NOT RECOMMENDED FOR PUBLICATION

File Name: 20a0715n.06

No. 20-5306

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

OUTDOOR VENTURE CORPORATION, 

J.C. EGNEW, and L. RAY MONCRIEF,

Plaintiffs-Appellants,

v.

PHILADELPHIA INDEMNITY 

INSURANCE CO., et al,

Defendants-Appellees.

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ON APPEAL FROM THE UNITED 

STATES DISTRICT COURT FOR THE 

EASTERN DISTRICT OF KENTUCKY

BEFORE: DAUGHTREY, NALBANDIAN, and MURPHY, Circuit Judges.

MARTHA CRAIG DAUGHTREY, Circuit Judge. Plaintiffs Outdoor Venture 

Corporation (OVC), J.C. Egnew, and L. Ray Moncrief appeal a district court judgment denying 

their requests that defendants Grange Mutual Casualty Company and Scottsdale Indemnity 

Company reimburse them for the attorneys’ fees and costs incurred by the plaintiffs in defending 

themselves in underlying lawsuits. Because we conclude that the terms of the relevant insurance 

policies do not require such reimbursement of fees related to the hiring by the plaintiffs of 

independent counsel, we affirm the judgment of the district court.

FACTUAL AND PROCEDURAL BACKGROUND

Although this appeal now involves only three plaintiffs and two defendants, the action, as 

originally filed, included additional parties. In one of its opinions in the course of this litigation, 

the district court appropriately identified those parties and expertly summarized the relevant facts 
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of the present lawsuit. We thus see no reason to offer an additional summary of those facts and 

instead adopt the following district court statement of the background of the litigation:

The plaintiffs in this matter are three corporations and two individuals who 

were officers of the corporations.

The three corporations are Stearns Manufacturing and its successor Outdoor 

Venture Corporation (together, “OVC”) and Kentucky Highlands Investment 

Corporation. The two individual plaintiffs are J.C. Egnew and L. Ray Moncrief. 

During at least the relevant time, Egnew was the president of OVC. Moncrief was 

a director of OVC and an officer of Kentucky Highlands.

The root of this dispute is three lawsuits filed against various of the plaintiffs 

by a company called LEEP, Inc. and one of LEEP’s insiders, Roger Blanken. LEEP 

alleged that it entered into “joint venture negotiations” with OVC. During the 

negotiations, Egnew signed on OVC’s behalf a non-disclosure and noncircumvention agreement (the “NDA”) which prevented OVC from contacting 

LEEP’s lenders or customers.

Eventually, LEEP and OVC signed a letter of intent which “contemplated 

the formation of a new company to manufacture, in Kentucky, steel insulated

building panels.” The companies were unable to reach an agreement, however, and 

negotiations ceased in August 2012.

At the time, LEEP owed more than $7 million to Fortress Credit 

Corporation and was in default under the terms of the parties’ financing agreement. 

After joint venture negotiations between LEEP and OVC ceased, Kentucky 

Highlands purchased Fortress’s rights under the financing agreement. Kentucky 

Highlands then repossessed LEEP’s assets and sold the assets to plaintiff Stearns 

Manufacturing, which is a subsidiary of OVC. Stearns Manufacturing no longer 

exists; OVC now owns Stearns’ assets and liabilities.

With the three lawsuits underlying this action, LEEP and Blanken asserted 

that Kentucky Highlands wrongfully repossessed their assets.

The first lawsuit was brought by LEEP in Jefferson Circuit Court against 

Kentucky Highlands, OVC, Egnew, and Moncrief (the “LEEP lawsuit[”]). With 

this lawsuit, LEEP alleged that the insureds had devised a scheme to “force LEEP 

out of business and to take over LEEP’s business by virtue of obtaining LEEP’s 

confidential information and then purchasing the Fortress note.” LEEP alleged that, 

after buying the note, the insureds gave notice of default to LEEP and took 

possession of LEEP’s facility and its assets and “took over LEEP’s business and 

contacted LEEP’s customers, all in an effort to destroy LEEP and to take over 

LEEP’s business through unlawful means.” LEEP sought $30 million in damages.

