Facts
In Scottsdale Insurance Co. v. Seven County Services, Inc., No. 3:23-cv-357-DJH-CHL, (W.D. Ky. 8/13/2025), insured Seven County, which managed juvenile residential facilities, was sued by the estate of a juvenile, a resident of one of the facilities, who died as a result of being physically restrained by several employees. CGL insurer Scottsdale denied coverage based on a “professional services” exclusion and subsequently filed suit.
Holding
The federal trial court held that the exclusion did not eliminate a duty to defend but did eliminate a duty to indemnify. “Professional services” was undefined in the policy. Acknowledging that Kentucky law defining the undefined term “professional services” was sparse, it identified the definition as requiring an exercise of judgement or training, with the applicable factors including (1) whether the act was predominantly manual versus intellectual, (2) whether the act was routine or mechanical, (3) how much the employee was paid, and (4) whether the act required specialized knowledge. Applied here, with respect to the duty to defend, the underlying complaint did not allege sufficient facts to determine whether the exclusion applied. With respect to the duty to indemnify, a consideration of all of the facts established that, while the act of restraining a minor is predominantly manual and the employees were not highly paid, the particular restraint technique employed here requires specialized knowledge and training, is neither mechanical nor routine, and is regulated by the state and required certification. Thus, the court granted Seven County’s motion for summary judgment on the duty to defend and granted Scottsdale’s motion for summary judgment on the duty to indemnify, with the amount of Seven County’s damages on the duty to defend to be determined.