Court Opinion

ID: 8991496
Source: CourtListenerOpinion
Date Created: 2022-11-27 12:14:52.165044+00
Date Added: 2024-06-11T17:10:56.067292
License: Public Domain

HATCHETT, Circuit Judge,
concurring specially:
The umbrella carriers argued before the district court that they owed no duty to Colonial concerning the underlying lawsuit brought against Colonial by the Fords because of the “professional service” liability exclusions contained in the umbrella policies. The district court agreed, and upon Colonial’s appeal to this court, the umbrella *1167carriers again asserted that as a result of the “professional service” exclusions, they owed no duty to indemnify Colonial. The majority disposes of this case based on an argument neither the umbrella carriers, nor the district court considered. Although agreeing with the result the majority reaches, I would confine my analysis to the issues and arguments the district court ruled on and the parties presented.
Colonial contends that whether the activities for which it was found liable in the underlying litigation were “professional services” rendered for others presents an issue of material fact. According to Colonial, under Alabama law, what constitutes a “professional service” is a question of fact. To support this argument, Colonial relies heavily on the case of United States Fidelity and Guaranty Co. v. Armstrong, 479 So.2d 1164 (Ala.1985). In Armstrong, a declaratory judgment action was brought in an effort to determine whether an insurer owed its insured, an engineering company, coverage for liability which the insured might incur in a pending lawsuit. At the time the declaratory judgment action was decided, the underlying lawsuit was still pending; thus, the activity which led to liability had not been factually established. The court held that the insurer had a duty to defend, in light of the claim for damages due to nonprofessional services, but the court noted that the insurer would not be required to indemnify for damages not caused by professional services.
The Armstrong court was not in a position to decide, as a matter of law, whether an activity constituted a “professional service” because the particular activity out of which the liability arose was unidentified due to the posture of the case. In this case, however, the facts had been resolved because the underlying lawsuits had been tried; the activities of Colonial which ultimately resulted in its liability had been identified. Since the facts had been established beyond dispute, the only remaining issue, whether the acts rendering Colonial liable were “professional services,” was a matter of law. See Alpha Therapeutic Corp. v. St. Paul Fire and Marine Ins. Co., 890 F.2d 368 (11th Cir.1989).
The district court determined that Colonial’s activities constituted “professional services” as a matter of law:
In order to determine what is a ‘professional service’ in the present case, this court must examine the definition set forth in the policy. The policy states that the exclusion applies to ‘any professional liability arising out of the insured’s profession as a mortgage company.’ It further defines ‘professional liability’ as liability ‘arising out of the insured’s profession.’ There is no question that Colonial was in the business of making mortgage loans, and that liability arose in the underlying cases out of the act of making a mortgage loan. The exclusion further states that professional liability which arises out of the insured’s rendering or failure to render such services by any employee or any person for whom the insured is legally liable is not covered. It cannot be disputed that the Walls and Ford litigation arose out of actions and decisions of Colonial’s employees, agents, and those for whom Colonial was responsible. The circumstances involved in the Walls and Ford litigation fit squarely within the definition set forth in the policy’s professional liability exclusion.
Colonial argues that the district court erred when it interpreted “professional services” to mean any activity relating to Colonial’s business. Colonial urges that the court should have considered the affidavit of Paul Miles, an independent agent who served as Colonial’s risk manager, which states that Colonial expected that the policies it had with the umbrella carriers would cover the type of liability it faced as a result of the Fords’ lawsuit.
When interpreting the meaning of any particular policy provision, unambiguous exclusions must be enforced as written. Altiere v. Blue Cross and Blue Shield of Alabama, 551 So.2d 290 (Ala.1989). If the language of a policy provision is not ambiguous, the court will not consider the reasonable expectations a party to the contract had concerning the provision’s mean*1168ing. Wallace v. Auto-Owners Ins. Co., 421 So.2d 131, 133 (Ala.Civ.App.1982). Colonial’s policies with the umbrella carriers expressly define Colonial’s profession as “a mortgage company,” and expressly exclude coverage for liability arising out of Colonial’s profession and caused by the rendering or failure to render professional service for others. The issuing of letters of commitment and the representations made concerning its loans are central to the profession or business of serving others as a mortgage company. Colonial’s liability clearly arose out of actions it undertook as a mortgage company performing its services for others.
Colonial also contends that the affidavit of Walter Sexton, who performed the underwriting functions leading to the issuance of the umbrella policies, creates a latent ambiguity in the policy. Sexton stated that the umbrella carriers believed that they owed coverage to Colonial under the policies for the losses Colonial sustained as a result of the Ford verdict, assuming such losses were due to liability for humiliation and mental anguish.
