                NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 13a0360n.06

                                           No. 12-5857                                  FILED
                                                                                    Apr 10, 2013
                          UNITED STATES COURT OF APPEALS                      DEBORAH S. HUNT, Clerk
                               FOR THE SIXTH CIRCUIT


LM INSURANCE CORPORATION; LIBERTY                        )
MUTUAL FIRE INSURANCE COMPANY,                           )
                                                         )        ON APPEAL FROM THE
       Plaintiffs-Appellees,                             )        UNITED STATES DISTRICT
                                                         )        COURT FOR THE EASTERN
v.                                                       )        DISTRICT OF KENTUCKY
                                                         )
CANAL INSURANCE COMPANY,                                 )                          OPINION
                                                         )
       Defendant-Appellant.                              )
                                                         )
                                                         )


BEFORE: MARTIN, GUY, and McKEAGUE, Circuit Judges.

       McKEAGUE, Circuit Judge. William Henderson’s truck collided with Charles Henney’s

vehicle in October 2008. Charles Henney died as a result of the accident, and his estate brought a

suit against Henderson and the company for which he was hauling aggregate, Hinkle Contracting

Corporation. Prior to the accident, Henderson had purchased an automobile insurance policy

through Canal Insurance Company (“Canal”), Defendants-Appellants, that listed Hinkle Contracting

as a designated insured. Hinkle Contracting was also covered by two policies issued by Plaintiffs-

Appellees, Liberty Mutual Fire Insurance Company and LM Insurance Corporation.

       What ensued was a dispute between Canal and Plaintiffs over whether Canal had a duty to

defend Hinkle Contracting against the vicarious-liability and independent-misconduct claims

asserted by the Henney estate against Hinkle Contracting. Plaintiffs ultimately assumed the entirety
No. 12-5857
LM Ins. Corp., et al. v. Canal Ins. Co.

of Hinkle Contracting’s defense in the Henney estate action. They brought this diversity case in the

Eastern District of Kentucky seeking a declaratory judgment and the costs of defending Hinkle

Contracting in the Henney estate action. In the end, the district court granted Plaintiffs’ motion for

summary judgment and Canal appealed. We now affirm.

                                                  I.

                                                  A.

       In May of 2006, William Henderson, d/b/a Henderson Trucking (“Henderson”), entered into

a contract (“hauling contract”) with Hinkle Contracting, whereby Henderson agreed to provide

hauling services to Hinkle Contracting. The hauling contract stated that Hinkle Contracting “from

time to time and at its discretion, may tender to Contractor [(Henderson)] . . . construction materials

for delivery,” and that Hinkle Contracting had the right to require Henderson to deliver the materials

by the shortest practicable route and within a specified time period. Henderson was to use his own

equipment, was responsible for any maintenance needed as a result of hauling for Hinkle

Contracting, and was to be paid by the weight hauled. The hauling contract required Henderson to

procure liability insurance that named Hinkle Contracting as an additional insured on a primary and

non-contributory basis, in an amount not less than $1 million. The hauling contract also provided

that Henderson would indemnify and hold harmless Hinkle Contracting.

       Henderson obtained a liability insurance policy through Canal; he paid an additional $200

premium to obtain a designated-insured endorsement, which named Hinkle Contracting as an

additional insured.



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       Hinkle Contracting also maintained its own insurance policies. LM Insurance Corporation

(“LM”) issued Hinkle Contracting a commercial general liability insurance policy. Liberty Mutual

Fire Insurance Corporation (“Liberty Mutual”) issued Hinkle Contracting a business auto policy.

                                                 B.

       On October 30, 2008, while the above policies were effective, Henderson was involved in

an accident with Charles Henney, at a time when Henderson was hauling aggregate for Hinkle

Contracting. Henney died as a result of the accident. Henderson gave Canal notice of the accident

on October 31, 2008. Hinkle Contracting notified Liberty Mutual of the accident. Liberty Mutual

undertook Hinkle Contracting’s defense. In the spring of 2009, Liberty Mutual informed Canal that

Henderson was hauling aggregate for Hinkle Contracting at the time of the accident. Liberty Mutual

also requested that Canal take over the defense of Hinkle Contracting in the Henney estate action.

       In early June 2009, Canal’s counsel advised Liberty Mutual that the Canal policy provided

no coverage to Hinkle Contracting because there was no evidence that Hinkle Contracting was

vicariously liable. Nonetheless, even if there were such a claim, Canal stated that the Liberty Mutual

auto policy and Canal policy would be co-primary.

