1

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

PENNSYLVANIA NATIONAL MUTUAL )

CASUALTY INSURANCE COMPANY, )

Plaintiff, )

)

v. ) CIVIL ACTION NO. 13-00066-KD-M

) 

ST. CATHERINE OF SIENA PARISH and )

KIKER CORPORATION, )

Defendants. )

ORDER

This matter is before the Court on Pennsylvania National Mutual Casualty Insurance 

Company (Pennsylvania National)’s Motion for Summary Judgment (Docs. 72, 74-1 to 74-10, 

75-77, 89-90), Kiker Corporation (“Kiker”)’s Response (Doc. 105), St. Catherine of Siena Parish 

(“St Catherine)’s Response (Doc. 102, 103), and Pennsylvania National’s Replies (Docs. 

107-108); and St. Catherine’s Motion for Summary Judgment (Docs. 70-71, 73, 80), 

Pennsylvania National’s Response (Doc. 104), and St. Catherine’s Reply (Doc. 106).1

I. Facts2

This case has its origins in St. Catherine of Sienna Parish v. Kiker Corp., Thompson 

Eng’g, Inc., Thompson Eng’g Testing, Inc., and Damon Lett Roofing, filed in the Circuit Court of 

 1 Pennsylvania National asserts that St. Catherine filed a renewed motion to strike its exhibits 6, 7, and 10. 

(Doc. 107 at 2). St. Catherine has not actually filed any such motion, but references “renewal” of its motion to 

strike within the body of its Response to summary judgment, claiming as well the Court’s rulings have violated its 

due process rights. (Doc. 103 at 2). Additionally, St. Catherine endeavors to move to strike, again within the 

body of its summary judgment briefing, all correspondence offered by Pennsylvania National as exhibits (Doc. 103 

at 2). Regardless, the matter is now MOOT due to Kiker’s concession of its counterclaims (which are apparently 

the subject of the exhibits included in St. Catherine’s renewal and new request to strike) and moreover, the Court did 

not rely on any of the exhibits in its ruling.

2 At the summary judgment stage, the facts are taken in the light most favorable to the non-movant. Tipton 

v. Bergrohr GMBH–Siegen, 965 F.2d 994, 998-999 (11th Cir. 1992). The “facts, as accepted at the summary 

judgment stage of the proceedings, may not be the actual facts of the case.” Priester v.. City of Riviera Beach, 208 

F.3d 919, 925 n. 3 (11th Cir. 2000).

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Mobile County, Alabama (CV 2010-900578). (Doc. 71-1 at 1-10, 40-44 (and as amended)). 

The state court case concerned a dispute stemming from a roofing construction contract between 

Pennsylvania National’s insured, Kiker, and St. Catherine, for Kiker to re-roof two of St. 

Catherine’s buildings (the main building and the “horseshoe” building). Kiker executed a May 

14, 2003 written contract for the roofing work on the main building (Doc. 71-1 at 47), but did not 

for the horseshoe building. Kiker then sub-contracted the roofing work out to Damon Lett

Roofing on May 22, 2003. (Doc. 71-1 at 35-37). The roofs were replaced with a “40 year 

roof” shingle, and the work was completed in March 2004 (main building) and February 2005 

(horseshoe building). However, the roofs began leaking in April 2008 (main building) and 

February 2005 (horseshoe building). Despite 40-50 service visits, Kiker could neither diagnose 

nor fix the problem and the leaks continued. St. Catherine hired a roof inspector and an 

under-the-shingle inspection allegedly revealed installation errors, construction defects, and 

breaches of the scope of work established by Kiker’s agreement with St. Catherine. (Doc. 71-2 

at 333, 338, 343-350, 377, 395, 404, 477). 

As such, on March 10, 2010, St. Catherine sued Thompson Engineering, Thompson 

Engineering Testing, and Kiker in state court for negligence, wantonness, breach of contract, and 

misrepresentation/suppression. (Doc. 71-1 at 1-10, 40-44). Kiker filed a Third-Party Complaint 

against Damon Lett Roofing (its sub-contractor) for breach of contract, negligence, breach of 

implied/express warranties, breach of implied warranty of workmanship, common law 

indemnity, and breach of contract for failure to procure insurance. (Doc. 71-1 at 18-30).

