The Kentucky Supreme Court determined there was no coverage when the insured was sued for mineral trespass. Am. Mining Ins. Co. v. Peters Farms, LLC, 2018 Ky. LEXIS 287 (Ky. Aug. 16, 2018).
Beginning in 2007, Ikerd Mining. LLC removed 20,212 toms of coal from land belonging to Peters Farms, LLC. Of that amount, 10,012 tons were wrongfully mined under Ikerd's alleged mistaken belief as to the correct location of Peters' boundaries. The other 1,200 tons were mined by Ikerd knowing that the land thereunder belonged to Peters, but pursuant to a disputed oral lease agreement between the two. Peters claimed that the lease was an ongoing negotiation that was never finalized.
In 2010, Peters sued Ikerd and Ikerd's insurer, American Mining Insurance Company, Inc. (AMIC) for Ikerd's "willful and wanton trespass" onto Peters' property and conversion of coal. AMIC argued that the losses claimed by Peters from the mining activities were not an "occurrence," and thus not covered by the policy. The trial court determined that Ikerd's mistake in mining Peters' property was an "accident," which meant it was an "occurrence" under the CGL policy. The court also determined that the removal of coal and foliage from Peters' property constituted "property damage" that triggered insurance coverage under the policy. On appeal the Court of Appeals affirmed the trial court.
The Kentucky Supreme Court considered under the fortuity doctrine the extent of Ikerd's intent and control regarding its excavation and conversion of Peters' coal. Although it may not have been Ikerd's intent to mine Peters' coal specifically, Ikerd did intend to mine and sell the coal it extracted. Regardless of whether its trespass was willful or innocent, Ikerd intended to act.
Further, Ikerd had complete control over its employees and any subcontractors who extracted the coal from Peters' property. Ikerd directed its employees to excavate coal from Peters' property for several months. Therefore, because the actions taken by Ikerd, which led to property damage, were entirely under its control, and Ikerd fully intended to execute the excavation plan as it did, the resulting damage was not an accident. Accordingly, there was no coverage under the policy. The Court of Appeals' decision was reversed.