       In late June 2009, the Henney estate’s attorney informed Liberty Mutual that the estate would

pursue non-automobile theories of liability against Hinkle Contracting.

                                                 C.

       On October 28, 2009, the Henney estate filed suit against inter alia Henderson and Hinkle

Contracting. The complaint alleged six counts against Hinkle Contracting and Henderson. Count

I stated that Henderson negligently or grossly negligently operated his truck as an agent of Hinkle

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Contracting. The Henney estate alleged that Hinkle Contracting was vicariously liable for these acts.

Count II stated that Henderson, with the knowledge of Hinkle Contracting, negligently or knowingly

operated his truck while it was overloaded and that Hinkle Contracting was vicariously liable for

Henderson’s acts. Count IV alleged that Hinkle Contracting negligently or knowingly overloaded

Henderson’s dump truck, which contributed to the accident. Count VI asserted that all of the

defendants were liable for intentionally, recklessly, or grossly negligently overseeing Henderson’s

truck, which entitled the Henney estate to punitive damages. Finally, counts VII and VIII alleged

that the defendants engaged in a joint enterprise or conspiracy to overload the trucks.

       In November 2009, Liberty Mutual’s adjuster wrote to Canal’s attorney and attempted to

tender Hinkle Contracting’s defense and indemnification to Canal “on behalf of Hinkle.” Canal’s

counsel responded in January 2010 by advising Liberty Mutual that Canal would evaluate what

duties may be owed by Canal to Hinkle Contracting based upon the allegations in the complaint.

       In late March 2010, Canal informed Liberty Mutual that Canal had never received a request

from Hinkle Contracting to tender its defense to Canal and that the tender was a non-delegable task.

Canal advised Liberty Mutual that if such a request were made, Canal would work with Liberty

Mutual on a co-primary basis. In June 2010, Canal received a letter from Hinkle Contracting’s

attorney formally tendering the defense and indemnification to Hinkle Contracting. In June 2010,

Canal agreed that Hinkle Contracting was an additional insured under Henderson’s Canal policy but

that Hinkle Contracting’s coverage was limited to the vicarious-liability claims.

       On July 9, 2010, Canal reiterated its acceptance of Hinkle Contracting’s tender on a co-

primary basis with Liberty Mutual. Canal also stated that it would be amenable to discussing a “cost

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No. 12-5857
LM Ins. Corp., et al. v. Canal Ins. Co.

sharing agreement for Hinkle Contracting’s defense as of June 7, 2010.” Sealed App. at 40. Canal

received no further communications from Hinkle Contracting or Liberty Mutual about a cost-sharing

agreement. Canal did not make any efforts, however, to assist in Hinkle Contracting’s defense.

Canal was not consulted about choice of defense counsel or provided with a single invoice for

Hinkle Contracting’s defense costs and expenses until after the present lawsuit was initiated. Liberty

Mutual never informed Canal that LM was providing some part of Hinkle Contracting’s defense

costs. Canal has not contributed or reimbursed Plaintiffs for the cost of defending Hinkle

Contracting in the Henney estate action.

           In January 2011,the Henney estate’s claims against Hinkle Contracting were dismissed as

settled.

                                                     D.

           As a result, Plaintiffs filed this suit, seeking a declaratory judgment that Canal had a duty to

defend Hinkle Contracting for the claims asserted in the Henney estate action (both the vicarious-

liability and independent-misconduct claims) and that the LM and Liberty Mutual policies were

excess to the Canal policy. Plaintiffs also sought reimbursement from Canal for the defense costs

and expenses paid in defending the Henney estate action, along with prejudgment interest.

           In January 2012, Plaintiffs filed a motion for summary judgment, arguing that Plaintiffs paid

$421,925.51 in attorneys’ fees and costs in defending the claims asserted against Hinkle Contracting.

They sought a judgment in that amount plus prejudgment interest. On the same date, Canal cross-

filed for partial summary judgment. While Canal conceded that it was liable for twenty-five percent



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of Hinkle Contracting’s valid defense costs and expenses incurred after June 7, 2010 (the date of

Hinkle Contracting’s tender), it sought summary judgment on the remainder of Plaintiffs’ Claims.