At the time of the roofing project, Kiker had a commercial general liability (“CGL”) 

policy with Pennsylvania National. (Doc. 76). As such, Pennsylvania National defended 

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Kiker, against St. Catherine’s claims, in the state court litigation under a reservation of rights. 

In doing so, however, Pennsylvania National advised Kiker that there was no coverage under the 

terms of the insurance policy for “[a]ny damage as a result of breach of warranty or breach of 

contract [as it] is not covered as it is not considered an occurrence.” (Doc. 74-3 at 5). 

Only St. Catherine’s claims against Kiker proceeded to trial. During trial, the Court 

granted a motion for judgment as a matter of law as to St. Catherine’s claims against Kiker for 

negligence, wantonness, and misrepresentation/suppression, stating that the only remaining claim 

for the jury was St. Catherine’s breach of contract claim. (Doc. 75-1 at 56). 

At trial, St. Catherine presented evidence that Kiker provided faulty and/or defective 

workmanship on the roofs for the main and horseshoe buildings. St. Catherine also presented 

evidence that this faulty workmanship resulted in the building’s gypsum decking being water 

damaged and the main building’s interior ceiling being damaged. (Doc. 71-2). Trial 

testimony indicated that the main building’s interior ceiling repairs (in 10 areas) would cost 

$104,127.63 to repair. (Doc. 71-2 at 56).

The state court judge charged the jury, in relevant part, as follows:

***

....This is an action for breach of contract. A contract is breached or broken when a 

party does not do what he promised to do in the contract. To recover damages from Kiker

Corporation for breach of contract Saint Catherine of Siena Parish must prove to your 

reasonable satisfaction all of the following: One, that Saint Catherine of Siena and Kiker

Corporation entered into a contract; two, that Saint Catherine did all the things that the 

contract required it to do; three, that the Kiker Corporation failed to do the things that the 

contract required it to do; and four, that Saint Catherine of Siena Parish was harmed by 

that failure. Those are the elements of breach of contract.

Damages, the general rule for breach of contract, if you decide that Saint Catherine of 

Siena Parish has proved their claim of breach of contract, you must also decide how 

much money will reasonably compensate that party for the harm caused by the breach. 

This compensation is called damages. The purpose of such damages is to put the party 

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claiming the breach in as good a position as they would have had if the opposing party 

had not broken the contract.... If you find that the Defendant breached its written contract 

you must also determine whether the remedy contained in the warranty failed its essential 

purpose. By Defendant's warranty it promised [sic] do that during a period of two years 

from the date of substantial completion of the roof it would at its own cost make or cause 

to be made such repairs to said roof and compositional flashing in faults or defects in 

workmanship applied by or through the contractor as may be necessary. A remedy such 

as one found in this warranty fails of its essential purpose if the Defendant refused to 

repair or replace the malfunctioning equipment or if it failed to do so in a reasonable 

period of time under the circumstances....

***

It is a general rule in contracts for works and services that there is an implied duty to 

perform that contract or services with such degree of skill or workmanship which is 

possessed by those of ordinary skill in the particular trade for which one is employed....

(Doc. 75-2 at 3-5 (emphasis added)). (See also Doc. 75-1 at 56-58).3

Following deliberations, the jury found in favor of St. Catherine and returned a general 

verdict -- “find[ing] the issues in favor of the plaintiff and against the Kiker Corporation and 

assess the plaintiff’s damages as follows: $350,000.” (Doc. 71-1 at 45). The state court judge

entered a “Jury and Verdict” Order stating St. Catherine had been awarded $350,000 in 

compensatory damages. (Id. at 46). Kiker and St. Catherine appealed the verdict, which 

remains pending before the Alabama Supreme Court.

