Lafayette Insurance Company v. Jerry S. Roberts

IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

April 17, 2013 Session

LAFAYETTE INSURANCE COMPANY v. JERRY S. ROBERTS, ET AL.

Direct Appeal from the Circuit Court for Dyer County

No. 2010CV69 William B. Acree, Judge

No. W2012-02038-COA-R3-CV - Filed July 31, 2013

In this appeal we must determine whether an injured worker was an “employee” or a

“temporary worker” within the meaning of a commercial general liability insurance policy.

The policy excludes coverage for injuries to the insureds’ employees, but it covers injuries

to “temporary workers” who are not employees, as that term is defined in the policy. The

trial court granted summary judgment to the worker upon concluding that he was a

“temporary worker,” and therefore covered under the policy, and it denied the insurer’s

motion for summary judgment. We find that the worker was not a “temporary worker” as

that term is defined by the insurance policy. Therefore, the trial court erred in granting the

worker’s motion for summary judgment and denying the insurer’s motion. We reverse and

remand for entry of an order granting summary judgment to the insurer.

Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Circuit Court Reversed and

Remanded

A LAN E. H IGHERS, P.J., W.S., delivered the opinion of the Court, in which D AVID R. F ARMER,

J., joined and H OLLY M. K IRBY, J., joined in results only.

Christopher H. Crain, Memphis, Tennessee, for the appellant, Lafayette Insurance Company

Dean P. Dedmon, W. Lewis Jenkins, Jr., Sean P. Day, Dyersburg, Tennessee, for the

appellee, Bobby Burns

John M. Lannom, James S. Wilder, III, Dyersburg, TN, for the appellees, Jerry Roberts,

Diane G. Roberts, and James P. Roberts, Jr.

OPINION

I. F ACTS & P ROCEDURAL H ISTORY

Jerry Roberts and his wife Diane Roberts, along with Jerry’s brother James Roberts,

Jr. (collectively, “the Roberts”) own a commercial building in Dyersburg that is operated as

a Family Dollar store. The Roberts engaged Bobby Burns to assist with recoating the roof

of the building in April 2009. Mr. Burns fell from the roof on April 26, 2009, and suffered

devastating injuries. On April 23, 2010, Mr. Burns filed a lawsuit against the Roberts

seeking to recover for his personal injuries.1 Mr. Burns’ complaint alleged that he was an

employee of the Roberts defendants, working at the direction of Jerry Roberts, and paid by

the hour. Mr. Burns asserted that he was not in the business of roofing or roofing repair and

that he was not an independent contractor. Mr. Burns alleged that he sustained his injuries

during the course of his employment, and he alleged that the Roberts failed to provide him

with a safe working environment and failed to provide safety equipment or other devices to

prevent his fall. He sought $7 million in compensatory damages.

Lafayette Insurance Company (“Insurer”) had provided a commercial general liability

(“CGL”) insurance policy to the Roberts defendants that was in effect on the date of the

injury. The Roberts requested a defense and indemnification under the CGL policy of

insurance concerning the underlying lawsuit filed by Mr. Burns. Insurer provided a defense

to the Roberts defendants under a reservation of rights and filed the instant lawsuit seeking

a declaratory judgment that it had no duty to defend the lawsuit filed by Mr. Burns and that

the CGL policy did not afford coverage for the claims asserted. The insuring agreement of

the Roberts’ CGL policy provided, in relevant part:

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

damages because of “bodily injury” or “property damage” to which the

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. . . .

1

The complaint also named as a defendant Family Dollar Stores of Tennessee, Inc., but this entity

is not involved with this appeal.

-2-

The policy contained the following “Exclusions,” as relevant here:

This insurance does not apply to:

...

d. Workers Compensation And Similar Laws

Any obligation of the insured under a workers’ compensation, disability

benefits or unemployment compensation law or any similar law.

e. Employer's Liability

“Bodily injury” to:

(1) An “employee” of the insured arising out of and in the course of:

a. Employment by the insured; or

b. Performing duties related to the conduct of the insured's business; . . .

...

This exclusion applies whether the insured may be liable as an employer or in

any other capacity . . . .

The policy contained the following relevant definitions:

5. “Employee” includes a “leased worker.” “Employee” does not include

a “temporary worker.”

...

10. “Leased worker” means a person leased to you by a labor leasing firm

under an agreement between you and the labor leasing firm, to perform

duties related to the conduct of your business. “Leased worker” does

not include a “temporary worker.”

...

19. “Temporary worker” means a person who is furnished to you to

substitute for a permanent “employee” on leave or to meet seasonal or

short-term workload conditions.

In sum, the policy did not provide coverage for injuries to “employees” or “leased workers,”

but it did provide coverage for injuries to “temporary workers,” as that term was defined in

the policy.