        The district court granted Liberty Mutual summary judgment. It found (1) Canal had the

primary duty to defend Hinkle Contracting on both the vicarious-liability and independent-

misconduct claims; (2) Canal’s duty to defend began at the inception of the case; (3) Liberty Mutual

was entitled to reimbursement of its defense costs; and (4) the defense costs incurred were liquidated

damages and, therefore, an award of prejudgment interest was required. This appeal followed.

                                                  II.

        There are three issues in this appeal. First, we must consider the extent of Canal’s liability

for Hinkle Contracting’s defense costs under the terms of the Canal policy. Second, we must

determine from what date Canal is responsible for Hinkle Contracting’s defense costs. Third, we

must decide whether the award of prejudgment interest by the district court was an abuse of

discretion. We discuss each of these in turn, after outlining the standards of review and detailing the

relevant provisions of the Canal policy.

                                                  A.

        We review the district court’s grant of summary judgment de novo. Smith v. Wal-Mart

Stores, Inc., 167 F.3d 286, 289 (6th Cir. 1999). Summary judgment is proper “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). The parties agree that Kentucky law applies in this diversity

case.



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No. 12-5857
LM Ins. Corp., et al. v. Canal Ins. Co.

       The interpretation of an insurance policy is a question of law appropriate for determination

at the summary judgment stage. Stone v. Ky. Farm Bureau Mut. Ins. Co., 34 S.W.3d 809, 810-11

(Ky. Ct. App. 2000). We will give the terms of an insurance policy their plain and ordinary meaning,

and when the terms of the policy are clear and unambiguous, we must enforce them as drafted. City

of Louisville v. McDonald, 819 S.W.2d 319, 320-21 (Ky. Ct. App. 1991); Osborne v. Uniguard

Indem. Co., 719 S.W.2d 737, 740 (Ky. Ct. App. 1986). We will interpret ambiguous terms in an

insurance contract “in favor of the insured’s reasonable expectations and construed as an average

person would construe them . . . . Insurance policies should be construed according to the parties’

mutual understanding at the time they entered into the contract, with this mutual understanding to

be deduced, if at all possible, from the language of the contract itself.” Hugenberg v. W. Am. Ins.

Co., 249 S.W.3d 174, 185-86 (Ky. Ct. App. 2006).

       We review the district court’s grant of prejudgment interest for an abuse of discretion.

Travelers Prop. Cas. Co. of Am. v. Hillerich & Bradsby Co., 598 F.3d 257, 274 (6th Cir. 2010). We

will only reverse the district court if it applied an incorrect legal standard, misapplied the correct

legal standard, or relied upon clearly erroneous findings of fact. Getsy v. Mitchell, 495 F.3d 295, 310

(6th Cir. 2007).

                                                  B.

       This case revolves around the terms of the Canal policy. Therefore, we must take some care

in detailing the relevant provisions. Near the beginning of the Canal policy’s Coverage Form, it

reads, “Throughout this policy the words ‘you’ and ‘your’ refer to the Named Insured shown in the

Declarations.” R. 21-3 at 41, Page ID # 907. Referring back to the policy declarations, Item One

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of the Canal policy’s “Common Policy Declarations” names “William Henderson DBA Henderson

Trucking” as the “Named Insured.” R. 21-3 at 1, Page ID # 868. Item One also provides a

checkbox, which is followed by “For additional named insureds see IL 04 CW 0906.” Id. The series

of letters and numbers refers to a particular form, which presumably would be attached to the policy

if additional named insureds were intended. The Canal policy does not include form IL 04 CW

0906.

        Section II.A. of the Coverage Form, entitled “Liability Coverage,” provides that “We will

pay all sums an ‘insured’ legally must pay as damages because of ‘bodily injury’ or ‘property

damage’ to which this insurance applies, caused by an ‘accident’ and resulting from the ownership,

maintenance or use of a covered ‘auto.’” Id. at 42, Page ID # 908. The plan also states that Canal

has “the right and duty to defend any ‘insured’ against a ‘suit’ asking for such damages or a ‘covered

pollution cost or expense.’” Id. Section II.A.1. entitled “Who Is An Insured” reads as follows:

        The following are “insureds”:
        a. You for any covered “auto”.
        b. Anyone else while using with your permission a covered “auto” you own, hire or
        borrow except:
                (1) The owner or anyone else from whom you hire or borrow a
                covered “auto”. This exception does not apply if the covered “auto”
                is a “trailer” connected to a covered “auto” you own. . . .
                (5) A partner (if you are a partnership), or a member (if you are a
                limited liability company) for a covered “auto” owned by him or her
                or a member of his or her household.
        c. Anyone liable for the conduct of an “insured” described above but only to the
        extent of that liability.