As a result of the $350,000 verdict against Kiker, Pennsylvania National initiated this 

federal declaratory judgment action4 asking this Court to determine whether it has a duty to 

indemnify Kiker (i.e., pay St. Catherine’s jury award against Kiker). Pennsylvania National 

seeks a declaration that it is not required to indemnify Kiker because St. Catherine’s breach of 

 

3 An express limited labor warranty was issued by Kiker to St. Catherine as part of the St. Catherine-Kiker 

roofing contract. (Doc. 71-4, p. 4) This express warranty stated that it was in lieu of all other warranties, expressed 

or implied. Id. The state court judge charged the jury on the remedy promised in Kiker’s express limited labor 

warranty and stated, regarding determining extent of damages, that the jury should consider whether the remedy 

failed in its essential purpose. Although not specifically stated, it is presumed that one purpose of the express 

warranty charge was to convey to the jury that if the express warranty failed in its essential purpose then the express 

warranty’s limitation on damages could be disregarded.

4 The Complaint alleges federal diversity jurisdiction. (Doc. 17 at 2).

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contract claim against Kiker does not constitute an “occurrence” under the policy. In the 

alternative, Pennsylvania National argues that the policy exclusions (contractual liability

exclusion and “your work” exclusion) prevent recovery.

II. Standard of Review

“The court shall grant summary judgment 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) (Dec. 2010). Rule 56(c) provides as follows:

(1) Supporting Factual Positions. A party asserting that a fact cannot be or is 

genuinely disputed must support the assertion by:

(A) citing to particular parts of materials in the record, including 

depositions, documents, electronically stored information, affidavits or 

declarations, stipulations (including those made for purposes of the motion only), 

admissions, interrogatory answers, or other materials; or

(B) showing that the materials cited do not establish the absence or 

presence of a genuine dispute, or that an adverse party cannot produce admissible 

evidence to support the fact.

(2) Objection That a Fact Is Not Supported by Admissible Evidence. A party 

may object that the material cited to support or dispute a fact cannot be presented 

in a form that would be admissible in evidence.

(3) Materials Not Cited. The court need consider only the cited materials, but it 

may consider other materials in the record.

(4) Affidavits or Declarations. An affidavit or declaration used to support or 

oppose a motion must be made on personal knowledge, set out facts that would be 

admissible in evidence, and show that the affiant or declarant is competent to 

testify on the matters stated. 

FED.R.CIV.P. Rule 56(c) (Dec. 2010). 

The party seeking summary judgment bears the “initial responsibility of informing the 

district court of the basis for its motion, and identifying those portions of ‘the pleadings, 

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depositions, answers to interrogatories, and admissions on file, together with the affidavits, if 

any,’ which it believes demonstrate the absence of a genuine issue of material fact.” Clark v. 

Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991) (quoting Celotex Corp. v. Catrett, 477 

U.S. 317, 323 (1986)). If the nonmoving party fails to make “a sufficient showing on an 

essential element of her case with respect to which she has the burden of proof,” the moving 

party is entitled to summary judgment. Celotex, 477 U.S. at 323. “In reviewing whether the 

nonmoving party has met its burden, the court must stop short of weighing the evidence and 

making credibility determinations of the truth of the matter. Instead, the evidence of the 

non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.” 

Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 998-999 (11th Cir. 1992) (internal citations and 

quotations omitted).

The applicable Rule 56 standard is not affected by the filing of cross-motions for 

summary judgment. See, e.g., Am. Bankers Ins. Group v. United States, 408 F.3d 1328, 1331 

(11th Cir. 2005); Gerling Global Reins. Corp. of Am. v. Gallagher, 267 F.3d 1228, 1233 (11th

Cir. 2001). “Cross-motions for summary judgment will not, in themselves, warrant the court in 

granting summary judgment unless one of the parties is entitled to judgment as a matter of law 

on facts that are not genuinely disputed.” United States v. Oakley, 744 F.2d 1553, 1555 (11th

Cir. 1984) (citation omitted). The Court is mindful that “[w]hen both parties move for 

summary judgment, the court must evaluate each motion on its own merits, resolving all 

reasonable inferences against the party whose motion is under consideration.” Muzzy Prods., 

Corp. v. Sullivan Indus., Inc., 194 F.Supp.2d 1360, 1378 (N.D. Ga. 2002)). The Court has 

reviewed the facts submitted by each party and has made its own examination of the record.

