FI L ED U.S. COURT OF APPEAL S EL EVENTHCI RCUI T NOVEMB ER 17, 2011 J OHN L EY CL ERK [DO NOT PUBLISH] IN THE UN ITED STATES COURT OF APPEALS FOR THE ELE VENTH CIRCUIT

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__ __ __ __ __ __ __ __ __ __ __ __ D.C. Dock etNo. 2 :0 9- cv -0 12 38 -AKK PROFESS IONAL ASSET STRATEG IES, LLC, NORMAN M. BERK, Pl ai nt iff s - C ou nt er - Defen da nt s - Ap pe ll an ts , ve rs us CONTINENTAL CASUALTY COMPANY, Defen da nt- Co un te r - Cl ai m an t - Ap pe ll ee, HOWARD SCHULTZ, Thi rdPart y - Defen da nt .

__ __ __ __ __ __ __ __ __ __ __ __ App eal fro m

th e Uni te d S ta te s Di st ric t Co urt forth e North ernDis tri ctof Al ab am a

__ __ __ __ __ __ __ __ __ __ __ __ (No ve m be r 17 , 20 11 )Befo re EDMONDSON, CARNES, an d KRAVITC H, Circ ui t J ud ge s.

PER CURI AM:

Pl ai nt iff s- App el lant s, Pr of

es si on al Ass etStr at eg ie s (“ PAS”) a ndNorm anM. Berk(co ll ect iv el y

“ Pl ai nt iff

s” ), ap pe al th e d is tri ctco urt’s g ran t o f su m m ary jud gm en t i n fa vo r of

Defen da nt -Ap pe ll ee Co nt in en ta l Ca su al ty Com pa ny (“ Co nt in en ta l” ) di sp os in g o f Pl ai nt iff s’ in su ran ce-b as edcla im s. No rev ers ib le erro r ha s b eensh own ; we af firm . PAS an d i ts so le own er, Berk, p ro vi de fee- on ly inv es tm en t advi ce t o c li en ts . PAS d oe s n ottak e cu st od y or p os se ss io n o f it s cl ie nt s’ fun ds ; the fun ds an d a ss et s are h el d b y

cu st od ia n C ha rle s Sc hwab (“ Sch wab ”) i n a cco un ts inth e cl ie nt s’ na m es . InOcto be r 20 03 , PAS em pl oyed An dr ew Pet ro fs ky. At Pe tro fs ky’ s u rg in g, Petro fs ky’ s g ran dp aren ts , Howardan d M erl e Sch ul tz , m ov edth ei r in ve st m en t acco un ts to Sch wab forPAS’s m an ag em en t. Inearl y 20 05 , Petro fs ky beg an st eal in g m on ey

fro m hi s g ran dp aren ts ’ acco un t an d c on ti nu edto do so in to 20 08 . Petro fs ky carri edou t h is th eft , inpa rt, b y writ in g c he ck s o n h is grandpa ren ts ’ acco un ts -- o n c he ck s i ss ue d b y Sch wab di rect ly to the gra ndpa ren ts -- an d fo rg in g

2hi s g ran dp aren ts ’ si gn atur es . Petr of sky carr ie d o utan d c on ceal edhi s co nduc t b y us in g h is po si ti onat P AS to ga in acce ss to Sch wab ’s so ftwa re. W it h a cces s t o Sch wab ’s so ftwa re, Pet ro fs ky was ab le to m od ify his gra ndparen ts ’ Sch wab acco un t d at a to esc ap e d et ect io n. Berkdi sc ov eredPetro fs ky’ s t he ft i n Au gu st20 08 an d d is ch arg edhi m . Petro fs ky is cu rren tl y

in pri so n. Be fo re Be rk ’s di sc ov ery of th eft , no on e atPAS ha d kno wled ge of P etro fs ky’ s ac ts ex cep t Pe tro fs ky. PAS s ou gh t co ve rag e fo r th e lo ss es in cu rredby Petro fs ky’ s g ran dp aren ts un de r a p ro fes si on al li ab il ity po li cy is su edby Con ti ne nt al . The p ol ic y is su edin 20 02 an d was ren ewedeachy ear. Co nt in en ta l d en ie d c ov erag e. Pla in ti ffs bro ug htsu itin cir cu itco urt i n Al ab am a se ek in g ade cl arat ory

jud gm en t tha t co ve rag e ex is te d u nd er the po li cy ; the cas e was rem ov edto fed eral di st ric t co urt. The po li cy

is su edto Pla in ti ffs by Con ti ne nt al pro vi de d t ha t Co nt in en ta l wou ldpa y

all cla im s: fir stm ad e ag ai ns t yo u an d re po rte d i n wri ti ng to us du rin g t he po li cy