Insurer’s complaint for declaratory judgment alleged that because the underlying

lawsuit filed by Mr. Burns sought damages arising out of his employment, then Mr. Burns’

claims and damages were specifically excluded from coverage under the policy’s employer

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liability exclusion. Insurer filed a motion for summary judgment contending that Mr. Burns

was an employee of the Roberts, and not a temporary worker, and therefore the policy

provided no coverage for his bodily injuries as an employee of the insured. For purposes of

summary judgment, Insurer conceded that Mr. Burns was hired for one project only –

repairing the roof. Nevertheless, Insurer argued that Mr. Burns did not meet the policy’s

definition of a covered “temporary worker” as “a person who is furnished to you to substitute

for a permanent ‘employee’ on leave or to meet seasonal or short-term workload conditions.”

(emphasis added). Insurer argued that “[t]he majority of the courts that have considered the

very same definition of ‘temporary worker’ hold that the phrase ‘furnish to’ unambiguously

requires the involvement of a third party, such as a temporary staffing agency, that supplies

the worker to the insured employer.” Insurer submitted the deposition testimony of Mr.

Burns in which he stated that he was not hired “through any third party staffing agency,

leasing agency, [or] anything like that, in connection with this work [he] performed on the

roof at Family Dollar.”2 Because Mr. Burns was not “furnished to” the Roberts by any third

party, Insurer argued, he was not a “temporary worker” within the meaning of the CGL

policy.

In response to the motion for summary judgment, Mr. Burns argued that the policy

either did not require the involvement of a third party, or at the very least, was ambiguous

as to whether a third party must have furnished the worker. Mr. Burns insisted that the

simple use of the word “furnish” did not necessarily imply the involvement of a third party,

and, he claimed, it was possible for the Roberts to “furnish” themselves with a worker. Mr.

Burns pointed out that the policy’s definition of “leased worker” specifically stated, “a

person leased to you by a labor leasing firm,” while the definition of “temporary worker”

simply said, “a person who is furnished to you,” without specifying who was to “furnish” the

temporary worker. Mr. Burns acknowledged that “conflicting authority exists,” but he

claimed that “some courts have held that the ‘temporary worker’ [definition] either contains

an ambiguity that represents a question of fact or permits coverage for short-term employees

who respond directly to an employer’s solicitation of employment” without being furnished

by a third party. Thus, Mr. Burns argued that the “better reasoned” approach was to hold that

the definition of temporary worker was ambiguous and to be construed against Insurer. Mr.

Burns also filed his own motion for summary judgment, claiming that “summary judgment

should be granted in favor of coverage in this matter,” either because he clearly met the

definition of a temporary worker, or because the policy was ambiguous as to whether he was

a temporary worker.

2

The Roberts also admitted that “Bobby Burns was not furnished to Jerry Roberts by any third

party, staffing, or employment agency in connection with the work performed by him on the roof of the

building.”

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On August 9, 2012, the trial court entered an order granting summary judgment to Mr.

Burns and denying the motion for summary judgment filed by Insurer. The court explained

its findings, in pertinent part, as follows:

The complaint filed by Burns in the underlying tort action and the

discovery taken to date in this declaratory judgment action shows that Burns

was employed by the Roberts defendants for a discrete task (i.e., recoating the

roof of the building located at 303 East Court Street, Dyersburg, Tennessee)

and on a temporary basis.

...

Burns was not furnished to Roberts by any third party, staffing or

employment agency in connection with the work performed by him on the roof

of the building.

The issue in the motions for summary judgment and in this suit is the

employment status of Burns. If he was a temporary worker within the meaning

of the policy, then Lafayette has a duty to defend the Roberts in the tort action

and to provide coverage to them if a judgment is rendered against them. If he

was not a temporary employee, then there is no duty to defend nor is there any

coverage.

It is undisputed that Burns was employed by the Roberts to make

certain repairs to the roof of a building owned by them, and, upon completion

of that work, his employment would end. Obviously, Burns was a temporary

worker. However, Lafayette argues that under the definition of a temporary

worker in the policy, a temporary worker must be furnished by someone else.

The policy does not say this. As applied to this case, the policy states that a

temporary worker is a person furnished to meet a short term workload

condition. If Lafayette intended to require the temporary worker to be

furnished by a third party, it could have included additional language in the

policy as it did in defining "leased worker".

Based on these findings, the trial court held that Insurer had a duty to defend the Roberts in

the underlying tort case filed by Mr. Burns, and to provide coverage to the extent of the

policy limits should a judgment be awarded against them. Insurer timely filed a notice of

appeal.

II. I SSUES P RESENTED

On appeal, Insurer argues that the trial court erred in granting Mr. Burns’ motion for

summary judgment and in denying the motion for summary judgment filed by Insurer. For

the following reasons, we reverse the decision of the circuit court and remand for entry of

-5-

an order granting summary judgment to Insurer.