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III. Kiker v. Pennsylvania National: Kiker’s Counterclaims

Kiker has specifically withdrawn all of its counterclaims against Pennsylvania National

“or otherwise concede[d]” them. (Doc. 105 at 2). As such, Pennsylvania National’s motion 

for summary judgment against Kiker, as to those counterclaims, is MOOT.

IV. Analysis5

A. Occurrence

Pennsylvania National contends that it is not obligated to indemnify Kiker for the 

$350,000 verdict for breach of contract because there was no “occurrence” to trigger coverage 

under the CGL policy. St. Catherine contends that faulty workmanship resulted in a covered 

occurrence that caused, through repeated exposure to rain, damage to the gypsum substrate of the 

roof, as well as the interior and ceiling of the building. 

The relevant CGL policy’s insuring agreement states that insurer Pennsylvania National

must pay the sums that the insured Kiker becomes legally obligated to pay as damages because 

of “bodily injury” or “property damage” caused by an “occurrence:”

1. Insuring Agreement

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

damages because of ... “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....

***

b. This insurance applies to ...“property damage” only if:

(1) The ... “property damage” is caused by an “occurrence” that takes 

place in the “coverage territory” ...

 

5 The parties’ briefing cites the May 1, 2009-May 1, 2010 CGL policy -- even though the roofs were 

completed in 2004 and 2005 and began leaking in 2005 and 2008. As the parties appear to agree that the 

2009-2010 policy is the relevant and applicable policy (and no party has objected to this), the Court will presume 

that such is correct for purposes of this summary judgment review.

Additionally, St. Catherine repeatedly references the Plaintiff by an incorrect name, as “Continental,” in its 

summary judgment briefing; the Court presumes this is a typographical error.

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(Doc. 76 at 92).

The CGL policy defines “occurrence” as “an accident, including continuous or repeated 

exposure to substantially the same general harmful conditions.” (Doc. 76 at 105). Under 

Alabama law, the term “accident” means “an unintended and unforeseen injurious occurrence; 

something that does not occur in the usual course of events or that could be reasonably 

anticipated.” Hartford Cas. Ins. Co. v. Merchs. & Farmers Bank, 928 So.2d 1006, 1011 (Ala.

2005) (citing St. Paul Fire & Marine Ins. Co. v. Christiansen Marine, Inc., 893 So.2d 1124, 1136 

(Ala. 2004)).

Pennsylvania National argues that Kiker’s breach of contract claim cannot give rise to an 

occurrence under the policy. Penn also argues that all the cases cited by St. Catherine to the 

contrary are distinguishable because the verdicts in each of those cases included tort claims as 

well as breach of contract claims. The court disagrees with both arguments. 

In Moss v. Champion Insurance Company, 442 So.2d 26, 29 (Ala. 1983), the Alabama 

Supreme Court found an “occurrence” for CGL policy purposes when the contractor's faulty 

workmanship resulted in not only a poorly constructed roof -- the only job the contractor had 

been hired to perform -- but damage to other parts of the plaintiff's home. One year later the

Court held that faulty workmanship itself is not an occurrence for purposes of a CGL policy. 

U.S. Fid. & Guar. Co. v. Warwick, 446 So.2d 1021 (Ala. 1984). Given the seemingly conflicting 

decisions in Warwick and Moss, the Alabama Supreme Court then explained in Town & Country 

Prop., L.L.C. v. Amerisure Ins. Co., 111 So.3d 699, 707 (Ala. 2011) (emphasis added) that: 

“[w]e may conclude that faulty workmanship itself is not an occurrence but that faulty 

workmanship may lead to an occurrence if it subjects ... other parts of the structure to 

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‘continuous or repeated exposure’ to some other ‘general harmful condition’ (e.g., the rain in 

Moss) and, as a result of that exposure ... other parts of the structure are damaged.” The 

holding in Town and Country was succinctly summarized by Judge Steele as follows: 

the rule in Alabama is that there is an “occurrence” when faulty work results in damage 

to nondefective parts of a structure or property, but that there is no “occurrence” insofar 

as the insured is held liable for repairing or replacing the faulty work itself.