The second lawsuit was brought by Blanken, who sued Kentucky Highlands 

and OVC in this Court. See Blanken, et al. v. Kentucky Highlands Investment 

Corporation, et al., No. 6:13-47-DLB (E.D. Ky. filed April 22, 2013) (the “Blanken 

Kentucky action”). With this action, Blanken asserted that he—not LEEP—owned 
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a major piece of equipment repossessed by Kentucky Highlands called the 

Bradbury Roll Forming Machine and, thus, Kentucky Highlands had wrongfully 

repossessed it and sold it to OVC.

The third lawsuit was also brought by Blanken, this time in state court in 

Pennsylvania (the “Blanken Pennsylvania action”). In the Pennsylvania action, 

Blanken again sued Kentucky Highlands and OVC again asserting that the insureds 

wrongfully repossessed certain other inventory that belonged to him, not to LEEP. 

That action was later removed to federal court in Pennsylvania, which transferred 

the case to this Court. See Blanken v. Kentucky Highlands Investment Corporation, 

et al., 6:14-cv-202-DLB (E.D. Ky. Removed March 7, 2014).

Kentucky Highlands, OVC, Egnew, and Moncrief were insured by at least 

one of the defendant insurers in this action: Grange Mutual Casualty Co., 

Scottsdale Indemnity Company, or Auto-Owners/Owners Insurance Company 

(together, “Owners”).1 These insurers asserted, however, that the claims brought 

by LEEP and Blanken against their insureds were not covered under the applicable 

insurance policies. Grange refused to defend their insureds at all. Owners offered 

to defend the insureds under a “reservation of rights” and appointed counsel to 

represent them. Scottsdale did the same, except with regard to Moncrief, who 

Scottsdale refused to defend at all.

The insureds, however, retained their own counsel to represent them. With 

this action, they seek reimbursement for the amounts they paid to defend 

themselves in the three lawsuits. They assert a breach of contract claim and seek a 

declaratory judgment that the insurance companies were obligated to defend them 

in the underlying actions. They also assert claims for statutory bad faith and 

common-law bad faith against Scottsdale and Grange.

Each of the insurance company defendants assert a counterclaim in which 

they ask the Court to declare that they have no duty to reimburse their insureds for 

the costs incurred in defending the underlying actions. In addition, Owners asks 

that Kentucky Highlands be required to reimburse it for the costs of defending it in 

the underlying actions. None of the insurers seek to recover any amounts paid by 

them to settle the underlying actions.

The insureds move for partial summary judgment, asking for judgment in 

their favor that the insurance companies had a duty to defend them in the underlying 

actions. Each of the insurance companies also moves for summary judgment, 

asking the Court to find that they had no duty to defend the plaintiffs.

Outdoor Venture Corp. v. Phila. Indem. Ins. Co., No. 6:16-cv-182-KKC, 2018 WL 4656400, at 

*1–2 (E.D. Ky. Sept. 27, 2018) (citations omitted).

1 The insureds’ claims against a fourth insurer, Philadelphia Indemnity Insurance Company, were voluntarily 

dismissed by the insureds.
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After the plaintiffs voluntarily dismissed their claims against Philadelphia Indemnity 

Insurance Company, the district court issued a lengthy opinion in which it concluded that summary 

judgment should be entered in favor of Grange and Owners because neither insurer had a 

contractual duty to defend the plaintiffs in the underlying actions. Id. at *4–11. The district court 

further held that Scottsdale “complied with its duty to defend OVC and Egnew by appointing 

counsel to represent them in the LEEP and Blanken actions,” but “breached its duty to defend 

Moncrief in the LEEP and Blanken actions.” Id. at *19. 