Id. at 42-43, Page ID ## 908-09.




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        Section IV.B.5., entitled “Other Insurance,” states, “For any covered ‘auto’ you own, this

Coverage Form provides primary insurance. For any covered ‘auto’ you don’t own this Coverage

Form is excess over any other collectible insurance.” Id. at 49, Page ID # 931.

        Finally, two endorsements are relevant to this appeal. The first, entitled “Designated

Insured,” “identifies . . . organization(s) who are ‘insureds’ under the Who Is An Insured Provision

of the Coverage Form.” The endorsement lists Henderson as the named insured and lists “Hinkle

Contracting” under the heading “Name of Person(s) or Organization(s).” The premium for adding

Hinkle Contracting is listed as $200. The endorsement ends with the following: “Each . . .

organization shown in the Schedule is an ‘insured’ for Liability Coverage, but only to the extent that

. . . organization qualifies as an ‘insured’ under the Who Is An Insured Provision contained in

Section II of the Coverage Form.” Id. at 53, Page ID # 919.

        The second endorsement, entitled “Truckers Endorsement,” adds two subsections to the

Coverage Form. The endorsement adds subsection b.(6) to the Who Is An Insured Provision; the

added subsection provides that “No coverage is afforded to any person, firm, or organization using

the described ‘auto’ pursuant to any lease, contract of hire, bailment, rental agreement, or any similar

contract or agreement either written or oral, expressed or implied.” The endorsement also added

subsection IV.B.5.e. to the Other Insurance Provision. The additional subsection states, “Regardless

of the provisions of paragraph a. above, in the event the ‘auto’ described in this policy is being used

or maintained pursuant to any lease, contract of hire, bailment, rental agreement, or any similar

contract or agreement, either written or oral, expressed or implied, the insurance afforded you shall

be excess insurance over any other insurance.” Id. at 78, Page ID # 944.

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

                                                  C.

        Turning to the extent of Canal’s liability for Hinkle Contracting’s defense costs, before

delving into the contested issues in this case, it is worthwhile to detail what is not contested. First,

the parties agree that the Liberty Mutual and LM policies provided Hinkle Contracting coverage on

the vicarious-liability and independent-misconduct claims asserted in the Henney estate action and

that the coverage provided would be excess to any other insurance. Second, the parties agree that

the Canal policy provided Hinkle Contracting coverage on the vicarious-liability claims asserted in

the Henney estate action.

        The parties’ dispute revolves around the extent of Hinkle Contracting’s coverage under the

Canal policy. To determine the scope of Hinkle Contracting’s coverage under the Canal policy, we

must consider whether the Canal policy was primary or co-excess over the vicarious-liability claim.

We then must define “contract of hire” under the terms of the Canal policy. Finally, we must

consider what does it mean to “use” a covered auto under the omnibus clause of the Canal policy.

Before turning to these considerations, however, there is an initial hurdle: What type of insured is

Hinkle Contracting under the terms of the Canal policy, i.e., is it a named insured or otherwise

entitled to first-class coverage?

                                                  1.

        The question is easily answered by turning to the relevant policy provisions of the Canal

policy. To begin with, the “Common Policy Declarations” do not list Hinkle Contracting as a named

insured; indeed, the form necessary for naming additional insureds is absent from the policy. Nor

does the designated-insured endorsement add an additional subsection to the Who Is An Insured

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Provision that would entitle Hinkle Contracting to first-class coverage. Further, the designated-

insured endorsement listed Henderson as the named insured and ended with “[e]ach . . . organization

shown in the Schedule is an ‘insured’ for Liability Coverage, but only to the extent that . . .

organization qualifies as an ‘insured’ under the Who Is An Insured Provision contained in Section

II of the Coverage Form.” If Hinkle Contracting were supposed to be a named insured (i.e., a “you”

under the Canal policy) or if Hinkle Contracting were otherwise entitled to first-class coverage, the

qualifying language at the end of the Designated Insured endorsement would be superfluous.

Because Hinkle Contracting is not a named insured or otherwise entitled to first-class coverage, it

only qualifies for coverage to the extent that it meets the criteria under the omnibus (section

II.A.1.b.) and vicarious-liability clauses (section II.A.1.c.) of the Canal policy.

                                                  2.