pe rio d b y

reas on of an a ctor o m is si on in th e p erfo rm an ce o f pr of es si on al servi ces by yo u or b y an y pe rs on forwho m

y ouare l eg al ly liab le pro vi de d t ha t ... pri orto th e eff

ect iv e d at e o f th is po li cy , no ne of yo u ha d aba si s t o b el ie ve th atan y su chactor o m is si on , or in te rrel at edactor o m is si on , m ig htreas on ab ly be ex pe ct edto be th e b as is of acla im . (Em ph as is ad de d) .
3Co nt in en ta l co nt en ds th atno co ve rag e is du e u nd er the po li cy be cau se Petro fs ky -- an e m

pl oyee of PAS -- fa ll s wi th in th e d efi ni ti on of “ yo u ” inth e po li cy . Con ti ne nt al als o arg ue s t ha t Pe tro fs ky was co nduc ti ng “pr of es si on al se rv ic es ” inth e co m

m is si onof h is wron gf

ul act s an d kne w or s ho ul d h av e kno wn atth e ti m e o f th e p ol ic y ’s effec ti ve ren ewal da te th athi s ac ts m ig htreas on ab ly res ul t i n acla im

on th e p ol ic y . The d is tri ctco urt ag reed . * Pl ai nt iff s ad va nc e th ree a rg um en ts in anatt em ptto ov erco m e Co nt in en ta l’s de ni al of c ov erag e. Pla in ti ffs co nt en d tha t Pe tro fs ky was n otpe rfo rm in g

“pr of es si on al servi ce” wh enhe st ol e th e fu nd s s o h e can no t fa ll withi n t he de fin it io n o f “

yo u” un de r th e p ol ic y ; a m at eri al is su e o f fac ts ex is ts ab ou t wh ethe r Petro fs ky hadreas on to be li ev e th athi s ac ts wou ldres ul t i n acla im ; an d c ov erag e is du e u nd er the po li cy ’s “ in no cen t i ns ur ed ” p ro vi si on no twi th st an di ng th e p rio r kn owl ed ge of i ts em

pl oyee who was m is ap pr op ria ti ng fun ds . As we h av e sa id , Petrofsky also urg ed his mother-in-la w to move her

investment acc ount to Schwab for * PAS’s manag ement. Ac cordingto Plainti ff, no thef ts ag ainst that acc ount occur red until afte r the eff ective da te of the policy

in 2008. Thefts fr om the mother-in-la w’s ac count wer e ac complished in the same manne r as the the fts from the grandpa rents’ a ccount. The district court ruled that the mother-in-la

w thefts duringthe policy period we re inter

rela ted to the pre -policy

thefts from the grandpa rents and w ere also fore closed fr om cover ag e by Petrofsky ’s prior knowle dg e of his pre
policy thefts. Plaintiff’s brief

argues in conc lusory

and unper suasive ter

ms that the district court err ed in its treatment of the mother-in-la w thefts. Plaintiff’s cur sory treatment of this issue fail to addre ss the terms of the policy -- quoted a

bove -- which include e x pressly “interr elated a ct[s] ” that “might rea sonably

be expected to be the basis of a claim.” 4[i]t i s wel l es tabl is he d ... th atwhen do ub t ex is ts as t o whe th er co ve rag e is pro vi de d und er an in su ran ce p ol ic y , th e la ng ua ge us edby the in su rer m us t b e co ns tru edfor th e b en efi t o f th e in su red . Furt he r, whe n a m bi gu it y ex is ts in th e la ng ua ge of a n e xc lu si on , th e ex cl us io n wi ll be co ns tru edso as t o l im itth e ex cl us io n t o t he na rro wes t ap pl ic at io n re as on ab le un de r th e wor di ng . Howev er, i t i s equa ll y well set tl edth atin th e ab se nc e o f st atut ory pr ov is io ns to th e co nt rary, ins ur ers ha ve th e ri gh t t o l im it th ei r li ab il it y

by writ in g p ol ic ie s wi th na rro w cov erag e. In de ed , if the re i s n o a m

bi gu it y , cou rts m

us t en fo rce in su ran ce co nt ract s as writ te n a ndcan no t d efea t ex pr es s pr ov is io ns in a po li cy , in cl ud in g e xc lu si on s fr om co ve rag e, by m ak in g ane w con tra ctforth e p art ie s. HR Acqui si ti on I Co rp . V. Tw inCit y Fir e In s. Co ., 54 7 F .3d13 09 , 13 15 (11 Cir . th 20 08 ) (i nt ern al qu ot at io ns an d c it at io ns om it te d) . Pl ai nt iff s’ arg um en t tha t Pe tro fs ky’ s t he ft c an no t co ns ti tu te “pr of es si on al se rv ic es ” b ecau se Petro fs ky actedou ts id e th e sc op e o f hi s dut ie s t o a cco m pl is h t he th eftis witho utm eri t. Tha t a p ers on act edou ts id e h is auth or it y do es no t m ean he was no t i n t he actof r en de rin g p ro fes si on al servi ces . And , as t he di st ric t co urt ap tl y no te d, i f Pl ai nt iff

