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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-12327
________________________
D.C. Docket No. 8:10-cv-02387-JSM-EAJ
AUTO-OWNERS INSURANCE COMPANY,
a Michigan corporation,
Plaintiff-Counter Defendant-Appellee,
versus
E.N.D. SERVICES, INC.,
a Florida corporation,
SOOSIE L. LAZENBY,
GEORGE W. SPOWART,
Defendants-Counter Claimants-Appellants.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(February 6, 2013)
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Before DUBINA, HULL, and ALARCÓN, ∗ Circuit Judges.
HULL, Circuit Judge:
Defendants-Appellants E.N.D. Services, Inc. (“E.N.D.”), Soosie Lazenby,
and George W. Spowart appeal the district court’s order granting summary
judgment in favor of Plaintiff-Appellee Auto-Owners Insurance Co. (“Auto-
Owners”). In this declaratory judgment action, Plaintiff Auto-Owners sought a
ruling as to what, if any, obligations it owed its insured, the Defendant, E.N.D.
Prior to this action, Defendants Lazenby and Spowart had received a default
judgment against the insured, E.N.D., in a separate underlying state court action.
Defendant E.N.D. then assigned its rights under its Auto-Owners insurance policy
to Defendants Lazenby and Spowart. In this declaratory judgment action,
Defendants moved for summary judgment, claiming coverage under the policy.
The district court held that, because of a coverage exclusion, Plaintiff Auto-
Owners was not obligated to cover or defend Defendant E.N.D. in connection with
Defendants Lazenby and Spowart’s claims against E.N.D. After review, we affirm
the district court’s decision.
∗
Honorable Arthur L. Alarcón, United States Circuit Judge for the Ninth Circuit, sitting
by designation.
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I. BACKGROUND
A. The Policy
In 2007, Dominic Minicozzi formed Defendant E.N.D., serving as its sole
owner and employee. At that time, Defendant E.N.D. began offering home
inspection services in the area around Spring Hill, Florida. Also in 2007, E.N.D.
purchased a commercial general liability insurance policy from Auto-Owners (the
“policy”).
The policy contains several exclusions from coverage. The exclusion at
issue here is prominently labeled, “EXCLUSION--INSPECTION, APPRAISAL
AND SURVEY COMPANIES,” (the “exclusion”). This exclusion provides that
the policy “does not apply to ‘bodily injury,’ ‘property damage,’ ‘personal injury,’
or ‘advertising injury’ for which the insured may be held liable because of the
rendering or failure to render professional services in the performance of any . . .
inspection . . . .”
B. The Underlying State Court Action
On April 9, 2007, Defendant E.N.D. entered into an agreement (the
“Inspection Agreement”) with Defendant Lazenby to inspect a home located at 647
Ponce De Leon Boulevard, Belleair, Florida that Defendants Lazenby and Spowart
planned to purchase (the “Lazenby Property”). In the Inspection Agreement,
E.N.D. promised that it would perform an inspection in accordance with certain
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professional standards, as discussed below. Thereafter, E.N.D. completed the
inspection.
Defendants Lazenby and Spowart then finalized their purchase of the
Lazenby Property. Upon moving into the home, they discovered structural defects
caused by insect infestation and water damage. Convinced that these defects
existed when E.N.D. performed its inspection, Defendants Lazenby and Spowart
concluded that E.N.D. had failed to fulfill its obligations under the Inspection
Agreement.
On May 6, 2009, Lazenby and Spowart filed a complaint in the Sixth
Judicial Circuit Court of Florida against E.N.D. and other defendants (the
“underlying state court action”). Lazenby and Spowart brought claims against
E.N.D. for breach of contract, negligence, and a violation of the Florida Deceptive
and Unfair Trade Practices Act (“FDUTPA”). They based each claim on E.N.D.’s
inspection of the Lazenby property.
Initially, Auto-Owners, pursuant to the policy, defended E.N.D. in the state
court action. However, soon after the underlying state court action began, Auto-
Owners determined that because of the professional services exclusion, it was not
obligated to defend E.N.D. or to indemnify it for any adverse judgment levied by
the state court.
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After Auto-Owners withdrew its defense, E.N.D. did not obtain its own
counsel or make any further effort to defend itself. Accordingly, on February 11,
2010, the state court entered a default judgment against E.N.D., awarding Lazenby
and Spowart $245,940.00 in damages. Instead of immediately attempting to
collect this judgment from E.N.D., Lazenby and Spowart then accepted an
assignment of E.N.D.’s rights and claims against Auto-Owners under the policy. 1
C. Auto-Owners’s Declaratory Judgment Action
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 Auto-
Owners.
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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
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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.
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II. DISCUSSION
On appeal, we consider whether the district court erred in finding that
E.N.D. rendered a professional service in the inspection of the Lazenby Property. 3
Under Florida law, insurance contracts like the one at issue here “are
construed according to their plain meaning, with any ambiguities construed against
the insurer and in favor of coverage.” U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So.
2d 871, 877 (Fla. 2007); see also Penzer v. Transp. Ins. Co., 29 So. 3d 1000, 1005
(Fla. 2010); Swire Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So. 2d 161, 165 (Fla.
