### F I LE D U. S . COURT OF AP PE ALS E LEVE NTH CI RCUI T A pr i l 29, 2004 T HOM AS K. KAHN C L E RK [ P UB L I S H] I N THE UN I TE D STATE S C OU RT OF APPE ALS F O R T H E E L E V E N T H C IR C U IT

________________________ N o. 03- 14720

________________________ D. C . Do c k e tNo . 0 1 - 0 2 2 3 6 - C V- AJ T A U R U S H O L D I N G S , I N C ., T A U R U S I N T E RN A T I O N A L M A N U F A C T U R I N G , I N C ., P la in tif f s - A p p e lla n ts , v ersu s U N I T E D S T A T E S F I D E L I T Y A N D G U A R A N T Y C O M P A N Y , P A C I F I C I N S U R A N C E C O M P A N Y , L I M I T E D , F E D E R A L I N S U R A N C E C O M P A N Y , G R E A T N O R T H E RN I N S U R A N C E C O M P A N Y , U N I T E D N A T I O N A L I N S U R A N C E C O M P A N Y , F I R E M A N 'S F U N D I N S ., D e f e n d a n ts - A p p e lle e s , N A U T I L U S I N S U R A N C E C O M P A N Y , D e f e n d a n t.

________________________ A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f orthe S outhe rn D i s tr i c tof F l or i da

_________________________ ( A p r i l29, 2004)2

B efo re A N D E R S O N , C A RN E S an d F A Y , C i rcu i tJu d g es. P E R C U R I A M: C e rtif ic a tio n f r o m T h e U n ite d S ta te s C o u rt o f A p p e a ls f

o rth e E le v e n th C i r c ui tt o the S upr e m e C ourtof F l or i da , pur s ua ntt o A rt i c l e V , s e c t i on 3( b) ( 6) of the F l or i daC ons t i tut i on. P l ai nt i ff s- A pp el l ant s T aurus H ol di ng s, Inc. and T aurus I nt ernat i on al M a nuf a c tur i ng, I nc . ( c ol l e c t i ve l y “ T aurus ” ) appe a l af i na l j udgm e nti n f

a vorof D e f e n d a n ts - A p p e lle e s U n ite d S ta te s F id e lity a n d G u a r a n ty C o m p a n y , P a c if ic Insura nce C om pany, L i m i t ed, F eder al Insura nce C om pany, G re atN orthern I n s u r a n c e C o m p a n y , a n d U n ite d N a tio n a l I n s u r a n c e C o m p a n y ( c o lle c tiv e ly

“ I ns ur a nc e P r ovi de r s ” ) . T aurus f i l e d s ui ta ga i ns tI ns ur a nc e P r ovi de r s , s e e ki ng, a m ong othe rthi ngs , ade c l a r a t ory j udgm e nttha ti ns ur a nc e pol i c i e s i s s ue d by I ns ur a nc e P r ovi de r s r e qui r e d the m t o c ontr i but e t o the de f e ns e c os t s of

about30 l aw su i t s p en d i n g ag ai n stT au ru s. T h e d i stri ctco u rtfo u n d th atth e “ p ro d u ct scom pl et ed op er at i on s haz ar d” prov i si on cont ai ned i n these i nsurance pol i ci es e x c lu d e d c o v e r a g e f

o rd e f e n s e o f th e s e la w s u its a n d d is m is s e d T au ru s ’ c o m p la in t. B e c aus e w e f

i nd tha tthi s c a s e turns on a n i m port a ntque s t i on of s t a t e l a w f