Cincinnati Ins. Co. v. Amerisure Ins. Co., 2012 WL 4033724, 6 (S.D. Ala. Sept. 12, 2012).

The Alabama Supreme Court very recently clarified “the dichotomy” between the court’s 

holdings in Warwick and Moss, in Owners Ins. Co. v. Jim Carr Homebuilder, LLC, 2014 WL 

1270629, *5-6 (Ala. Mar. 28, 2014), stating as follows:

6

[The insurance company argues] that faulty workmanship performed as part of a 

construction or repair project might result in an “occurrence” only to the extent that that 

workmanship results in property damage to real or personal property that is not part of 

that construction or repair project. However, in making that argument Owners asks the 

term “occurrence” to do too much. The term “occurrence” is defined in the Owners 

policy simply as “an accident, including continuous or repeated exposure to substantially 

the same general harmful conditions.” If some portion of the Owners policy seeks to 

affect coverage by references to the nature or location of the property damaged, it is not 

the provision in the policy for coverage of occurrences. The policy simply does not 

define “occurrence” by reference to such criteria. See, e.g., Lamar Homes, Inc. v. Mid–

Continent Cas. Co., 242 S.W.3d 1, 9 (Tex.2007) (“The CGL policy, however, does not 

define an ‘occurrence’ in terms of the ownership or character of the property damaged by 

the act or event. Rather, the policy asks whether the injury was intended or fortuitous, 

that is, whether the injury was an accident.... [N]o logical basis within the ‘occurrence’ 

definition allows for distinguishing between damage to the insured's work and damage to 

some third-party's [work or] property ....”). See also Travelers Indem. Co. of America v. 

Moore & Assocs., Inc., 216 S.W.3d 302, 308–09 (Tenn.2007); United States Fire Ins. Co. 

v. J.S.U.B., Inc., 979 So.2d 871, 883 (Fla.2007) (“[W]e fail to see how defective work 

that results in a claim against the contractor because of injury to a third party or damage 

to a third party's property is ‘unforeseeable,’ while the same defective work that results in 

a claim against the contractor because of damage to the completed project is 

‘foreseeable.’ This distinction would make the definition of ‘occurrence’ dependent on 

which property was damaged.); 9A Couch on Insurance § 129:4 (3d ed. 2005) (“[W]hat 

does constitute an occurrence is an accident caused by or resulting from faulty 

 6 The prior decision, Owners Ins. Co. v. Jim Carr Homebuilder, LLC, 2013 WL 5298575 (Ala. Sept. 20, 

2013), was withdrawn and superseded on grant of rehearing on March 28, 2014.

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workmanship, including damage to any property other than the work product and damage 

to the work product other than the defective workmanship.”). Indeed, to read into the 

term “occurrence” the limitations urged by Owners would mean that, in a case like this 

one, where the insured contractor is engaged in constructing an entirely new building, or 

in a case where the insured contractor is completely renovating a building, coverage for 

accidents resulting from some generally harmful condition would be illusory. There 

would be no portion of the project that, if damaged as a result of exposure to such a 

condition arising out of faulty workmanship of the insured, would be covered under the 

policy.

***

....we think it prudent to restate that principle in more precise terms—faulty 

workmanship itself is not “property damage” “caused by” or “arising out of” an 

“occurrence.” See also Shane Traylor Cabinetmaker, LLC v. American Express Res. Ins. 

Co., 126 So.3d 163, 172 (Ala.2013) (Murdock, J., concurring specially) (“I would state 

the rule as follows: ‘faulty workmanship itself’ is not ‘property damage’ ‘caused by’ or 

‘arising out of’ an ‘occurrence.’ That is, the fact that the cost of repairing or replacing 

faulty workmanship itself is not the intended object of the insurance policy does not 

necessarily mean that, in an appropriate case, additional damage to a contractor's work 

resulting from faulty workmanship might not properly be considered ‘property damage’ 

‘caused by’ or ‘arising out of’ an ‘occurrence.”’). In sum, the cost of repairing or 

replacing faulty workmanship is not the intended object of a CGL policy issued to a 

builder or contractor. Accordingly, we conclude that the definition of the term 

“occurrence” does not itself exclude from coverage the property damage alleged in this 

case.