III. A NALYSIS

“A declaratory judgment proceeding provides an appropriate vehicle for deciding

[insurance] coverage questions.” Standard Fire Ins. Co. v. Chester-O'Donley & Associates,

Inc., 972 S.W.2d 1, 5 (Tenn. Ct. App. 1998). “Issues involving an insurance policy’s

coverage and an insurance company’s duty to defend require ‘the interpretation of the

insurance policy in light of claims asserted against the insured.’” Sulphuric Acid Trading

Co., Inc. v. Greenwich Ins. Co., 211 S.W.3d 243, 248 (Tenn. Ct. App. 2006) (quoting

Allstate Ins. Co. v. Jordan, 16 S.W.3d 777, 779 (Tenn. Ct. App. 1999)). These are matters

of law that may be resolved by summary judgment when there are no genuine issues as to any

material fact. Travelers Indem. Co. of America v. Moore & Associates, Inc., 216 S.W.3d

302, 305 (Tenn. 2007). This Court reviews a trial court’s interpretation of contract language

de novo with no presumption of correctness. Id. (citing Allstate Ins. Co. v. Watson, 195

S.W.3d 609, 611 (Tenn. 2006)).

An insurer has a duty to defend when the underlying complaint alleges damages that

are within the risk covered by the insurance contract and for which there is a potential basis

for recovery. Travelers Indem. Co., 216 S.W.3d at 305. Therefore, the central issue in this

declaratory judgment action is whether Mr. Burns’ complaint alleges damages that are within

the risk covered by the CGL policy that Insurer issued to the Roberts. See id.

Commercial general liability or “CGL” policies have been used since 1940. Travelers

Indem. Co., 216 S.W.3d at 305. “Most CGLs are written on standardized forms developed

by an association of domestic property and casualty insurers known as the Insurance Services

Offices.” Id. (citing Hartford Fire Ins. Co. v. California, 509 U.S. 764, 772, 113 S.Ct. 2891,

125 L.Ed.2d 612 (1993)). CGL policies are “designed to protect an insured against certain

losses arising out of business operations.” Id. (citing Chester–O'Donley, 972 S.W.2d at 6).

“In order to prevent overlapping coverage and to minimize gaps in coverage, they combine

several historic forms of coverage into an integrated whole with coverage being broadly

stated in a single insuring agreement and exclusions circumscribing the broad grant of

coverage.” Chester-O’Donley, 972 S.W.2d at 6. However, “‘CGL policies are not ‘all-risk’

policies; rather, these policies provide the insured with coverage up to the policy limits for

damages for which the insured becomes liable as a result of tort liability to a third party.’”

Insura Property & Cas. Ins. Co. v. Ashe, No. M2002-00374-COA-R3-CV, 2003 WL

253255, at *2 (Tenn. Ct. App. 2003) (quoting Am. Indem. Co. v. Foy Trailer Rentals, Inc.,

No. W2000-00397-COA-R3-CV, 2000 WL 1839131, at *3 (Tenn. Ct. App. Nov. 28, 2000)).

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Injuries to employees are typically excluded from coverage, as the expectation is that the

employer will have in place workers’ compensation insurance. Monticello Ins. Co. v. Dion,

836 N.E.2d 1112, 1113 (Mass. App. Ct. 2005) (citing 9 Couch, Insurance § 129.7 (3d ed.

1997)); see also AMCO Ins. Co. v. Dorpinghaus, No. 05-1296, 2007 WL 313280, at *2 (D.

Minn. Jan. 12, 2007) (“The reason that policies such as [these] exclude injuries to employees

is that such injuries are supposed to be covered by worker's compensation insurance, not by

CGL insurance.”). Both “automobile and CGL insurers exclude from their policies those

risks that are supposed to be covered by their insured's workers' compensation insurance

policies so as to avoid both double coverage and double premiums.” Brown v. Indiana Ins.

Co., 184 S.W.3d 528, 537 (Ky. 2005); Erie Ins. Exchange v. Columbia Nat. Ins. Co., No.

M2012-00331-COA-R3-CV, 2013 WL 395982, at *6 (Tenn. Ct. App. Jan. 30, 2013) (noting

that auto policies and CGL policies are created to cover different risks, and bring cost and

efficiency benefits by eliminating the duplicate premiums that would be paid were the risks

not separated); 21-132 Appleman on Insurance 2d § 132.5 (2002) (“The basic purpose of

Workers’ Compensation and Employers’ Liability Exclusions ‘d’ and ‘e’ is to prevent the

general liability insurance policy from being converted into a workers’ compensation and

employer’s liability policy.”)