Subsequently, the district court entered agreed orders that dismissed all claims by the 

plaintiffs against Owners, all counterclaims by Owners against the plaintiffs, all claims by 

Moncrief against Scottsdale, and Scottsdale’s counterclaim against Moncrief. Outdoor Venture 

Corp. v. Phila. Indem. Ins. Co., No. 6:16-cv-182-KKC, 2020 WL 891213, at *1 (E.D. Ky. Feb. 

24, 2020). Finally, the district court granted summary judgment to Grange and Scottsdale on the 

plaintiffs’ bad-faith claims and dismissed any counterclaims by the insurers as moot. Id. at *2. 

Thus, the only issues now remaining before us on appeal involve the plaintiffs’ claims that Grange 

and Scottsdale are liable for reimbursement of the expenses incurred by the plaintiffs in obtaining 

independent counsel to defend themselves in the underlying lawsuits.

DISCUSSION

Standard of Review

We review de novo a district court’s grant of summary judgment. See Dodd v. Donahoe, 

715 F.3d 151, 155 (6th Cir. 2013). Summary judgment is appropriate only “if the movant shows 

that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a 

matter of law.” Fed. R. Civ. P. 56(a). A genuine dispute of material fact exists when, assuming 

the truth of the non-moving party=s evidence and construing all inferences from that evidence in 
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the light most favorable to the non-moving party, there is sufficient evidence for a trier of fact to 

find for that party. See Ciminillo v. Streicher, 434 F.3d 461, 464 (6th Cir. 2006).

Applicable Law

The district court exercised its diversity jurisdiction over this dispute pursuant to the 

provisions of 28 U.S.C. § 1332. Consequently, on appeal we are obligated to apply the substantive 

law of the forum state—here, the Commonwealth of Kentucky. See Erie R.R. Co. v. Tompkins, 

304 U.S. 64, 78 (1938); Fox v. Amazon.com, Inc., 930 F.3d 415, 422 (6th Cir. 2019) (citation 

omitted). 

At issue in this appeal are the terms of insurance policies issued by Grange and Scottsdale 

in favor of OVC and its officers and directors, specifically those terms setting forth the 

requirements for the insurance companies to defend the plaintiffs against the allegations made by 

LEEP and Blanken. The Kentucky Supreme Court has held consistently that the construction of 

insurance contracts generally is considered a matter of law to be determined by the court, see, e.g., 

Bituminous Cas. Corp. v. Kenway Contracting, Inc., 240 S.W.3d 633, 638 (Ky. 2007), and “[t]he 

determination of whether a defense is required must be made at the outset of the litigation.” James 

Graham Brown Found., Inc. v. St. Paul Fire & Marine Ins. Co., 814 S.W.2d 273, 279 (Ky. 1991). 

We too have recognized explicitly that “[u]nder Kentucky law, a court should determine at the 

outset of litigation whether an insurance company has a duty to defend its insured by comparing 

the allegations in the underlying complaint with the terms of the insurance policy.” Westfield Ins.

Co. v. Tech Dry, Inc., 336 F.3d 503, 507 (6th Cir. 2003) (citation omitted).

In making that determination, as well as in construing other contractual provisions, “[t]he 

language of a written insurance policy is given its plain meaning, unless terms are otherwise 

defined therein.” Am. Mining Ins. Co. v. Peters Farms, LLC, 557 S.W.3d 293, 296 (Ky. 2018)
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(citation omitted). If the meaning of any contract term is ambiguous, however, the ambiguity must

be “interpreted against the drafter-insurer.” Id. (citation omitted).

Claims Against Grange

The district court ruled that Grange had no duty to defend the plaintiffs against the 

allegations made by LEEP and Blanken. Specifically, the district court concluded that Grange was 

required to defend its insureds only from claims of “bodily injury,” “property damage,” or 

“personal and advertising injury.” Because, according to the district court, the lawsuits filed by 

LEEP and Blanken did not allege actions that fell within the definitional parameters of those 

contractual terms, no duty to defend ensued. 

Bodily Injury or Property Damage

Pursuant to the provisions of Grange’s policies, the company agreed:

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.