Contrary to Pennsylvania’s argument, the fact that Moss, Warwick, Town & Country, 

and Jim Carr, may have all included tort and contract claims, as opposed to only a contract claim, 

does not distinguish their holdings. The explanation as to when faulty workmanship may give 

rise to an occurrence did not rest on whether the verdict was for tort or contract. Rather the 

focus was on the claim of faulty workmanship. 

St. Catherine’s breach of contract claim against Kiker, as submitted to the jury, included 

the breach of the implied warranty to perform the contract with ordinary skill or workmanship.7

 7 In Pennsylvania’s reply it cites the jury instruction regarding the express warranty and then argues that 

the jury charge regarding the implied warranty was given only as “a possible measure of damages and not 

independent of the breach of contract claim....” (Doc. 107 at 8). Contrary to this confusing assertion, the 

transcript indicates that the judge charged the jury on the implied warranty as part of the breach of contract claim. 

(Doc. 75-2 at 5). 

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See e.g., Blackmon v. Powell, 132 So.3d 1, 5 (Ala. 2013) (discussing the general rule in 

contracts for work or services that there is an implied a duty to perform with that degree of skill

or workmanship which is possessed by those of ordinary skill in the particular trade for which 

one is employed). A claim for breach of an implied warranty (i.e., that the contract will be 

performed with ordinary skill or workmanship), is a claim of faulty workmanship. Thus, the 

cases that discuss faulty workmanship claims are applicable to implied workmanship warranty 

claims, as well as claims sounding in tort. 

St. Catherine’s breach of contract claim, which encompasses its faulty workmanship 

claim, includes damages not just for repair and replacement of the roofs, but also other property 

damage to the buildings – namely, to the gypsum substrate of the roof, as well as the interior and 

ceiling of the building. Because faulty workmanship subjected the structure to continuous or 

repeated exposure to water, resulting in damage to not only the roof but also other property, the 

court finds that the claim is for an “occurrence” as defined in the policy.

8

B. Exclusions

Pennsylvania National contends that if it is determined that St. Catherine’s claim is an 

“occurrence”, the policy excludes any recovery under two exclusions; the “your work” exclusion 

and the “contractual liability” exclusion.

In Alabama, “[g]eneral rules of contract law govern an insurance contract.” Safeway Ins. 

Co. of Ala., Inc. v. Herrera, 912 So.2d 1140, 1143 (Ala. 2005). “In the absence of statutory 

 

8 St. Catherine contends that the Court in Jim Carr broadened coverage for defective construction claims 

and that “Jim Carr means that both categories of damages (the contracted work and the damage to unrelated parts of 

the building) constitute[] a covered ‘occurrence.’” (Doc. 106 at 2-3). The undersigned is unsure what St. Catherine 

contends, but in light of the Court’s statement in Jim Carr that the cost of repairing or replacing faulty workmanship

is not recoverable damage, the Court cannot agree that the “contracted work” is now recoverable property damage.

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provisions to the contrary, insurance companies have the same right as individuals to limit their 

liability, and to impose whatever conditions they please upon their obligations not inconsistent 

with public policy; and the courts have no right to add anything to their contracts or to take 

anything from them.” Upton v. Miss. Valley Title Ins. Co., 469 So.2d 548, 554 (Ala. 1985) 

(quoting Life & Cas. Ins. Co. v. Whitehurst, 148 So. 164 (1933) (internal quotations omitted)). 

However, Alabama courts have held that an insurance policy “shall be construed liberally in 

favor of the insured and strictly against the insurer. Exclusions are to be interpreted as narrowly 

as possible, so as to provide maximum coverage for the insured, and are to be construed most 

strongly against the insurance company, which drafted and issued the policy.” Allstate Ins. Co. v. 