       This definition of “you” quickly resolves the parties dispute over whether the Canal policy

provided primary or co-excess coverage over the claims. The Other Insurance Provision states “for

any covered ‘auto’ you own, this Coverage Form provides primary insurance.” Because the claim

arose from a covered auto owned by Henderson (i.e., “you”) the coverage is primary.

       Canal argues that the Section IV.B.5.e. of the Truckers Endorsement presents a wrinkle, but

this argument quickly falls apart by looking to the plain terms of the policy. Just as it was above,

the key is the word “you,” in the phrase, “the insurance afforded you shall be excess.” As was

discussed above, Hinkle Contracting is not “you” under the terms of the policy. To determine

otherwise would read an inconsistency into the policy: Hinkle Contracting would be a “you” under

the “Truckers Endorsement” but not a “you” under the Who Is An Insured Provision. Section

                                                 - 11 -
No. 12-5857
LM Ins. Corp., et al. v. Canal Ins. Co.

IV.B.5.e. does not apply to Hinkle Contracting, and as a result, the Canal policy provided primary

coverage for the Henney estate action.1

                                                  3.

       Turning to whether this was a “contract of hire” under Section II.A.1.b(6), if the agreement

between Hinkle Contracting and Henderson were a “contract of hire,” then Hinkle Contracting would

be entitled to no coverage under the omnibus clause. The Coverage Form does not define “contract

of hire,” and we have found no Kentucky or Sixth Circuit cases defining the term. Therefore, we

have turned to the most relevant cases from other jurisdictions.

       The most relevant cases involve two of the parties currently before this court and similar

Truckers Endorsements. In Liberty Mutual Fire Insurance Co. v. Canal Insurance Co., No.

A.1:96cv261–D–D, 1997 WL 786760 (N.D. Miss. Nov. 13, 1997) and Liberty Mutual Fire

Insurance Co. v. Canal Insurance Co., 50 F. Supp. 2d 591 (S.D. Miss. 1998), the courts found that

the term “contract of hire” as used in a Canal policy is an ambiguous term and then narrowly

construed “contract of hire” in favor of the insured.

       It is plain from [the] definitions of “hire” that a contract of hire might be for either
       the use of a thing or for the labor or services of an individual. The question is
       whether the phrase as used in the endorsement is so broad. One reading, that of the
       defendant, is that it indeed means any sort of contract for hire. When looking to the
       context of the endorsement and in light of the policy as a whole, another more narrow
       reading of the term comes to light. In this vein, it is reasonable to read the provision
       as being satisfied only when “pursuant to any lease, contract of hire, bailment, rental
       agreement or any similar contract or agreement” of the insured automobile. This


       1
         This creates a bit of an absurdity, as Canal points out: Hinkle Contracting, under the
vicarious-liability clause, is seemingly entitled to more coverage than Henderson. However, as the
drafter of the policy, the absurdity was within Canal’s control.

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       would distinguish between the two types of contracts of hire—i.e., those for the use
       of a chattel and those for the personal services or labor of an individual.

Liberty Mut. Fire Ins. Co., 1997 WL 786760, at *6; see also Liberty Mut. Fire Ins. Co., 50 F. Supp.

2d at 599 (“ATCO merely hired McConnell to perform a service, and the trucks were incidental to

that service.”), aff’d 177 F.3d 326 (1999).

       An additional consideration persuades us to apply the narrow interpretation of “contract of

hire.” Before the issuance of the Canal policy in dispute, Canal was on notice that “contract of hire”

could be interpreted in at least two different ways. Liberty Mut. Fire Ins. Co., 1997 WL 786760, at

*6; Liberty Mut. Fire Ins. Co., 50 F. Supp. 2d at 599, aff’d 177 F.3d 326. Canal chose not to

eliminate the ambiguity.

       Hinkle Contracting hired Henderson for his services—to haul aggregate—and his truck was

incidental to that service. See Liberty Mut. Fire Ins. Co., 1997 WL 786760, at *6 (finding that

defendant hauling lumber and lumber products was service and not contract of hire under similar

truckers endorsement); Liberty Mut. Fire Ins. Co., 50 F. Supp. 2d at 599 (finding that cutting trees

and hauling lumber constituted service and not contract of hire under similar truckers endorsement).