More specifically, Grange’s liability for, and duty to defend against, bodily injury and property 

damage came into play only if the alleged bodily injury or property damage was caused by an 

“occurrence” in the coverage territory during the policy period. Because the policies defined an 

“occurrence” to mean “an accident,” coverage—and thus a duty to defend—was excluded in 

situations in which the bodily injury or property damage was “expected or intended from the 

standpoint of the insured.”

Both the LEEP complaint and the Blanken complaints alleged that actions undertaken by 

the plaintiffs resulted in machinery and other assets belonging to LEEP or to Blanken being taken 

without legal authorization. According to the Grange policies, such takings could be considered
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“property damage,” which the policies defined as either “[p]hysical injury to tangible property” or 

“[l]oss of use of tangible property that is not physically injured.” As the policies also provided, 

however, for coverage to exist for such property damage, the physical injury or the loss of use 

must not have been “expected or intended from the standpoint of the insured” and must not have 

arisen out of a failure by the insured (or a person acting on the behalf of an insured) “to perform a 

contract or agreement in accordance with its terms.”

Although the Grange policies at issue in this appeal did not define the term “accident” 

explicitly, Kentucky courts have taken numerous opportunities to offer guidance for construing 

such a contractual provision. In Fryman v. Pilot Life Insurance Co., 704 S.W.2d 205, 206 (Ky. 

1986), for example, the Kentucky Supreme Court noted that because the word “accident,” “as used 

in insurance policies, [has] never acquired a technical meaning in law, [it] must be interpreted 

according to the usage of the average [person].” Thus, “[a]n accident is generally understood as 

an unfortunate consequence which befalls an actor through . . . inattention, carelessness or perhaps 

for no explicable reason at all.” Id. “Conversely, a consequence which is a result of plan, design 

or intent is commonly understood as not accidental.” Id.

More than a quarter of a century later, following years of attempting to divine the 

applicability of the concept of “accident” to different fact patterns, see, e.g., Bituminous Cas. 

Corp., 240 S.W.3d at 638–40, and Cincinnati Ins. Co. v. Motorists Mut. Ins. Co., 306 S.W.3d 69 

(Ky. 2010), the Kentucky Supreme Court made clear in Martin/Elias Properties, LLC v. Acuity, 

544 S.W.3d 639, 642–43 (Ky. 2018), “that the legal analysis used to determine whether something 

constitutes an accident for issues of [commercial general liability] coverage is the doctrine of 

fortuity, which encompasses both intent and control.” (Emphasis in original.) Specifically, courts

must determine:
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1) whether the insured intended the event to occur; and 2) whether the event was a 

“‘chance event’ beyond the control of the insured.” If the insured did not intend 

the event or result to occur, and the event or result that occurred was a chance event 

beyond the control of the insured, then [commercial general liability] coverage 

covering accidents will apply to the benefit of the insured.

Id. at 643 (emphasis in original) (footnote omitted).

Arguing that their actions in repossessing assets belonging to LEEP and Blanken fell under 

the policies’ definitions of an “accident,” the plaintiffs point to a section heading in the Bituminous 

Casualty opinion that states, “Accident includes intentional acts that cause unexpected or 

unintended results from the standpoint of the insured.” Bituminous Cas. Corp., 240 S.W.3d at 

638. They thus insist that, although they did intend to repossess the LEEP and Blanken assets, 

they did not intend to interfere with any “legitimate and senior rights” of LEEP and Blanken. As 

a result, they maintain that the actual interference with what were alleged to be superior rights

must be considered an act beyond their control.

Such an argument puts too fine a point on an interpretation of the holding in Martin/Elias 

Properties. In essence, what the plaintiffs are arguing is that they intended to take possession of 

the assets of LEEP and Blanken, but only if such repossession was not improper, or in other words, 

did not result in a denial of insurance coverage. Such a formulation of the plaintiffs’ actions turns 

the concepts of accident and fortuity on their heads. Indeed, the plaintiffs intended the exact 

damage that occurred—the seizure of the assets of LEEP and Blanken. The decision to seize the 

assets, as well as the method of doing so, was completely within the plaintiffs’ control and thus 

cannot be considered accidental.