Once again, the Roberts’ CGL policy did not provide coverage for bodily injury to

employees of the insured, but injuries to temporary workers were covered. The complaint

filed by Mr. Burns alleged that he was an “employee” of the Roberts and not an independent

contractor. However, there were no facts alleged in the complaint that would indicate

whether Mr. Burns met the definition of a “temporary worker,” which, according to the

policy, is not included within the definition of an “employee.” As a result, it is not

definitively clear, solely from reading the complaint, whether Mr. Burns’ claims would be

covered by the CGL policy. See General Agents Ins. Co. of America, Inc. v. Mandrill

Corp., Inc., 243 Fed.Appx. 961, 965 (6th Cir. (Tenn.) 2007) (noting that an allegation of

“employee” status in a complaint could potentially have a different meaning than that in a

CGL Policy, and therefore the use of the term in the complaint was not conclusive as to

whether the plaintiff-worker was a “temporary worker”). An insurer “cannot refuse to

defend unless ‘it is plain from the face of the complaint that the allegations fail to state facts

that bring the case within or potentially within the policy's coverage.’” York v. Vulcan

Materials Co., 63 S.W.3d 384, 388 (Tenn. Ct. App. 2001) (quoting Drexel Chemical Co. v.

Bituminous Ins. Co., 933 S.W.2d 471 (Tenn. Ct. App. 1996)) (emphasis added).

‘Where the complaint does not state facts sufficient to clearly bring the case

within or without the coverage, the general rule is that the insurer is obligated

to defend if there is, potentially, a case under the complaint within the

coverage of the policy. Stated differently, in case of doubt as to whether or not

the allegations of the complaint against the insured state a cause of action

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within the coverage of their liability policy sufficient to compel the insurer to

defend the action, such doubt will be resolved in the insured's favor.’

Southland Mall, LLC v. Valor Sec. Services, Inc., No. W2003-03066-COA-R3-CV, 2005

WL 762616, at *4 (Tenn. Ct. App. Apr. 4, 2005) (quoting Dempster Brothers, Inc. v. United

States Fid. & Guar. Co., 388 S.W.2d 153, 156 (Tenn. Ct. App. 1964)); see also Marsh

Furniture Co. v. Pennsylvania Mfrs. Ass'n Ins. Co., No. 02A01-9505-CV-00103, 1996 WL

328713, at *3 (Tenn. Ct. App. Jun. 17, 1996) (“Where the allegations of the complaint

against the insured are ambiguous and there is doubt as to whether they state a cause of

action sufficient under the policy to compel the insurer to defend, the doubt should be

resolved in favor of the insured.”) “Thus, in the insurance context, the duty to defend is

triggered when the language of the complaint states a cause of action that may be covered

under the policy.” Southland Mall, LLC, 2005 WL 762616, at *4. Because the Roberts’

CGL policy arguably covered the claims asserted by Mr. Burns, Insurer had a duty to defend

until it established that the claims were not covered. See Erie Ins. Exchange, 2013 WL

395982, at *7 (quoting Chester-O’Donley, 972 S.W.2d at 11) (“An insurer's duty to defend

is triggered when its policy arguably, as opposed to distinctly, covers the claims being made,

and continues until the facts and the law establish that the claimed loss is not covered.”)

As noted above, Insurer provided a defense to the Roberts defendants under a

reservation of rights and filed the instant lawsuit seeking a declaratory judgment that it had

no duty to defend the lawsuit filed by Mr. Burns, and that the CGL policy did not afford

coverage for the claims asserted, because the claims did not, in fact, fall within the coverage

of the policy because Mr. Burns was an employee and not a temporary worker.3 Insurer

relied on Mr. Burns’ deposition testimony that he was hired directly by Jerry Roberts and that

he was not provided to the Roberts by any type of temporary staffing agency, employment

agency, or the like. The Roberts admitted this fact as well. Insurer argued that a person does

not meet the definition of a “temporary worker,” regardless of the duration of the

employment, if the person is hired directly by the insured and not “furnished to” the insured

by some third party. In response, Mr. Burns and the Roberts argued that the word “furnish”

does not require the involvement of a third party, and that it was permissible for the Roberts

3

“[I]nsurance companies may protect themselves by filing motions for declaratory judgment

requesting a court to decide whether coverage applies or by filing a ‘reservation of rights,’ which allows them

to proceed with the defense but withdraw if it becomes evident that there is no duty to defend.” Forrest

Const., Inc. v. Cincinnati Ins. Co., 703 F.3d 359, 363 (6th Cir. (Tenn.) 2013); see, e.g., Metropolitan

Property and Cas. Ins. Co. v. Buckner, 302 S.W.3d 288, 289-90 (Tenn. Ct. App. 2009); Tennessee Farmers

Mut. Ins. Co. v. Cherry, No. W2007-00342-COA-R3-CV, 2008 WL 933479 (Tenn. Ct. App. Apr. 7, 2008)

perm. app. denied (Tenn. Oct. 27, 2008).

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to “furnish” themselves with a temporary worker, under the terms of the policy.

The issue, then, is whether Mr. Burns was an “employee” of the Roberts at the time

of the accident, or a “temporary worker,” as that term is contemplated in the CGL policy.

We have been unable to locate any Tennessee authority discussing the distinction between

“employees” and “temporary workers” in comprehensive general liability policies such as

the one at issue in the present case, and the parties have not directed us to any. The pertinent

definitions bear repeating here:

5. “Employee” includes a “leased worker.” “Employee” does not include a

“temporary worker.”

