Opinion ID: 1749075
Heading Depth: 2
Heading Rank: 3

Heading: The Doctrine of Fortuity.

Text: Although this precise issue of whether faulty construction workmanship may be an occurrence under a CGL policy appears to be a matter of first impression in Kentucky, many other courts have already addressed it; and they have come to differing conclusions. [7] After careful analysis, we agree with the Supreme Court of Nebraska's characterization of this as a difficult question. . . . [8] The majority viewpoint, however, appears to be that claims of faulty workmanship, standing alone, are not occurrences under CGL policies. [9] Because we believe the majority viewpoint is correct, we adopt it. Since the term accident is not defined in the policy, we must afford it its ordinary meaning, if that meaning is not ambiguous. [10] We do not find the terms accident or occurrence to be ambiguous, [11] at least under these facts. [12] Thus, since the term accident has also not acquired a technical meaning in the realm of insurance law, we must accord the term accident its plain meaning. [13] Inherent in the plain meaning of accident is the doctrine of fortuity. Indeed, [t]he fortuity principle is central to the notion of what constitutes insurance. . . . [14] Although we have used the term fortuity in the past, we have not fully explored its breadth and scope. In short, fortuity consists of two central aspects: intent, which we have discussed in earlier opinions, and control, which we have not previously discussed. We recently recognized that the concept of fortuity is inherent in all liability policies[,] and explained that a loss was fortuitous if it was not intended. . . . [15] And we were correct in so doing because the issue of intent is one important aspect of the fortuity doctrine. As a leading insurance treatise notes, [t]ortuity primarily concerns intent. [16] So a loss or harm is not fortuitous if the loss or harm is caused intentionally by [the insured]. [17] As Motorists asserts, it is highly unlikely that Elite subjectively intended to build a substandard house for the Mintmans. After all, as the Supreme Court of Pennsylvania observed, the situation is rare indeed in which a contractor intends that the work product suffer injury. [18] So adoption of Motorists' viewpoint would mean that insurance policies would become performance bonds or guarantees because any claim of poor workmanship would fall within the policy's definition of an accidental occurrence so long as there was not proof that the policyholder intentionally engaged in faulty workmanship. This is a point made by other courts. [19] Instead, we agree with the Supreme Court of South Carolina that refusing to find that faulty workmanship, standing alone, constitutes an occurrence under a CGL policy ensures that ultimate liability falls to the one who performed the negligent work . . . instead of the insurance carrier. It will also encourage contractors to choose their subcontractors more carefully instead of having to seek indemnification from the subcontractors after their work fails to meet the requirements of the contract. [20] Motorists' viewpoint reflects the minority viewpoint of other courts who have considered this issue. [21] And we agree with the Supreme Court of Pennsylvania that Motorists' position is an overly broad interpretation of accident that fails to take into account the full nature of the concept of fortuity. [22] In other words, although we may have done so in factually distinguishable cases in the past, we rightly should not end our analysis in this case by merely concluding that coverage exists simply because it is virtually certain that Elite would not have intentionally built a shoddy home for the Mintmans. For an event to be truly fortuitous, it must, of course, be accidental because the policy only covers occurrences that are accidents. Of course, one cannot intend to commit an accident because an accident is an event that takes place without one's foresight or expectation. . . . [23] Or, as our late colleague William E. McAnulty, Jr., wrote as a judge of the Kentucky Court of Appeals, an accident in the insurance law context is something that does not result from a plan, design, or . . . intent on the part of the insured. [24] So focusing solely upon whether Motorists intended to build a faulty house is insufficient. Rather, a court must also focus upon whether the building of the Mintmans' house was a `chance event' beyond the control of the insured [Elite]. [25] Or, in other words, a court must bear in mind that a fortuitous event is one that is beyond the power of any human being to bring . . . to pass, [or is] . . . within the control of third persons. . . . [26] It is abundantly clear, therefore, that the issue of control is encompassed in the fortuity doctrine. Clearly, Elite had control over the construction of the Mintmans' home, either directly or through the subcontractors it chose. One cannot logically say, therefore, that the allegedly substandard construction of the Mintmans' home by Elite was a fortuitous, truly accidental, event. This leads to the inevitable conclusion that the faulty workmanship claim at issue is not covered by the CGL policy Elite purchased from Motorists because the faulty workmanship was not an accidental occurrence. As stated before, this conclusion is in accordance with decisions of numerous other courts comprising the majority viewpoint. Simply put, [f]aulty workmanship is not an accident. . . . [27]