The Grange policies also explicitly excluded from coverage any damage to property that 

was not physically injured but which arose out of a failure of the insured “to perform a contract or 

agreement in accordance with its terms.” In its second amended complaint in Jefferson Circuit 
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Court, LEEP alleged that Egnew, as president of OVC, signed a non-disclosure and noncircumvention agreement with LEEP that “precluded OVC, its agents and representatives from 

contacting any of LEEP’s creditors or lenders or customers or suppliers.” According to LEEP,

OVC and Egnew breached that agreement “by using confidential and proprietary information 

provided, including LEEP’s lender negotiations and non-public lender agreements for a lucrative 

settlement of debt . . . .” 

LEEP’s allegation regarding the plaintiffs’ failure to abide by the terms of the nondisclosure and non-circumvention agreement brought the plaintiffs’ actions squarely within yet 

another explicit exclusion to coverage for property damage under the Grange policies. Because 

Grange thus had no duty to defend the plaintiffs in the underlying actions alleging property 

damage, Grange also has no responsibility for now reimbursing the plaintiffs for attorneys’ fees 

and costs associated with retaining independent counsel.

Personal and Advertising Injury

Under the provisions of the commercial general liability policy Grange had with the 

plaintiffs, the insurance company also agreed:

We will pay those sums that the insured becomes legally obligated to pay as 

damages because of “personal and advertising injury” 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 “personal and advertising injury” to which 

this insurance does not apply.

In pertinent part, the policy defined “personal and advertising injury” as injury arising out 

of the “wrongful entry into . . . premises that a person occupies” or “[o]ral or written publication, 

in any manner, of material that slanders or libels a person or organization or disparages a person’s 

or organization’s goods, products, or services.” The policy included specific exclusions from 

coverage, however, for any such injury “caused by or at the direction of the insured with the 
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knowledge that the act would violate the rights of another and would inflict ‘personal and 

advertising injury’” or any such injury “arising out of oral or written publication of material, if 

done by or at the direction of the insured with knowledge of its falsity.”

The plaintiffs argue on appeal that the district court could not properly determine Grange’s 

duty to defend them against LEEP’s2claims of “personal and advertising injury” merely by 

examination of the allegations in the complaint in the underlying action. In putting forth that 

argument, the plaintiffs assert that, at the pleading stage of the litigation, it is impossible to 

establish whether they knowingly violated the rights of another—a prerequisite to invocation of 

the exclusion provision of the policy. Rather, the plaintiffs contend that such information can be 

ascertained only through information obtained pursuant to discovery or by a finder of fact at trial.

As we have noted already, however, Kentucky law calls upon courts to determine an 

insurer’s duty to defend at the outset of litigation by reference to the allegations in the underlying 

complaint. Westfield Ins. Co., 336 F.3d at 507. Here, the allegations of “personal and advertising 

injury” in LEEP’s complaint made clear that the actions undertaken by the plaintiffs fall outside 

the coverage provisions of Grange’s policies because of the plaintiffs’ alleged knowledge of the 

consequences of those actions. Specifically, LEEP’s second amended complaint against OVC, 

Egnew, Moncrief, Kentucky Highlands Investment Corporation, and others alleged, in pertinent 

part:

93. All Defendants were specifically instructed not to contact either Fortress or the 

landlord, and all Defendants agreed to keep the information provided by LEEP 

confidential and to make no contact with either Fortress or the landlord.

94. From on or about early 2012 through December 26, 2012, the Defendants 

conspired, planned, organized, and schemed, to force LEEP out of business and to 

take over LEEP’s business by virtue of obtaining LEEP’s confidential information 

and then purchasing the Fortress note.