The arrangement was not a lease-type agreement by which Henderson was paid by the “amount of

time the truck was used in the benefit of” Hinkle Contracting. See Liberty Mut. Fire Ins. Co., 1997

WL 786760, at * 6. This narrow interpretation avoids the unreasonable result that “a plethora of

normally covered activities, if not the entire trucking operation of [Henderson], would be without

primary coverage under the policy.” See Liberty Mut. Fire Ins. Co., 1997 WL 786760, at * 6.




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No. 12-5857
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       In light of these considerations, the covered auto was not being used pursuant to a “contract

of hire,” and as a result, section IV.B.5.e. does not apply to Hinkle Contracting. The only remaining

question with regard to Hinkle Contracting’s coverage under the Canal policy is whether Hinkle

Contracting was “using” the vehicle when it was loading aggregate.

                                                   4.

       The omnibus clause provides that Hinkle Contracting would be covered for the independent-

misconduct claims asserted by the Henney estate if the loading and unloading of Henderson’s vehicle

constituted “using” the vehicle. Though the Kentucky courts do not appear to have considered

whether “use” includes loading and unloading, “[t]he term ‘use’ is a broad catchall designed to

include all uses of the vehicle not falling within the terms ‘ownership’ or ‘maintenance,’ and

involves simply employment for the purposes of the user.” 8A Couch on Ins. § 119:37. The term

“extends to any activity in utilizing the insured vehicle in the manner intended or contemplated by

the insured.” Id. When an insurance plan is silent about whether unloading and loading are covered,

courts have at times defined “use” to include loading and unloading. 8 Couch on Ins. § 111:38 n.2;

see also Am. Oil Co. v. Hardware Mut. Cas. Co., 408 F.2d 1365, 1367-68 (1st Cir. 1969).2


       2
         Complicating the matter somewhat, the Kentucky’s Motor Vehicle Reparations Act defines
“use” to exclude loading and unloading. Ky. Rev. Stat. Ann. § 304.39-020. The Motor Vehicle
Reparations Act requires Kentucky drivers to procure certain insurance and also establishes a right
to basic reparation benefits for those who suffer loss from injury arising out of the maintenance or
use of a motor vehicle. Id. §§ 304.39-010, .030. There is nothing in the statute, however, that would
appear to require that the Canal policy must or should define “use” as it is defined in the statute. The
terms of the insurance policy control, unless the terms contravene public policy. Ky. Farm Bureau
Mut. Ins. Co., 326 S.W.3d at 811. We see no principled basis to conclude that it would contravene
public policy to define “use” to include loading and unloading on the facts of this case.
        Canal cites Hartford Ins. Co. of Am. v. Ky. Sch. Bds. Ins. Trust, 17 S.W.3d 525, 527 (Ky. Ct.

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       The appellants cite Kentucky Water Service Co. v. Selective Insurance Co., 406 S.W.2d 385

(Ky. Ct. App. 1966), as a case relevant to the determination of whether loading a vehicle constitutes

“use.” In that case, Jasper was a customer of Kentucky Water. He drove his truck into Kentucky

Water’s loading rack. Jasper placed a hose connected to an overhead pipe into his truck’s tank. A

Kentucky Water employee began pumping water into the hose. The hose detached from the

overhead pipe and injured Jasper. Jasper sued Kentucky Water, and Kentucky Water then sought

a declaration from the court determining Kentucky Water was an insured under the omnibus clause

of Jasper’s insurance policy because Kentucky Water was “using” the vehicle. Id. at 385.

       The Kentucky Court of Appeals determined that Jasper’s truck was under his exclusive

control, and that the mere act of turning a water valve and allowing Jasper to use a hose did not

constitute use of Jasper’s vehicle. Id. at 387. This is a common-sense conclusion: “Jasper did not

pay premiums to Selective so that it would insure third parties against his claim for damages.” Id.

The intent of the insured was of utmost importance. See id.

       The Hauling Contract provided that Henderson was required to obtain an automobile

insurance policy naming Hinkle Contracting as an insured on a primary and non-contributory basis.

If Hinkle Contracting’s intent was to carry out this contract provision, then “use” should be defined

broadly to carry out his intent—to insure Hinkle Contracting on a primary basis—and as a result

“use” would include loading and unloading the truck. Moreover, whereas in Kentucky Water Jasper


App. 1999), as a case that employed the Motor Vehicle Reparations Act definition of “use” when
determining the scope of an insurance policy’s coverage. The case is inapposite because that court
did not consider whether the loading or unloading of the vehicle could constitute “use” within an
insurance policy in spite of the Motor Vehicle Reparations Act. See id.