...

10. “Leased worker” means a person leased to you by a labor leasing firm

under an agreement between you and the labor leasing firm, to perform duties

related to the conduct of your business. “Leased worker” does not include a

“temporary worker.”

...

19. “Temporary worker” means a person who is furnished to you to substitute

for a permanent “employee” on leave or to meet seasonal or short-term

workload conditions.

We review the policy language as we would a contract. See Travelers Indem. Co.,

216 S.W.3d at 305-306 (“Our interpretation of insurance contracts, such as the CGL in this

case, is governed by the same rules of construction used to interpret other contracts.”) In the

absence of fraud or mistake, the policy should be interpreted as written, and its terms should

be given their natural and ordinary meaning. Chester-O’Donley, 972 S.W.2d at 7. The

policy should be construed as a whole, in a reasonable and logical manner. Id. “No single

clause in a contract is to be viewed in isolation; rather, the contract is to be ‘viewed from

beginning to end and all its terms must pass in review, for one clause may modify, limit or

illuminate another.’” Frizzell Constr. Co., Inc. v. Gatlinburg, L.L.C., 9 S.W.3d 79, 85

(Tenn. 1999) (citing Cocke County Bd. of Highway Comm'rs v. Newport Utils. Bd., 690

S.W.2d 231, 237 (Tenn. 1985)).

Reading the aforementioned definitions together, in the context of the entire policy,

we conclude that the definition of “temporary worker” does require the involvement of some

third party who “furnish[es]” the temporary worker “to” the insured. We do not dispute the

assertion by Mr. Burns and the Roberts that, in the abstract, it is possible for one to “furnish,”

supply, or provide oneself with a product or service. However, we are not simply

interpreting the word “furnish.” “[T]o properly construe an agreement, we are not allowed

to take words in isolation, but must construe the instrument as a whole.” Pitt v. Tyree Org.

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Ltd., 90 S.W.3d 244, 253 (Tenn. Ct. App. 2002). “‘A word or expression in the contract

may, standing alone, be capable of two meanings,’” and yet the contract may be

unambiguous when read in context. Adkins v. Bluegrass Estates, Inc., 360 S.W.3d 404,

412-13 (Tenn. Ct. App. 2011) (quoting Fisher v. Revell, 343 S.W.3d 776 (Tenn. Ct. App.

2009)).

‘Thus, in determining whether or not there is such an ambiguity as calls for

interpretation, the whole instrument must be considered, and not an isolated

part, such as a single sentence or paragraph. The language in a contract must

be construed in the context of that instrument as a whole, and in the

circumstances of that case, and cannot be found to be ambiguous in the

abstract.’

Id. (quoting Fisher, 343 S.W.3d at 776). Here, a “temporary worker” means “a person who

is furnished to you to substitute for a permanent ‘employee’ on leave or to meet seasonal or

short-term workload conditions.” (emphasis added). This definition suggests the

involvement of a third party who provides the temporary worker to the insured. If one could

furnish oneself with a temporary worker within the meaning of the policy, there would be no

need for including the phrase “who is furnished to you.” The definition could just as easily

read, “a person who substitutes for a permanent employee or who meets seasonal or short-

term workload conditions.” Any worker who substituted for a permanent employee on leave

or who met seasonal demands or short-term workload conditions would satisfy the definition

of a temporary worker, and there would effectively be no “furnished to you” requirement.

Contracts must be construed, as far as is reasonable, so as to give effect to every term.

Vantage Technology, LLC v. Cross, 17 S.W.3d 637, 650 (Tenn. Ct. App. 1999) (citing

Wilson v. Moore, 929 S.W.2d 367, 373 (Tenn. Ct. App. 1996)). Insurer’s interpretation is

the only one that gives meaning to all of the words of the policy definition.

The “temporary worker” definition at issue here has been construed on numerous

occasions by courts in other jurisdictions, and the vast majority of the courts have concluded

that the phrase “who is furnished to you” requires third party involvement.4 See, e.g.,

4

As the Court explained in Mandrill Corp., Inc., 243 Fed.Appx. at 967 (6th Cir. (Tenn.) 2007):

The employer exclusion and the definitions of temporary and leased workers appear on a

form copyrighted by the Insurance Services Office, Inc. (“ISO”). As a result, these same

definitions appear on many CGL policies across the country. The ISO added these

definitions to this standard form in 1993. See American Family Mutual Ins. Co. v. Tickle,

99 S.W.3d 25, 30 (Mo. Ct. App. 2003). The temporary worker definition was apparently

added to address a distinction made by several states' workers' compensation statutes. See

(continued...)