2 Blanken did not allege “personal and advertising injury” in either of his underlying complaints.
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95. Nordstrom[, LEEP’s president,] communicated to Defendants his private 

negotiations with Fortress, and they used that confidential information to approach 

Fortress to obtain an assignment of the Note for only $750,000 and then give notice 

of default to LEEP[,] demand over $7 million dollars to be paid immediately, take 

possession of [a] former LEEP facility without any legal foreclosure action and 

wrongfully repossess all LEEP assets. Defendants substantially profited from the 

confidence it gained through LEEP.

96. On or about December 26, 2012 and continuing thereafter, Defendant, KHI, 

being assisted by other Defendants, then wrongfully entered the landlord’s 

premises and took manufactured LEEPCoreTM structural insulated panels and 

removed the Bradbury Roll Forming lines and related support equipment and 

removed other equipment and supplies belonging to LEEP and others.

97. KHI in concert with other Defendants wrongfully hired away the LEEP key 

employees Nordstrom had previously identified in confidential disclosures and 

took over LEEP’s business and contacted LEEP’s customers, all in an effort to 

destroy LEEP and to take over LEEP’s business through unlawful means.

98. Defendant, KHI, in concert with other Defendants wrongfully locked LEEP 

out of its Somerset fabrication building in an attempt to further destroy LEEP’s 

business. All actions of Defendants in furtherance of the scheme to destroy LEEP 

and use confidential information to take LEEP’s business were unlawful and all 

were performed by and through unlawful means.

. . . 

159. Sotera is a defense contractor which has entered a contract with LEEP 

regarding the manufacturing and construction of man camps for use of the United 

States Armed Forces. Sälzer is a Germany company which has entered into a 

contract with LEEP.

160. The Defendant Egnew slandered LEEP to Sotera and Sälzer by disparaging 

LEEP’s business.

Such statements clearly allege that the actions of the plaintiffs in this case now on appeal 

were taken with full knowledge of the fact that they would violate the rights of others, that the 

plaintiffs gained entry into a premises only as a result of violating the terms of a confidentiality 

agreement, and that representations made by Egnew disparaged an “organization’s goods, 

products, or services.” The district court thus did not err in ruling that Grange had no duty to 

defend the plaintiffs on LEEP’s claims of personal and advertising injury. Consequently, Grange 

also bears no liability for reimbursing the plaintiffs for the costs they incurred in employing

independent counsel for their defense.
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Claims Against Scottsdale

In a final appellate issue, plaintiffs OVC and Egnew contend that, even though Scottsdale 

appointed counsel to defend them in the lawsuits filed by LEEP and Blanken, the insurance 

company now should reimburse them for the costs of employing their own independent counsel. 

According to the plaintiffs, the attorneys provided by Scottsdale to defend them might have

operated under a conflict of interest because those attorneys allegedly also owed a duty to the 

insurance company to minimize any liability for the insurer.

Despite the plaintiffs’ claim that counsel provided by Scottsdale might consider their 

primary duty to be to the insurance company rather than to the plaintiffs themselves, Scottsdale 

appointed one law firm to represent the plaintiffs in the underlying lawsuits and retained an entirely

separate firm to represent the insurer’s interests. The Kentucky Bar Association has said, more 

than once, that “[w]hen an Insurer provides the defense to an Insured, the attorney represents the 

Insured but not the Insurer.” Ky. Bar Ass’n Ethics Op. KBA E-410 (1999).3

Moreover, the plaintiffs’ appellate brief claims to identify “examples of how counsel 

appointed by Scottsdale could manipulate the proof . . . in a way that would have a real impact on 

the coverage determination.” But before the district court, the plaintiffs admitted that they “are 

certainly not suggesting that appointed counsel did anything wrong in these cases[.]” So the 

plaintiffs essentially argue that Scottsdale’s reservation of rights alone created the prospect of a 

conflict of interest, entitling them to select their own counsel at the expense of Scottsdale. Of 

course, some jurisdictions hold that “a reservation of rights issued on certain bases creates a 

3 To be sure, Kentucky courts are not bound by the bar association’s ethics opinions. See, 

e.g., United States ex rel. U.S. Attorneys for the E. and W. Dist. of Ky. v. Ky. Bar Ass’n, 439 S.W.3d 