Skelton, 675 So.2d 377, 379-380 (Ala. 1996) (internal citations omitted). “To the extent the 

language of an insurance policy provision is ambiguous, all ambiguities must be resolved against 

the insurance company.” Safeway Ins. Co., 912 So.2d at 1143. Nevertheless, “[i]nsurance 

companies are entitled to have their policy contracts enforced as written, rather than risking their 

terms either to judicial interpretation or the use of straining language, and the fact that different 

parties contend for different constructions does not mean that the disputed language is 

ambiguous.” Woodall v. Alfa Mut. Ins. Co., 658 So.2d 369 (Ala. 1995) (quoting Gregory v. 

Western World Ins. Co., 481 So.2d 878, 881 (Ala. 1985) (internal citations and quotations 

omitted)).

“Whether a provision of an insurance policy is ambiguous is a question of law[,]” 

Safeway Ins. Co., 912 So.2d at 1143, and “[t]he test to be applied by [a] court in determining 

whether there is ambiguity is not what the insurer intended its words to mean, but what a 

reasonably prudent person applying for insurance would have understood them to mean...In 

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determining whether an ambiguity exists, a court should apply the common interpretation of the 

language alleged to be ambiguous....This means that the terms of an insurance policy should be 

given a rational and practical construction.” Porterfield v. Audubon Indem. Co., 856 So.2d 

789, 799 (Ala. 2002) (internal citations and quotations omitted). See also American Resources 

Ins. Co. v. H&H Stephens Const., Inc., 939 So.2d 868, 873 (Ala. 2006) (discussing the 

reasonably prudent person standard – i.e., that the terms of a policy should be given a rational 

and practical construction).

“Under Alabama law, the insured bears the burden of establishing coverage by 

demonstrating that a claim falls within the policy[.]” Auto–Owners Ins. Co. v. Toole, 947 F. 

Supp. 1557, 1561 (M.D. Ala. 1996) (citing Colonial Life & Accident Ins. Co. v. Collins, 194 

So.2d 532, 535 (Ala. 1967) and U.S. Fidelity & Guarantee Co. v. Armstrong, 479 So.2d 1164, 

1168 (Ala. 1985)). However, the “insurer bears the burden of proving the applicability of any 

policy exclusion.” Id. The burden is also on the party seeking coverage to prove that 

coverage existed within the terms of the policy. Owners Ins. Co. v. Shep Jones Const., Inc., 

2012 WL 1642169, *3 (N.D. Ala. May 3, 2012). 

1. “Your Work” exclusion

Pennsylvania National contends that the “your work” exclusion in the policy precludes 

coverage for Kiker (and thus payment to St. Catherine for its state court verdict). That portion 

of the policy provides as follows:

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The clear policy language specifies that this exclusion does not apply if the work out of which 

the damage arises was performed by a subcontractor on the insured’s behalf. The parties all 

agree that insured Kiker subcontracted St. Catherine’s roofing work to Damon Lett. (Doc. 71-1 

at 35-37). Thus, this policy exclusion does not apply to bar coverage.

2. “Contractual Liability” exclusion

Pennsylvania National also contends that the contractual liability exclusion precludes 

coverage for Kiker (and thus payment to St. Catherine for its state court verdict) because that 

breach of contract verdict is an obligation for Kiker to pay by reason of its assumption of liability 

in the Kiker-St. Catherine roofing contract. That portion of the policy provides as follows:

St. Catherine contends that the contractual liability exclusion does not apply because the 

case law regarding “liability assumed by the insured under any contract” applies in the context of 

indemnification and hold-harmless agreements whereby an insured agrees to “assume” the tort 

liability of another, “not...the insured’s breaches of its own contracts.” (Doc. 103 at 7-8 (citing 

Ingalls Shipbuilding v. Fed. Ins. Co., 410 F.3d 214 (5th Cir. 2005)). St. Catherine adds that 

when the claim involves an implied breach of warranty (as here, insofar as the breach of contract 

claim includes the workmanship warranty), implied duties are not duties under the contract but 

instead, are duties implied by law. (Id. at 8-9 (citing United States Fidelity & Guar. Co. v. 

National Tank & Machine Works, Inc., 402 So.2d 925, 927-928 (Ala. 1981) (providing that 

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when a complaint alleges an ex delicto action arising out of a contract, the contractual exclusion 

does not apply)).