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was a customer of Kentucky Water, which suggests that Kentucky Water was not using its truck,

Henderson was working for Hinkle Contracting. Hinkle Contracting loaded Henderson’s truck for

Hinkle Contracting’s purpose and at Hinkle Contracting’s direction, which comports with our

common understanding of “use.”

       The insurance plan is silent about whether “use” covers loading or unloading, but if anything,

the silence creates ambiguity. To the extent there is ambiguity, we give the insured the benefit of

the doubt. “Use” therefore includes loading and unloading.

       Tying all of this together, the Canal policy covers both the vicarious-liability and

independent-misconduct claims. Hinkle Contracting used the covered auto when it loaded aggregate,

and the accident, as alleged in the Henney estate action, arose from that use. Thus, Hinkle

Contracting is covered under the omnibus clause. Further, the Canal policy is primary because the

action involved a vehicle owned by Henderson. Assuming there was effective notice, Canal had a

“duty to defend [Hinkle Contracting] against a ‘suit’ asking for such damages.” This segues us into

the next issue for consideration.

                                                 D.

       Liberty Mutual gave Canal notice of its intent to tender Hinkle Contracting’s defense to

Canal. Several months later, Canal informed Liberty Mutual that it would only accept a tender from

Hinkle Contracting directly. Canal argues that it is only responsible for attorney fees incurred after

Hinkle Contracting, through counsel, tendered its defense.

       Kentucky courts have held that an insurance company is an agent of the insured during the

course of litigation or anticipated litigation. See, e.g., Asbury v. Beerbower, 589 S.W.2d 216 (Ky.

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1979). In the present case, Plaintiffs tendered the defense “on behalf of Hinkle.” This was enough

for purposes of giving Canal notice.

                                                E.

       Finally, we must decide whether the district court abused its discretion when it awarded

Liberty Mutual prejudgment interest. Under Kentucky law, a party is entitled to prejudgment interest

when the award of damages is liquidated. Nucor Corp. v. Gen. Elec. Co., 812 S.W.2d 136 (Ky.

1991). “Liquidated claims are of such a nature that the amount is capable of ascertainment by mere

computation, can be established with reasonable certainty, can be ascertained in accordance with

fixed rules of evidence and known standards of value, or can be determined by reference to well-

established market values.” 3d Enters. Contracting Corp. v. Louisville & Jefferson Cnty. Metro.

Sewer Dist., 174 S.W.3d 440, 450 (Ky. 2005) (internal quotation marks omitted). “[T]he key issue

is whether the amount is fixed as between the parties to the litigation either by agreement or

operation of law.” Travelers Prop. Cas. Co. of Am., 598 F.3d at 276. We added in Travelers:

       Travelers was not privy to the amounts Hillerich owed on its open account with its
       defense counsel prior to Travelers taking on the defense costs after the Second
       Amended Complaint was filed. Hillerich has offered no proof that Travelers knew
       or should have known of those amounts due, and so as between Travelers and
       Hillerich, the damages were not liquidated.

Id. The implication from the court’s language in Travelers is that if a party were privy to the

amounts owed, or if the parties should have known of the amounts owed, then finding that such fees

are liquidated would not be an abuse of discretion.

       The district court determined that the defense costs incurred by Liberty Mutual were

liquidated because “[t]he amounts were invoiced, tendered to, and paid by Liberty Mutual pursuant

                                               - 17 -
No. 12-5857
LM Ins. Corp., et al. v. Canal Ins. Co.

to its insurance contract with HCC.” This alone would not have been enough for us to affirm the

district court, because the district court failed to analyze whether Canal knew or should have known

of the defense costs. However, the court clarified its consideration of the issue in its opinion and

order denying Canal’s motion to alter or amend. The court stated that “the defense costs should have

been paid by Canal pursuant to Canal’s contract with [Hinkle Contracting]. Canal cannot be allowed

to shirk its duty to defend, then fail to make Liberty Mutual whole for the lost use of its due and

payable money during the time required to secure ultimate judgment.” The district court’s statement

implies that Canal should have known the amounts owed for Hinkle Contracting’s defense—had

Canal assumed the defense, as it should have done, it would have received the amounts invoiced,

tendered to, and paid by Liberty Mutual. The district court therefore did not abuse its discretion

when it awarded Liberty Mutual prejudgment interest.

                                                III.

       For the foregoing reasons, we AFFIRM the decision of the district court.




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