or w hi c h the r e i s no c ontr ol l i ng pr e c e de nt , w e de f e rourde c i s i on pe ndi ng c e rt i f i c a t i on of the qu es t i on t o the S up re m e C ou rtof F l ori da.3 B AC KG R OU ND T au ru s is in th e b u s in e s s o f m a n u f a c tu r in g , s e llin g , a n d d is tr ib u tin g f ir e a rm s . G ov ernm entm un i ci pal i t i es have sued T aurus a nd other handg un m anufacturer s s e e k in g c o m p e n s a tio n f o re x p e n s e s a lle g e d ly in c u rr e d a s ar e s u lt o f g u n v io le n c e in the i rc om m uni t i e s . T he s e s ui t s a l l e ge , a m ong othe rthi ngs , ne gl i ge nc e , ne gl i ge nt s upe rvi s i on, ne gl i ge ntm a rke t i ng, ne gl i ge ntdi s tr i but i on, ne gl i ge nta dve rt i s i ng, n eg l i g en ten tru stm en t , p u b l i c an d p ri v at e n u i san ce, fai l u re t o w arn , fal se ad v ert i si n g , an d u n fai r an d d ecep t i v e trad e p ract i ces. A s a resu l to f T au ru s’ ac t i on s, the m un i ci pal i t i es cl ai m they have s pentsubst ant i al sum s of m on eyt ow ar d pol i c e ope r a t i ons , e m e r ge nc y m e di c a l c os t s , a nd l e ga l pr os e c ut i ons r e l a t i ng t o gun v i o l en ce an d cri m es co m m i tt ed i n v o l v i n g h an d g u n s. A l th o u g h m o sto f th ese l aw sui t s s ee k com pensat ory dam ages , som e r equeston l y e qu i t abl e r el i ef . W hen T aurus i ni t i at ed thi s s ui tagai nstInsura nce P rovi ders , T aurus had al re ady not i fi ed th e m o f ab o u t 3 0 s u c h la w s u its p e n d in g a g a in s t it. I n s u r a n c e P r o v id e r s is s u e d c o m m e r c ia l g e n e r a l liab ility in s u r a n c e p o lic ie s to T aurus betw ee n the ye ar s 199 1 and 19 99 . U nd erthese po l i ci es , Insura nce P r ovi de r s ha ve the duty t o de f e nd T aurus a ga i ns tl a w s ui t s s e e ki ng da m a ge s f or b o d i l y i n j u ry, p ro p erty d am ag e, ad v ert i si n g i n j u ry, o r p erso n al i n

j u ry. T h ese pol i c i e s , how e ve r , do nota f f or d c ove r a ge f

orda m a ge s i nc l ude d w i thi n theAlthough thedescribed policy provisions are taken from Defendant Fe deral Insuranc e 1 Company ’s policy, the languag e of thepertinent provisions are substantially the same f

or all of thea pp lic a bleinsuranc epo lic ie s at is su ein t hisa pp e al. 4 “ prod uct s- com pl et ed op er at i on s haz ar d” prov i si on . T he F eder al Insura nce C o m p a n y p o lic y d e f

in e s ap r o d u c ts - c o m p le te d o p e r a tio n s h a z a r d a s f o llo w s : 1 [ A ]ll b od i l y i n ju ry a nd p r op e r t y d am age oc c urr i ng a w a y f r om pr e m i s e s y ou ow n orr e nta nd a r i s i ng outof y ou r p rod u ct or y ou r w orke x c e p t: a. prod uct s thatar e s t i l l i n you r physi ca l pos s e s s i on; or b. w ork tha tha s noty e tbe e n c om pl e t e d or aba ndone d. T h e p o l i cy th en d efi n es “ yo u r p ro d u ct ” as fo l l o w s:

[A ] n y g o o d s o r p ro d u ct s, o th er th an real p ro p erty, m a nuf a c tur e d, s ol d, ha ndl e d, di s tr i but e d ordi s pos e d of b y: 1. y ou; 2. othe r s tr a di ng unde ry ourna m e ; or 3 . ap e r s o n o ro r g a n iz a tio n w h o s e b u s in e s s o ra s s e ts y ou ha ve a c qui r e d. T he que s t i on pr e s e nt e d i n thi s appe a l i s w he the rthe pr oduc t s - c om pl e t e d ope r a t i ons haza rd excl usi on appl i es t o the l aw sui t s pendi ng agai nstT aurus. Insura nce P r ovi de r s a r gue tha tthe i nj ur i e s c om pl a i ne d of i n the unde r l y i ng s ui t s a r os e outof T aurus ’ pr oduc t s – ha ndguns – a nd the r e f or e the pr oduc t s - c om pl e t e d ope r a t i ons haza rd prov i si on excl ud es coverage. T aurus, ho w ever , cont ends thatbecause a t l easto n e cl ai m i n each o f th e u n d erl yi n g su i t s al l eg es i n j u ri es cau sed b y T au ru s’5

on- pr e m i s e s t ort i ous c onduc t( i . e . ne gl i ge ntm a rke t i ng, ne gl i ge ntdi s tr i but i on, f a i l ur e t o w a rn, f

a l s e a dve rt i s i ng, unf

a i ra nd de c e pt i ve tr a de pr a c t i c e s . . . ) , the e x c lu s io n d o e s n o t p r e c lu d e c o v e r a g e . I ni t i a l l y , the di s tr i c tc ourtc onc l ude d tha tbe c aus e the unde r l y i ng s ui t s a l l e ge tha ti nj ur i e s w e r e c aus e d by T aurus ’ t ort i ous bus i ne s s pr a c t i c e s a nd be c aus e the

