Water, and Kentucky Water t hen sought

a decla ration from the court deter mining Kentucky Water was an insured under the omnibus clause of Jasper’s insuranc e policy beca use Ke ntucky

Water wa s “using ” the ve hicle. Id. at 385. T h e Kentucky Court of Appea ls deter mined that J asper ’s truck was under his ex cl u s i v e control, and that the mere act of turning a water valve and allowing J asper to use a hose did not constitute use of J asper ’s vehicle. Id. at 387. This is a common-sense conclusion: “Jasper did not pay premiums to Selective so that it would insure third parties ag ainst his claim for damag es.” Id. The intent of the insure d was of utmost importance

. See id. The Hauling Contract provided that Hende rson was require d to obtain an automobile insurance policy naming Hinkle Contracting as an insured on a primary and non-contributory basis. I f Hinkle Contracting ’s intent was to car ry out this contra ct provision, then “use” should be define d b ro adly to car

ry out his intent—to insure Hinkle Contracting on a primary basis—and as a re s u l t “use” would include loading and unloading the truck. Moreove r, wher eas in Kentucky W ater J asper App. 1999), as a case that employ ed the Motor Vehicle Reparations Act definition of “u se” when deter mining the scope of an insurance policy ’s cover ag e. The case is inapposite beca use that court did not consider whether the loadi ng or unloading of the vehicle could constitute “use” within an insurance policy

in spite of the Motor Vehic le Repar ations Act. See id. - 15 -No. 12-5857

LM Ins. Corp., et al. v. Canal Ins. Co.

was a customer of Kentucky Water, which sug g ests t h at Ke n t ucky Water was not using its truck, Hende rson was working for Hinkle Contracting

. Hinkle Contracting loaded Hende rson’s truck for Hinkle Con t rac ting’ s purpose and at Hinkle Contracting ’s direc tion, which comports with our common understanding of “use .” The insurance plan is silent about whether “use” cover s loading or unloading , but if any thing, the s ilence cre ates ambiguity

. To the ex tent there is ambig uity , we give the insured the benef it of the doubt. “Use ” ther efor e includes loa ding a nd unloading

. Ty ing all of this toge ther, the Canal policy cover s both the vicar ious-liability and in d e p e n d e n

t- mi s c o n d u c t claims. Hinkle Contracting used the cover ed auto when it loaded a g g r e g a te , and the acc ident, as alleg ed in the Henne y estate action, arose from that u s e. T hus, Hinkle Contracting is cover ed under the omnibus clause

. Fur ther, the Canal policy is primary beca use the action involved a vehicle owned by Hende rson. Assuming there was eff ective notice, Canal had a “duty to defe nd [Hinkl e Contracting ] ag ainst a ‘suit’ asking for such damag es.” This seg ues us into the next is sue for

consideration. D. L iberty Mutual g ave Canal notice of its intent to tender Hinkle Con t ra ct i n g’s defe nse to Canal. Severa l months later, Canal informed L iberty Mutual that it would only acc ept a tender from Hinkle Contracting direc tly

. Canal arg ues that it is only responsible for attorney fee s incurre d afte r Hinkle Contracting , throug h counsel, tende red its def ense. Kentucky courts have held that an insuranc e compa ny is an ag ent of the insured during the

course of litiga tion or anticipated litig ation. See, e.g. , Asbury v. Bee rbower , 589 S.W .2d 216 (Ky

. - 16 -No. 12-5857

LM Ins. Corp., et al. v. Canal Ins. Co. 1979). I n the prese nt case , Plaintiffs tender ed the defe nse “on behalf of Hinkle.” This was enoug h for pur poses of g iving Cana l notice. E. Finally , we must decide whether the district court abuse d i t s discretion when it awa rded L iberty Mutual prejudg ment interest. Under Kentucky la w , a party is entitled to prejudg ment interest when the awa

rd of damag es is liquidated. Nucor Corp. v. Ge n . E l ec . Co. , 812 S.W .2d 136 (Ky

. 1991). “L iquidated claims are of such a nature that the amount is capa ble of asce rtainment by mere computation, can be est ab l i shed with rea sonable cer tainty , can be asce rtained in acc ordanc e with fix ed rules of evidenc e and known standards of value, or can be determined by ref ere nce to wellestablished mark et values.” 3d Enters. Contracting Corp. v. Louisvill e & Jefferson Cnty. Metro. Sewer Dist. , 174 S.W .3d 440, 450 (Ky

. 2005) (interna l quotation marks omitted). “[T] he key issue i s wh et h er the amount is fix ed as betwee n the parties to the litigation either by ag ree ment or opera tion of law.” Travelers Prop. Cas. Co. of Am. , 598 F.3d a t 276. We added in Travelers : Trave lers wa s not privy

to the amounts Hillerich owe d on its open acc ount with its defe nse counsel prior to Trave lers taking on the defe nse costs aft er the Second Amended Complaint was filed. Hillerich ha s offe red no proof that Trave lers knew or should have known of those amounts due, and so as betwee n Trave lers and Hillerich, the da

mag es we re not liquidated. Id. The implication from the court’ s l an gu age i n Travelers is that if a party wer e privy to the
amounts owed, or if the parties should have known of the amounts owed, then finding that such fee s

are liquidated would not be an a buse of discr etion. The district court deter

mined that the defe nse costs incurre d by L iberty M u t u al wer e liquidated beca

use “[t] he amounts wer e invoiced, tender ed to, and paid by L iberty Mutual pursuant - 17 -No. 12-5857

LM Ins. Corp., et al. v. Canal Ins. Co. t o i t s insurance contra ct wit h HCC.” This alone would not have been enoug h for us to aff irm th e district court, beca

use the district court failed to analy ze whether Canal knew or should have known of t he defense costs. Howeve r, t he court clar ified i ts consideration of t he is sue i n i t s o p i n i o n and order deny ing Canal’s motion to alter or amend. The court stated that “the defe nse costs should have been paid by Canal pursuant to Canal’s contra ct with [Hinkl e Contracting ]. Canal cannot be allowed
to shirk its duty to defe nd, then fail t o m ak e L i b er t y Mutual whole for the lost use of its due and pay able money during the time require d to secur e ultimate judgme nt.” The district court’s statement implies that Canal should have known the amo u nts owed for Hinkle Contracting ’s defe nse—had Canal as s u m ed the defe nse, as it should have done, i t would have rec eived the amounts invoiced, tender ed to, and paid by L iberty Mutual. The district court there fore did not abuse its dis cr et ion when it awa

rded L iberty

Mutual prejudg ment interest.

III. For the fore g oing r easons, we AF F IRM the dec ision of the district court.

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