A latent ambiguity creates a material issue of fact making summary judgment improper. See Hashwani v. Barbar, 822 F.2d 1038, 1040 (11th Cir.1987) (per curiam) (applying Florida law). “An ambiguity is latent when the language employed is clear and intelligible and suggests but a single meaning but some extrinsic fact or extraneous evidence creates a necessity for interpretation or a choice among two or more possible meanings.” Thomas v. Principal Financial Group, 566 So.2d 735 (Ala.1990) (citing Black’s Law Dictionary (5th ed. 1979) and Medical Clinic Board of the City of Birmingham-Crestwood v. Smelley, 408 So.2d 1203 (Ala.1981)).
In Thomas, an insurance policy provided coverage for certain dependents of the insured, including children “attending school on a full-time basis.” 566 So.2d at 736. The insurer had denied benefits in connection with the death of the insured’s daughter. The daughter, who had enrolled in July, 1984, in a 1,200-hour work-study course in cosmetology and had paid full tuition, became disabled and could not attend school after August, 1985, due to cancer; she died of cancer in March, 1987. The insured argued that the words “attending school on a full-time basis,” which were not defined in the policy, were ambiguous and that her daughter fell within the meaning of the policy, even though she had not attended classes for approximately eighteen months preceding her death. The insurer argued that no fact question existed for jury resolution. According to the insurer, the words of the policy were clear and the undisputed evidence showed that the daughter was not attending school on a full-time basis.
The trial court concluded that the words “attending school on a full-time basis” were ambiguous under the circumstances. It allowed the parties to present evidence concerning the meaning of the provision and instructed the jury to determine whether the daughter was a “dependent” within the meaning of the policy at the time of her death. The Alabama Supreme Court affirmed. It noted that while the words were not patently ambiguous, the policy language suffered from a latent ambiguity. Cf. Cathbake Investment Co., Inc. v. Fisk Electric Co., 700 F.2d 654 (11th Cir.1983) (applying Alabama law) (latent ambiguity exists in contract provision mentioning “inter-company accounts” without defining the term, and extrinsic evidence is admissible to elucidate the term’s meaning).
Unlike the provisions in question in Thomas and Cathbake, the professional liability exclusions in Colonial's policy are unambiguous. In Colonial’s policy, Colonial’s profession is expressly stated to be “a mortgage company.” Professional services, in this context, necessarily mean services Colonial provided as a mortgage company. Even though Alabama law recognizes that parol evidence is admissible when a contract contains a latent ambiguity, the “latent ambiguity” doctrine is not to be applied when the contract is not ambiguous and the terms clearly delineate the parties’ rights and obligations. See Hashwani, 822 F.2d at 1040.
*1169Even where a party seeks to prove a latent ambiguity, the interpretation urged by that party must be reasonable. No latent ambiguity exists unless the contract is actually susceptible to the meaning contended for by a party. In seeking to prove a latent ambiguity,- a party must attempt to resolve an actual ambiguity, not create one.
Orkin Exterminating Co., Inc. v. F.T.C., 849 F.2d 1354, 1362 (11th Cir.1988) (Clark, J.) (citations omitted), cert. denied, 488 U.S. 1041, 109 S.Ct. 865, 102 L.Ed.2d 989 (1989).
Finally, Colonial contends that even if it was proper for the district court to determine whether Colonial's activities leading to liability were “professional services,” the district court failed to read the professional liability exclusions as narrowly as possible, as Alabama law requires. See Sullivan v. State Farm Mutual Automobile Ins. Co., 513 So.2d 992 (Ala.1987). Colonial points to the policy’s general provisions which provide coverage for liability imposed upon Colonial by law as the result of mental anguish or injury and humiliation suffered by a third party. From these general provisions, Colonial contends that to the extent the professional liability exclusions contradict the general bodily and personal injury provisions, the policy is ambiguous, and the court should have considered extrinsic evidence in determining the scope of the policy.
It is incorrect to assume that because the coverage sections of the umbrella policies provide coverage for loss due to mental anguish and humiliation, the exclusions should be interpreted so as not to apply to that coverage. The essential purpose of an exclusion is to limit the scope of coverage granted in the coverage section of the policy. By definition, any exclusion is in direct conflict with the coverage section of the policy, but this conflict does not make the policy ambiguous. Since the exclusions do not create ambiguities in the policy, the district court correctly refused to consider extrinsic evidence. Green v. Merrill, 308 So.2d 702 (Ala.1975).
For the reasons stated, I concur with the result the majority reaches.