Opinion ID: 819774
Heading Depth: 2
Heading Rank: 3

Heading: Auto-Owners’s Declaratory Judgment Action

Text: On October 22, 2010, Plaintiff Auto-Owners commenced this declaratory judgment action against Defendants E.N.D., Lazenby, and Spowart. Auto-Owners asked the district court to declare that the policy does not afford E.N.D. coverage for Lazenby and Spowart’s claims and that Auto-Owners is therefore not required to pay Lazenby and Spowart any portion of the state court’s judgment. On March 18, 2011, Defendants moved for summary judgment, arguing that the professional services exclusion applies exclusively to inspection services that can only be performed by those who have specialized training, knowledge, and skill. Because Minicozzi (the owner and only employee of E.N.D.) received minimal specialized training and had no experience inspecting homes when he 1 When they accepted the assignment, Lazenby and Spowart reserved their right to attempt to obtain any deficiency from E.N.D. after exhausting all means of collecting from AutoOwners. 5 Case: 12-12327 Date Filed: 02/06/2013 Page: 6 of 17 formed E.N.D., Defendants asked the district court to find that the exclusion does not apply to E.N.D.’s inspection of the Lazenby Property. The district court denied Defendants’ motion. It concluded that the exclusion’s plain language made clear that the policy does not provide coverage for home inspections like E.N.D.’s inspection of the Lazenby Property. The district court first noted that the language in the exclusion applies broadly to “the performance of any . . . inspection . . . .” It then observed that the phrase “inspection, appraisal, [or] survey” indicates that the parties intended the exclusion to specifically apply to real estate services. Based on this language, the district court determined that the exclusion covers services rendered in the performance of a home inspection “as a home inspection is undeniably both a type of inspection and related to the real estate business.” Next, the district court concluded that such home inspection services are inherently “professional,” and therefore covered by the exclusion. The district court articulated these five reasons for its conclusion: (1) the parties to the Inspection Agreement “clearly provided for the deliverance of professional services . . .”; (2) after the events at issue occurred, Florida’s legislature enacted a statute requiring specific training for, and licensing of, home inspectors; (3) “home inspections require specialized skills and knowledge unavailable to the general public”; (4) various professional organizations have long promulgated professional 6 Case: 12-12327 Date Filed: 02/06/2013 Page: 7 of 17 standards for the home inspection industry; and (5) courts construing similar exclusions have held such CGL policy provisions to apply to “non-traditional professional[s] as long as the exclusion of such services was fairly encompassed by the policy.” After determining that Defendants were not entitled to summary judgment, the district court informed the parties that it was considering sua sponte entering summary judgment in favor of Plaintiff Auto-Owners. Defendants received 14 days to file a response stating why Plaintiff Auto-Owners was not entitled to summary judgment, in light of the district court’s conclusion regarding the exclusion. The district court cautioned Defendants that it “[would] not entertain any further arguments purporting to show that the [exclusion] is inapplicable.” Defendants did not heed the district court’s admonition. In response to the order, they filed a motion requesting that the district court reconsider its decision regarding the exclusion’s applicability. Accordingly, the district court denied the motion for reconsideration and sua sponte entered summary judgment in favor of Plaintiff Auto-Owners on all counts. Defendants timely appealed the district court’s order. 2 2 We review a district court’s declaratory judgment ruling de novo where, as here, the district court adjudicated a question of law based on its interpretation of an insurance policy. See Royal Ins. Co. of Am. v. Whitaker Contracting Corp., 242 F.3d 1035, 1040 (11th Cir. 2001). In addition, in this diversity case, we apply the substantive law of the forum state, Florida. See id.; see also Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S. Ct. 817, 822 (1938). The parties agree that Florida law applies to this insurance dispute. 7 Case: 12-12327 Date Filed: 02/06/2013 Page: 8 of 17