“ a r i s i ng outof

” l a ngua ge i n the pr oduc t s - c om pl e t e d ope r a t i ons ha z a r d pr ovi s i on w a s a m b ig u o u s u n d e rF lo r id ala w , th e e x c lu s io n d id n o t ap p ly . H o w e v e r , in re spon se t o Insurance Prov i ders ’ m ot i on for r ec on si dera t i on , the di stri ctcourtse t a s i de i t s i ni t i a l de t e rm i na t i on a nd f ound tha t( 1) the pr oduc t s - c om pl e t e d ope r a t i ons h a z a r d e x c lu s io n w a s n o t a m b ig u o u s a n d ( 2 ) th e in ju r ie s a lle g e d in th e la w s u its agai nstT aurus a rose ou tof T aurus’ hand gu ns and n otou tof i t s on-prem i se s ne gl i ge nc e . A c c or di ngl y , the di s tr i c tc ourtc onc l ude d tha tthe pl a i n l a ngua ge of the pr oduc t s - c om pl e t e d ope r a t i ons ha z a r d e xc l us i on di d nota f f or d c ove r a ge f

orthe l a w s ui t s a ga i ns tT aurus a nd di s m i s s e d the c om pl a i nt . T hi s appe a l f ol l ow e d. DI S C US S I ON I n r e a c hi ng i t s de c i s i on, the di s tr i c tc ourtr e l i e d on Ko i ko s v. T ra velers In s. C o. , 849 S o. 2d 263 ( F l a . 2003) , ac a s e r e c e nt l y de c i de d by the S upr e m e C ourtof F lo r id a . Ko i ko s i nvol ve d as hoot i ng a tar e s t aur a ntw he r e tw o pa tr ons w e r e s hotby one gunm a n. 849 S o. 2d a t265. I n the unde r l y i ng s ui t , the vi c t i m s a l l e ge d tha tthe6

r e s tau r a n t o w n e rn e g lig e n tly f a ile d to p r o v id e a d e q u a te s e c u r ity . I d. T he r e s t aur a ntow ne rthe n s ue d the i ns ur a nc e c om pa ny , c l a i m i ng the tw o s hoot i ngs c o n s titu te d tw o o c c u rr e n c e s u n d e rth e ap p lic ab le in s u r a n c e p o lic y . I d. T he i nsurance c om pany, ho w ever , cont ended thatthere w as on l y asi ng l e occ urre nce – th e f a ilu r e to p r o v id e a d e q u a te s e c u r ity . I d. T he S up re m e C ou rtof F l ori da, appl y i ng the “ c aus e the ory , ” di s c us s e d the f ol l ow i ng: Iti s the ac tthatcauses the dam age, w hi ch i s nei ther e xpe c t e d nori nt e nde d f r om the s t a ndpoi ntof

the i ns ur e d, thatconst i tut es the “ occurre nce. ” T he i nsured’ s a l l eged negl i gence i s notthe “ occurre nce” ; the i nsured’ s a l l eged ne gl i ge nc e i s the ba s i s upon w hi c h the i ns ur e d i s be i ng su ed b y th e i n

j u red p arty. I d
. at2 7 1 . T h u s, th ere w ere tw o “ o ccu rren ces” –th e tw o sh o o t i n g s. A l though Koi kos i s nota c as e abo utprod uct s- com pl et ed op er at i on s haz ar d ex clu sio n s, th e d istrict co u rt fo u n d th at th e S u p re m e C o u rt o f F lo rid a’s di s c us s i on o n i n su ran ce o ccu rren ces el i m i n at ed an y p ercei v ed am b i g u i ty i n th e p h rase