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Northland Cas. Co. v. Meeks, 540 F.3d 869, 875 (8th Cir. (Ark.) 2008) (“we find that the

Policy's use of the term ‘furnished to’ is unambiguous and clearly requires the involvement

of a third party in furnishing a worker either ‘to substitute for a permanent ‘employee’ on

leave’ or ‘to meet seasonal or short-term workload conditions.’”); General Agents Ins. Co.

of America, Inc. v. Mandrill Corp., Inc., 243 Fed.Appx. 961, 968 (6th Cir. (Tenn.) 2007)

(“‘furnished to’ requires the involvement of a third party. That is, to say that a worker

furnishes himself to the employer . . . is erroneous because it effectively reads the phrase

‘furnished to’ out of the CGL Policy.”); see also Parra v. Markel Intern. Ins. Co. Ltd., 300

Fed.Appx. 317, 318-319 (5th Cir. (Tex.) 2008); AMCO Ins. Co. v. Dorpinghaus, No.

05-1296, 2007 WL 313280, at *4-5 (D. Minn. Jan. 11, 2007); Nautilus Ins. Co. v. Gardner,

No. 04-1858, 2005 WL 664358, at *2-3 (E.D. Pa. Mar. 21, 2005); Carl's Italian Restaurant

v. Truck Ins. Exchange, 183 P.3d 636, 639 (Colo. App. 2007); Nationwide Mut. Ins. Co.

v. Allen, 850 A.2d 1047, 1055 (Conn. App. 2004); Brown v. Indiana Ins. Co., 184 S.W.3d

528, 537-541 (Ky. 2005); Monticello Ins. Co. v. Dion, 836 N.E.2d 1112, 1113 (Mass. App.

Ct. 2005); Gavan v. Bituminous Cas. Corp., 242 S.W.3d 718, 720-721 (Mo. 2008); Rhiner

v. Red Shield Ins. Co., 208 P.3d 1043, 1045 (Or. App. 2009); Borntreger v. Smith, 811

N.W.2d 447, 448-451 (Wis. Ct. App. 2012).

On appeal, Mr. Burns and the Roberts submit that the “minority” rule is the better

reasoned approach. A few courts have held that the “temporary worker” definition is

ambiguous. For example, in Nick's Brick Oven Pizza, Inc. v. Excelsior Ins. Co., 877

N.Y.S.2d 359, 362, 61 A.D.3d 655, 657 (2009), a New York appellate court held that the

definition is ambiguous because it “does not clearly define whether an individual who is

hired to meet seasonal or short-term workload conditions must also be ‘furnished’ to the

insured in order to qualify as a temporary worker, or whether only individuals hired to

substitute for an employee on leave must be so ‘furnished.’” Again, the definition provides

that a temporary worker is “a person who is furnished to you to substitute for a permanent

‘employee’ on leave or to meet seasonal or short-term workload conditions.” So, in the New

York court’s view, the definition could be read in one of two ways:

(1) a person who is furnished to you (a) to substitute for a permanent

‘employee’ on leave or (b) to meet seasonal or short-term workload

conditions; or

4

(...continued)

Brown v. Ind. Ins. Co., 184 S.W.3d 528, 538 (Ky. 2005). These statutes distinguish between

leased employees, who are considered to be employees of the lessee company; and

temporary employees, who are considered to remain employees of the temporary staffing

agency. Id.; see, e.g., Ky. Rev. Stat. Ann. § 342.615 (2006). The CGL Policy's definition

of employee, therefore, is designed to reflect this distinction as it exists in some states.

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(2) a person (a) who is furnished to you to substitute for a permanent

‘employee’ on leave or (b) to meet seasonal or short-term workload

conditions.

In effect, this interpretation of the policy permits it to be read as “a person . . . to meet

seasonal or short-term workload conditions.” This same conclusion was reached in

Bituminous Cas. Corp. v. Mike Ross, Inc., 413 F.Supp.2d 740, 744-746 (N.D. W.Va. 2006),

which is also cited on appeal by Mr. Burns and the Roberts. In that case, the Court

concluded that “the definition's second-part can make grammatical sense when the words

‘furnished to’ are discarded. In that case, a temporary worker would be 1) a person furnished

to the insured to substitute for a permanent employee for leave or 2) a person to meet

seasonal demands and short-term workload conditions.” Id.

We find this to be a strained and unnatural reading of the policy language, and it has

been rejected by other courts as well. The Missouri Court of Appeals provided a thorough

grammatical analysis of the definition:

The structure of the sentence defining “temporary worker” indicates that the

clause “who is furnished to you to substitute for a permanent employee on

leave or to meet seasonal or short-term workload conditions” is a subordinate

adjective clause modifying “person”. See Diana Hacker, The Bedford

Handbook 758–60 (5th ed. 1998). Within this clause, the parallel infinitive

phrases “to substitute for a permanent employee on leave” and “to meet

seasonal or short-term workload conditions” both function as adverbs or verbal

modifiers that modify the verb “is furnished” and both restrict the persons

covered under this definition. Id. at 763–64, 766. Because these phrases are

separated by the word “or,” a coordinating conjunction that is ordinarily used

to connect grammatically equal elements, they equally modify the verb “is

furnished.” Id. at 740. It is grammatically impossible to read the phrase “to

meet seasonal or short-term workload conditions” without the verb “is

furnished” because the phrase has no meaning without the antecedent verb it

modifies. There is no ambiguity in the relationship of “is furnished” to its

modifier “to meet seasonal or short-term workload conditions.”