s ar e co rrec t tha t Pe tro fs ky’ s ac ts fal l o ut si de th e d efi ni ti on of “pr of es si on al servi ces ,” th enno co ve rag e co ul d b e cl ai m edbe cau se a va li d cl ai m un de r th e p ol ic y

requi res th atth e co nduc t ar is e “ in th e ren de rin g o f pr of es si on al servi ces .”

5Abo utPla in ti ffs ’ arg um en t tha t a m at eri al is su e o f fac t ex is ts ab ou t

Petro fs ky’ s b el ie f th athi s ac ts wou ldres ul t i n acla im ag ai ns t PAS, t he st ip ul at ed fact s s ho w th atPetro fs ky exp en de d s om e eff ort t o h id e h is th eftfro m

hi s v ic ti m s. Und er the lan gu ag e o f th e p ol ic y , th e que st io n i s wh ethe r anob jecti ve pe rs on in Petro fs ky’ s p os it io n s ho ul d h av e ex pe ct edth athi s ac ts m ig htform th e b as is of a cl ai m . So, ap artfro m

Petro fs ky’ s s ub

jecti ve be li efs , onth es e st ip ul at edfact s a reas on ab le pe rs on co ul d o nl y ex pe ctth atth es e act s m ig htform th e b as is of a cl ai m . The “ in no cen t i ns ur ed ” cl au se als o fa il s t o s up po rt P la in ti ffs ’ co ve rag e cl ai m . The “ in no cen t i ns ur ed ” cl au se pro vi de s tha t i f co ve rag e is ex cl ud ed

as a res ul t o f an y

cri m in al , di sh on es t, i ll eg al , frau du le nt orm al ic io us act s b y

an y of you , we agr ee tha t the in su ran ce co ve rag e th atwou ldot he rwis e b e aff or de d un de r th is Po li cy

wil l co nt in ue to ap pl y

to an y of you who di d n otpe rs on al ly comm it , hav e kno wled ge of, o r pa rti ci pa te in su ch cri m in al , di sh on es t i ll eg al , frau du le nt orm al ic io us act s o r in th e co nc eal m en t the reo f fro m us . As n ot edby the di st ric t co urt, Co nt in en ta l’s d en ia l o f co ve rag e is no t b as ed on th e “ cri m in al , di sh on es t, i ll eg al , frau du le ntor m al ic io us ” n atur e o f Pet ro fs ky’ s act s. Co nt in en ta l ar gu es th atth e in no cen t i ns ur edclaus e is in ap pl ic ab le : Petro fs ky’ s p rio r kn owl ed ge of t he cla im de feat edco ve rag e, no t the cri m in al it y of hi s ac ts . 6Ina cas e b ro ug htag ai ns t Co nt in en ta l i nv ol vi ng si m il ar l an gu ag e an d a

di sh on es t em

pl oyee with kno wled ge of h is own wron gd oi ng on th e p ol ic y ’s effe ct iv e d at e, inanunpubl is he d o pi ni on , a pa ne l o f th e Uni te d S ta te s C ou rt o f App eal s fo r th e Fo urth Cir cu it-- ci ti ng with app ro va l the op in io n o f th e d is tri ct co urt i n thi s ca se -- uph el d t he de ni al of c ov erag e b as edon th e kno wled ge of t he di sh on es ‘t em pl oyee. Bry anBro th ers , Inc . v. Co nt in en ta l Ca s. Co ., 41 9 F ed . App x. 4 22 (4 th Cir . 20 11 ). Altho ug h t he Bry anBro th ers op in io n i s n otbi nd in g p rece de ntin th e ci rcu itwher e itis su ed , it s re as on in g s eem s p ers ua si ve he re. The pro fes si on al li ab il it y po li cy th atPAS p ur ch as edfro m Co nt in en ta l ne ga te d c ov erag e o f a cl ai m if any of a b ro adgro up of p ers on s af fil ia te d wi th PAS -- i nc lu di ng all em

pl oyees -- kn ew of

th e b as is of acla im

on th e p ol ic y ’s effec ti ve da te . Con ti ne nt al ha d t he rig htto so li m itit s l iabi li ty. AFFIR MED.

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