Alabama courts have not construed the contractual liability exclusion in the manner urged

by St. Catherine. Rather,

Alabama courts have recognized that contractual liability exclusions identical to 

the one here operate to deny liability for “property damage” and “bodily injury” 

resulting from breach of contract. See Carter v. Cincinnati Ins. Co., 435 So.2d 42, 

45 (Ala.1983) (holding that there is no insurance coverage pursuant to a 

commercial general liability policy with a contractual liability exclusion, when 

the plaintiff only sought to recover for breach of an implied contract, because the 

claim “falls squarely within the clear and unambiguous terms of the exclusionary 

provision [ ]”); Am. Nat. Prop. & Cas. Co. v. Blocker, 165 F.Supp.2d 1288, 1296–

97 (S.D.Ala.2001) (discussing Carter and holding same); Ajdarondinni v. State 

Auto Mut. Ins. Co., 628 So.2d 312, 313 (Ala.1993) (equivalent contractual 

liability exclusion in commercial general liability policy; jury in underlying suit 

returned verdict solely on the claims for breach of contract; court held that 

because the policy “clearly excludes breach of contract claims from its coverage, 

insurer has no duty to pay the judgment”).

Shep Jones, 2012 WL 1642169 at *6.

Therefore under binding Alabama law the breach of contract claim and the implied 

warranty claim are excluded from coverage under the contractual liability exclusion. See also,

Assurance Co. of Am. v. Admiral Ins. Co., 2011 WL 1897589, *8 (S.D. Ala. May 18, 2011)

(providing that “[i]mplied warranties are terms that are implied by law in a contract and would 

not exist apart from that contract. ...Actions for their breach therefore sound in contract as 

opposed to tort. The implied warranty at issue here would not exist were it not for the 

construction contract ... therefore [this claim] is also excluded by operation of the contractual 

liability exclusion of the Scottsdale policy...”) (citations omitted).

The court acknowledges that the discussion in Townsend Ford, Inc. v. Auto-Owners Ins. 

Co., 656 So.2d 360 (Ala. 1995) confuses the issue. In Townsend Ford the court stated that

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contractual liability exclusions “traditionally serve[] to exclude 'indemnity' types of liability, 

whereby the liability itself was assumed,” rather than warranty situations. Id. at 364.

However, the ultimate conclusion was that the breach of the express warranty claim did not fall 

within the contractual exclusion and that if insurers wish to exclude such liability [express 

warranties] they can provide for a separate breach of warranty exclusion in the policy. Id. at 

364-365. In any event, St. Catherine does not rely on the express warranty claim as the basis 

for its claimed coverage.9 Therefore the holding in Townsend is inapplicable.10 

V. Conclusion

Accordingly, it is ORDERED that: 1) Pennsylvania National’s Motion for Summary 

Judgment (Docs. 72, 89) against St. Catherine and Kiker is MOOT in part as to Kiker’s

counterclaims and GRANTED in part as to the declaratory judgment against St. Catherine and 

Kiker; and 2) St. Catherine’s Motion for Summary Judgment against Pennsylvania National 

(Doc. 70) is DENIED. As such, the Court DECLARES that there is no indemnity afforded 

under the Pennsylvania National policy to Kiker for the breach of contract jury verdict entered 

against Kiker in the underlying state court case. 

A Final Judgment consistent with the terms of this Order shall be entered by separate 

document as required by Rule 58 of the Federal Rules of Civil Procedure.

DONE and ORDERED this the 24th day of April 2014.

/s/ Kristi K. DuBose_ 

KRISTI K. DuBOSE

UNITED STATES DISTRICT JUDGE

 9 The express warranty remedy is limited to repairs to the roof and composition flashing and specifically 

excludes consequential damages to the building or contents. (Doc. 71-4 at 4). 

10 Moreover, Townsend would be distinguishable because the express warranty at issue in Townsend did

not involve “the assumption of liability,” but rather merely [was] a representation. Id. at 364. In the present case 

the express warranty is more than a representation, it promises a limited remedy in the case of faulty workmanship.

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