American Family Mut. Ins. Co. v. Tickle, 99 S.W.3d 25, 30-31 (Mo. Ct. App. E.D. 2003).

The Court of Appeals of Wisconsin likewise explained,

It is readily apparent that the definition is structured so that the ‘furnished to

you’ language introduces two parallel clauses separated by ‘or’: ‘furnished to

you to substitute for a permanent ‘employee’ on leave or to meet seasonal or

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short-term workload conditions’ (emphasis added). This structure leaves no

doubt that the two individual clauses starting with the words ‘to substitute’ and

‘to meet’ are both modified by the ‘furnished to you’ lead-in language.

Borntreger, 811 N.W.2d at 449. The Court of Appeals for the Eighth Circuit similarly

concluded that if the “furnished to you” language only applied to the first clause, “to

substitute for a permanent employee,” then “the ‘temporary worker’ definition would not

make grammatical sense.” Meeks, 540 F.3d at 875; see also Rhiner, 208 P.3d at 1045 (Or.

App. 2009) (“The wording of the policy simply cannot reasonably be read to say that. It

plainly and unambiguously provides that a temporary worker is ‘a person who is furnished

to you’ either to substitute for a permanent employee or to meet seasonal or short-term

workload conditions.”)

In another case relied upon by Mr. Burns and the Roberts as representing the

“minority rule,” the United States District Court for the Western District of Kentucky,

applying Kentucky law, found the term “furnished to you” to be “too ambiguous to be given

a literal interpretation.” Ayers v. C & D General Contractors, 237 F.Supp.2d 764, 769

(W.D. Ky. 2002). The Court explained that it had “struggled unsuccessfully to find the

logic” in distinguishing between temporary workers furnished by an employment agency and

temporary workers who respond directly to a newspaper ad. The Court ultimately decided

against a “literal interpretation” of the “furnished to you” language, stating, “[t]o give this

phrase dispositive weight within the policy makes no sense whatsoever.” The Court

concluded that any employee who was hired to fill-in for a permanent employee on leave or

to meet a short-term need was a “temporary worker.” Id. After Ayers was decided, several

other courts declined to follow its reasoning, including the Supreme Court of Kentucky. In

Brown v. Indiana Ins. Co., 184 S.W.3d 528, 538 (Ky. 2005), the Kentucky Supreme Court

explained that the Kentucky Workers’ Compensation Act provides the “logic” for the

distinction. It explained:

It is no coincidence that the definition of “temporary worker” in the []

policy mirrors the definition of “temporary worker” in KRS 342.615(1)(e). The

statute explains why injuries to temporary workers are not included within the

“employee” exclusion from the liability coverage of the automobile (or CGL)

policy. For insurance purposes, the temporary worker remains the employee

of the temporary help service that “furnished” the worker (rather than

becoming an employee of the entity to which that worker is furnished). Thus,

the temporary worker is covered under the temporary help service's workers'

compensation insurance, not that of the entity to which the worker is furnished.

Since the temporary worker is not the employee of the entity to which he or

she is furnished, that entity's automobile and CGL policies except the

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temporary worker from the definition of “employee.” However, for that

exception to apply, the worker must have been “furnished to” the entity by a

temporary help service, thereby assuring that the temporary worker is covered

by the workers' compensation insurance of the temporary help service. If the

worker is not “furnished to” the entity by a temporary help service, that worker

is simply the employee of that entity, and that worker is insured under that

entity's workers' compensation insurance and excluded from coverage under

its automobile and CGL policies.

Id. at 538. Other courts have also declined to follow the Ayers Court’s reasoning, which

effectively reads the “furnished to you” language out of the policy. See, e.g., Mandrill Corp.,

Inc., 243 Fed.Appx. at 967-68 (6th Cir. (Tenn.) 2007); AMCO, 2007 WL 313280, at *4-5

(D. Minn. Jan. 11, 2007).

Another case that has often been cited as following the minority rule is American

Family Mut. Ins. Co. v. As One, Inc., 189 S.W.3d 194, 197-199 (Mo. App. S.D. 2006),

where the Court, like Mr. Burns and the Roberts, relied upon the dictionary definition of

“furnish” and concluded that there was no requirement that a third party be involved to

“furnish” the worker. However, the As One decision was overruled by Missouri Supreme

Court in Gavan v. Bituminous Cas. Corp. 242 S.W.3d 718, 720-721 (Mo. 2008) (en banc).

The Supreme Court of Missouri held that “the term ‘furnished to,’ in context and in its plain

and ordinary meaning, is not ambiguous and necessarily implies that a third party has been

involved in providing or supplying the worker to the insured.” Any other interpretation

would render the “furnished to” language meaningless, and allow a worker to “furnish

himself” whenever convenient, the Court held. Id.