“ ar i si ng ou tof. ” T he di stri ctcourtno t ed the Koi kos co u rtfo u n d th atth e sh o o t i n g s, n o t th e a lle g e d n e g lig e n t f a ilu r e to p r o v id e s e c u r ity , “g a v e r is e to ” th e in ju r ie s in thatca se . A pp l yi ng thi s anal ys i s t o the pres entca se , the di stri ctcourtconcl ud ed the Koi kos de c i s i on i ndi c a t e d tha tthe S upr e m e C ourtof F l or i daw oul d f

i nd the i nj ur i e s a l l e ge d i n the l a w s ui t s a ga i ns tT aurus a r os e outof T aurus ’ ha ndguns a nd no tou tof i t s on-prem i se s negl i gence.7

W hi l e the di s tr i c tc ourtdi d i t s be s tt o pr e di c thow the S upr e m e C ourtof F lo r id aw o u ld in te rp r e t th e p r o d u c ts - c o m p le te d o p e r a tio n s h a z a r d p r o v is io n , it is af t eral l on l y agu es s. W e m ustconsi der thatthe Koi kos c ourtw a s i nt e rpr e t i ng the “c au s e th e o ry ” a s it ap p lie s to d e te rm in in g th e n u m b e ro f c o v e r e d o c c u rr e n c e s in an i nsurance pol i cy . A nd al tho ug h the un derl yi ng i ss ue no w before thi s C ou rtm ay b e a n a lo g o u s , it is c e rta in ly n o t th e s a m e ; th is c a s e is ab o u t d e f in in g a n e n tir e ly di ff er enti nsurance provi si on – the prod uct s- com pl et ed op er at i on s haz ar d e xc l us i on. T au ru s , o n th e o th e rh a n d , c o n te n d s th a t Fla. Farm B ureau Mut . Ins. C o. v. G as ki ns , 4 0 5 S o . 2 d 1 0 1 3 ( F la . 1 s t D C A 1 9 8 1 ) is c o n tr o llin g h e r e . G as ki ns i s a F l o ri d a F i rstD i stri ctC o u rto f A p p eal case d eal i n g d i rect l y w i th th e p ro d u ct scom pl et ed op er at i on s haz ar d p rovi si on . In G as ki ns , a c hem i ca l supp l y di stri bu t or, G a s k in s , d e liv e r e d a n h e rb ic id e in s te a d o f th e p r o p e rin s e c tic id e to o n e o f h is c u s to m e r s . 4 0 5 S o . 2 d a t 1 0 1 3 . T h e c u s to m e r , af a rm e r , u s e d th e h e rb ic id e o n h is to b a c c o c r o p a n d th e e n tir e c r o p w a s d e s tr o y e d . I d. G a s ki ns s oughtc ove r a ge f or th e s u b s e q u e n t c la im a g a in s t h im f r o m h is in s u r a n c e c o m p a n y . I d. a t 1 0 1 3 - 1 4 . T he i ns ur a nc e c om pa ny a r gue d tha tthe pr oduc tha z a r d a nd c om pl e t e d ope r a t i ons pr ovi s i ons of

the appl i c abl e i ns ur a nc e pol i c y pr e c l ude d c ove r a ge be c aus e the liab ility a r o s e o f

f - p r e m is e s a n d o u t o f

G a s k in s ’ p r o d u c t. I

d. at1 0 1 4 . T h e F i rst8

D i stri ctco n cl u d ed th atth e ex cl u si o n s w ere n o tap p l i cab l e b ecau se “ l i ab i l i ty aro se outof [ G a s ki ns ’ ] on- pr e m i s e s ne gl i ge nc e i n de l i ve r i ng the w r ong pr oduc tt o [ the farm er ] and n otou tof the prod uctdel i vere d. ” I d. T au ru s a s s e rts th a t G as ki ns st an d s fo r th e p ro p o si t i o n th atp ro d u ct sc om pl e t e d ope r a t i ons ha z a r d e xc l us i ons appl y onl y t o c l a i m s of i nj ury f r om defe ct i ve prod uct s. H ow ever , w hi l e the ca se s T aurus r el i es up on do i nd i ca t e that d e f e c tiv e p r o d u c ts a r e c o n te m p la te d b y th e s e p r o v is io n s , n o c a s e T au ru s c ite s to m a k e s th e a s s e rtio n th a t th e p r o d u c ts - c o m p le te d o p e r a tio n s h a z a r d e x c lu s io n is lim ite d in ap p lic a tio n to d e f e c tiv e p r o d u c ts . See Fla. Farm B ureau Mut . Ins. C o. v. Jam es , 6 0 8 S o . 2 d 9 3 1 ( F la . 4 th D C A 1 9 9 2 ) ; A s s o c ia te d E le c . & G a s I