136, 141 (Ky. 2014). At the same time, the Kentucky Supreme Court has cited bar association

opinions as persuasive authority. See Hiatt v. Clark, 194 S.W.3d 324, 328 (Ky. 2006); Shoney’s, 

Inc. v. Lewis, 875 S.W.2d 514, 516 (Ky. 1994).
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conflict of interest such that the Insured is entitled to ‘independent counsel’ paid for by the 

Insurer.” Ky. Bar Ass’n Ethics Op. KBA E-410 (1999). But that “stance is based on the notion 

that the attorney has as clients both the Insured and the Insurer, a view to which Kentucky does 

not adhere.” Id. 

Further, the plaintiffs admit that they “did not explicitly . . . reject the defense offered by 

their insurance carriers” prior to hiring their own counsel. Even in jurisdictions that require 

appointment of independent counsel after an insurer’s reservation of rights, the insured generally 

must reject the insurer’s appointed counsel before it hires its own attorney. See, e.g., Trinity 

Universal Ins. Co. v. Stevens Forestry Serv., Inc., 335 F.3d 353, 356 n.3 (5th Cir. 2003) (applying 

Louisiana law); see also Douglas R. Richmond, Independent Counsel in Insurance, 48 San Diego 

L. Rev. 857, 874 (2011).

Even more, under the terms of the Scottsdale policy, the plaintiffs had to seek the written 

consent of the insurer before incurring any additional expenses:

The Insureds agree not to . . . incur any Costs, Charges and Expenses or 

otherwise assume any contractual obligation or admit any liability with respect to 

any Claim without the prior written consent of the Insurer, such consent not to be 

unreasonably withheld. The Insurer shall not be liable for any settlement, Costs, 

Charges and Expenses, assumed obligation or admission to which it has not 

consented.

There is no evidence that plaintiffs in this case ever made such a request.

At least one district court has stated that “the right to independent counsel when an 

insurance company defends under a reservation is a novel question of state law” in Kentucky. 

Twin City Fire Ins. Co. v. Chewning, No. 5:18-CV-124-TBR, 2019 WL 2147282, at *8 (W.D. Ky. 

May 14, 2019). And two other federal trial courts also have grappled with the issue. Outdoor 

Venture Corp., 2018 WL 4656400, at *18–19; Auto-Owners Ins. Co. v. Egnew, 152 F. Supp. 3d 

868, 879 (E.D. Ky. 2016). We feel confident, however, that in the circumstances of this particular 
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case, Kentucky law does not require reimbursement for the counsel plaintiffs selected. OVC and 

Egnew not only failed to identify any injury that they suffered as a result of Scottsdale providing 

them with legal counsel, they also failed to take the steps necessary to justify the actions for which 

they now seek reimbursement. The district court thus did not err in granting summary judgment 

to Scottsdale on the claim that the insurer was required to pay the cost of independent counsel 

retained by OVC and Egnew.

CONCLUSION

After paying premiums for insurance coverage that included a duty on the part of the 

insurance companies to defend the insureds from certain claims seeking monetary damages, the 

plaintiffs suddenly found themselves either denied the benefits of that coverage altogether or 

worried that the defense offered by the insurance company would not have the best interests of the 

insureds at heart. The district court did not err, however, in concluding that the claims against the 

plaintiffs for “bodily injury or property damage” and for “personal and advertising injury” by 

LEEP and Blanken fell within exclusions to coverage in the Grange policies. Because Grange thus 

had no duty to defend those claims, it was not liable for the costs incurred by the plaintiffs in 

retaining their own counsel. Additionally, Scottsdale did provide OVC and Egnew with legal 

representation—representation that the plaintiffs failed to reject prior to hiring their own counsel. 

The district court thus also did not err in denying OVC and Egnew reimbursement for the fees they 

incurred in hiring independent counsel.

We AFFIRM the judgment of the district court.