In sum, we find the cases cited by Mr. Burns and the Roberts to be unpersuasive, and

we agree with those courts that have determined that “furnished to you” applies to both of

the clauses that follow, and that third party involvement is required.

Mr. Burns and the Roberts also argue that a comparison of the policy’s definition of

“leased worker” with the definition of “temporary worker” demonstrates that a third party

is not required to furnish a temporary worker:

10. “Leased worker” means a person leased to you by a labor leasing firm

under an agreement between you and the labor leasing firm, to perform duties

related to the conduct of your business. “Leased worker” does not include a

“temporary worker.”

...

19. “Temporary worker” means a person who is furnished to you to substitute

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for a permanent “employee” on leave or to meet seasonal or short-term

workload conditions.

(Emphasis added). They contend that because the definition of “leased worker” specifies the

type of third party that must lease a leased worker, but it does not specify who must furnish

a temporary worker, then anyone can furnish a temporary worker, including the insured itself.

We are not persuaded. The definition of temporary worker still requires the person to be

“furnished to you.” A reasonable reading of the definition is that third party involvement is

required. Moreover, this very same argument has been rejected by a number of other courts.

The Court of Appeals for the Eighth Circuit explained,

The Policy's definition of "leased worker" specifically states that a leased

worker must be furnished by a labor leasing firm. Meeks and Harrell contend

that if the Policy meant to require another party to furnish a "temporary

worker," then the Policy would have specified that the temporary worker be

furnished by such a third party. However, "just because one provision of an

insurance policy refers to third-party involvement more explicitly than another

provision of the same policy does not mean that third-party involvement is

excluded from the latter provision." [AMCO, 2007 WL 313280] at *6. The

distinction merely shows that the provisions contemplate differing degrees of

specificity. Id. It does not eliminate the requirement that a "temporary worker"

must still be furnished by a third party.

Meeks, 540 F.3d at 875-76. In sum, “The leased-worker provision requires the involvement

of a particular type of third party (a leasing firm). The temporary-worker provision requires

the involvement of any type of third party. But both provisions require third-party

involvement.” AMCO, 2007 WL 313280, at *6.

In conclusion, we find that the CGL policy does not provide coverage for the claims

asserted by Mr. Burns, and Insurer has no duty to defend or to indemnify the Roberts for

damages that may be awarded against them in Mr. Burns’ lawsuit. Mr. Burns was an

employee of the Roberts, not a temporary worker as that term was defined in the policy, and

therefore his claims fall within the employee exclusion to the CGL policy. His complaint

does not allege damages that are within the risk covered by the insurance contract.

We note briefly that Mr. Burns’ brief on appeal contains a footnote in which he argues

that there is a disputed issue of fact as to whether he would qualify as a “volunteer worker”

as that term is defined in the CGL policy: “a person who is not your ‘employee’, and who

donates his or her work and acts at the direction of and within the scope of duties determined

by you, and is not paid a fee, salary or other compensation by you or anyone else for their

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work performed for you.” Thus, he claims that this disputed fact would preclude the entry

of summary judgment in favor of the Insurer even if the “temporary worker” issue did not.

We disagree. We recognize that during discovery, Jerry Roberts testified that the parties had

not settled on an amount as far as Mr. Burns’ compensation. Mr. Roberts said that when he

suggested $10 an hour, Mr. Burns responded “We’ll talk about it.” Mr. Roberts admitted that

he intended to pay Mr. Burns something, but, he added, “I don’t know what he had in mind.”

Mr. Burns, on the other hand, testified that the parties had agreed on $10 an hour. In any

event, we find these facts immaterial because the duty to defend is to be determined based

on the allegations of the underlying complaint. Here, the complaint alleged that Mr. Burns

was an employee of the Roberts who was paid by the hour. These allegations would arguably

encompass a “temporary worker,” but they do not in any way suggest that Mr. Burns was a

“volunteer worker” who simply donated his time. Therefore, there is no genuine issue of

material fact with regard to Insurer’s duty to defend that would preclude the entry of

summary judgment in favor of Insurer. We also find that Mr. Burns failed to demonstrate

a genuine issue of material fact regarding the duty to indemnify. It is undisputed that Jerry

Roberts intended to pay Mr. Burns for his work, and it is likewise undisputed that Mr. Burns

expected to be paid. Thus, Mr. Burns was not a “volunteer worker,” but an “employee,”

whose injuries are not covered by the CGL policy.

IV. C ONCLUSION

For the aforementioned reasons, we reverse the decision of the circuit court and

remand for entry of summary judgment in favor of Insurer. Costs of this appeal are taxed to

the appellees, Jerry S. Roberts, Diane G. Roberts, James P. Roberts, Jr., and Bobby Burns,

for which execution may issue if necessary.

_________________________________

ALAN E. HIGHERS, P.J., W.S.

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