n s . Se r vs ., L td. v . H ous ton O i l

& G as C o. , 5 5 2 S o . 2 d 1 1 1 0 ( F la . 3 d D C A 1 9 8 9 ) ; G as ki ns , 405 S o . 2 d at1 0 1 4 . In fact , th ese cases seem t o d i scu ss G as ki ns w i thi n the c onf i ne s of i t s s peci fi c f

ac t s – thatthe prod uct s- com pl et ed op er at i on s haz ar d excl usi on do es n o t ap p ly to th e n e g lig e n t d e liv e ry o f th e w r o n g p r o d u c t. See J am es , 60 8 S o. 2d at 932 ( not i ng the i ns ur a nc e c om pa ny ’ s l i abi l i ty i n G as ki ns a r os e outof the ne gl i ge nt d e liv e ry o f

th e w r o n g p r o d u c t) ; A s s oc i ate d E le c . & G as I ns . Se r vs . , L td. , 552 S o. 2d a t1112 ( not i ng the ne gl i ge nc e i n G as ki ns ar ose f rom a se rvi ce w ho l l y unrel at ed t o the prod uct ).9 C ON C L US I ON In ou r vi ew , nei ther the Koi kos no r G as ki ns deci si on s c om pel a part i cul ar deci si on as t o w hether the prod uct s- com pl et ed op er at i on s haz ar d excl usi on appl i es t o the l a w s ui t s pe ndi ng a ga i ns tT aurus . W e r e c ogni z e the r e i s as i gni f i c a nta m ount of l i t i ga t i on i n thi s a r e atha ta f f e c t s the s ubs t a nt i a l r i ght s of both i ndi vi dua l s a nd c o rp o r a tio n s . T h is is a n a r e ae n tir e ly c o n tr o lle d b y s ta te la w a n d s o it is o n ly prop ert o al l ow F l ori da’ s hi gh es tcourtdeci de the i ss ue. A cc ordi ng l y, w e c ert i fy the fol l ow i ng qu es t i on t o the S up re m e C ou rtof F l ori da:

DO E S A “ P R OD UC T S - C OMP L E T E D O P E R AT I ON S HA Z AR D” E XC L US I ON I N A C OMME R C I AL G EN ERA L LI A BI LI TY PO LI CY O F I N SU RA N CE BAR C OV ER AG E AND THER EF ORE E LI M I NA TE AN I NSURER ’ S DUTY TO D EF END THE I NSURED GU N MAN UF AC T UR E R I N S UI T S AL L E GI NG NE GL I GE NC E , NE GL I GE NT S UP E R VI S I ON , NE GL I GE NT MAR KE T I NG , NE GL I GE NT DI S T R I B UT I ON , NE GL I GE NT AD VE R T I S I NG , NE GL I GE NT E NT R US T ME NT , P UB L I C AN D PRI V A TE N U I SA N CE, FA I LU RE TO W A RN , FA LSE AD VE R T I S I NG , AN D U NF AI R AN D D E C E P T I VE T R A D E P R A C T IC E S B A S E D O N T H E IN S U R E D ’S O N - P R E M I S E S B U S I N E S S P R A C T I C E S . T he phr a s i ng of

thi s que s t i on i s noti nt e nde d t o l i m i tthe S upr e m e C ourtof F lo r id a ’s c o n s id e r a tio n o f th e is s u e s in v o lv e d o rth e m a n n e rin w h ic h it g iv e s its a ns w e r . T he r e c or d i n thi s c a s e , a s w e l l a s c opi e s of the pa rt i e s ’ br i e f

s s ha l l be tr a n s m itte d to th e S u p r e m e C o u rt o f F lo r id ato a s s is t th e c o u rt in a n s w e r in g th is10

que s t i on. QU E S T I ON CE RT I F I E D.