2003) (“An ambiguous provision is construed in favor of the insured and strictly
against the drafter.”). An insurance contract is ambiguous when “the language is
susceptible to more than one reasonable interpretation, one providing coverage and
the other limiting coverage.” State Farm Mut. Auto. Ins. Co. v. Menendez, 70 So.
3d 566, 570 (Fla. 2011) (internal quotations omitted); see also Garcia v. Fed. Ins.
Co., 969 So. 2d 288, 291 (Fla. 2007) (same). However, “simply because a
provision is complex and requires analysis for application, it is not automatically
rendered ambiguous.” Swire Pac. Holdings, 845 So. 2d at 165. When a policy
provision is unambiguous, the provision is given its plain meaning. See, e.g.,
Penzer, 29 So. 3d at 1005.
3
On appeal, Defendants do not claim lack of adequate notice before the district court’s
summary judgment ruling, but instead focus on the merits of the coverage issue involving the
exclusion.
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Florida courts narrowly construe policy provisions that purport to exclude
coverage. See Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000)
(“[E]xclusionary clauses are construed even more strictly against the insurer than
coverage clauses.”); see also Chandler v. Geico Indem. Co., 78 So. 3d 1293, 1300
(Fla. 2011). Nevertheless, “if a policy provision is clear and unambiguous, it
should be enforced according to its terms whether it is a basic policy provision or
an exclusionary provision.” Taurus Holdings, Inc. v. U.S. Fid. & Guar. Co., 913
So. 2d 528, 532 (Fla. 2005); see also Am. Equity Ins. Co. v. Van Ginhoven, 788
So. 2d 388, 390 (Fla. 2001) (“Clearly worded exclusions in an insurance policy are
to be enforced as long as they are clear, unambiguous and do not violate public
policy.”).
We agree with the district court that the term “professional services” as used
in the exclusion is unambiguous. Giving the term its plain meaning, we conclude
that the district court did not err when it determined: (1) that E.N.D. was not
entitled to coverage under the policy for damages that resulted from E.N.D.’s
inadequate inspection of the Lazenby Property; and (2) that, thus, Lazenby and
Spowart, as assignees of E.N.D., have no claim against Auto-Owners under the
policy.
Here, the CGL policy exclusion uses but does not define “professional
services.” Florida’s Third District Court of Appeal (“Florida DCA”) recently
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confronted similar circumstances in Aerothrust Corp. v. Granada Insurance Co.,
904 So. 2d 470 (Fla. 3d Dist. Ct. App. 2005). 4 There, a CGL policy contained a
similar professional services exclusion. Aerothrust, 904 So. 2d at 471–72. The
insured inspected and maintained hoists at a manufacturer’s plant. Id. at 471.
Five months after the insured inspected a hoist, the hoist failed while the
manufacturer was using it to lower a jet engine. Id. The failure caused damage to
the jet engine, resulting in financial losses to the manufacturer. Id. The
manufacturer sued the insured, alleging that the insured’s negligent inspection of
the hoist proximately caused its losses. Id. The insurer then sought a declaratory
judgment that it had no duty to defend or indemnify its insured, based in part on
the professional services exclusion. Id.5
In Aerothrust, the Florida trial court entered summary judgment in favor of
the insurer based on the professional services exclusion. Id. at 472. The Florida
4
The Supreme Court of Florida has not considered this precise issue. Therefore, in this
diversity case, we must predict how that court would rule. Molinos Valle Del Cibao, C. por A. v.
Lama, 633 F.3d 1330, 1348 (11th Cir. 2011). Although we are not bound by decisions of the
Florida District Courts of Appeal, those courts’ decisions “provide data for this prediction.” Id.
Accordingly, we apply the intermediate appellate courts’ decisions unless we find “persuasive
evidence that the highest state court would rule otherwise.” Bravo v. United States, 577 F.3d
1324, 1325 (11th Cir. 2009) (per curiam) (internal quotation omitted). We find no such evidence
here.
5
The professional services exclusion at issue in Aerothrust provided, in part, “that the
insurance does not apply to property damage that occurs ‘due to the rendering or failing to render
any professional services or treatments.’” 904 So. 2d at 472. The professional services
exclusion featured “a non-exclusive list of [professional] services . . . .” Id. The list included:
“legal, accounting, or advertising services; engineering, drafting, surveying, or architectural
services; supervisory, inspection, or appraisal services; medical services; cosmetic services;
testing or consulting services; and data processing or computer programming services.” Id.
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DCA reversed as to the professional services exclusion. Id. 6 The Florida DCA
began by noting that the CGL policy at issue did not define the term “professional
services.” Id. Thus, the Florida DCA turned to the dictionary definition of
“professional,” given as, “[a] person who belongs to a learned profession or whose
occupation requires a high level of training and proficiency.” Id. (quoting Black’s
Law Dictionary 1246 (8th ed. 2004) (alteration in original)).
In light of this definition, the Florida DCA concluded that, although the
professional services exclusion at issue referred to “inspection . . . services,” “only
those inspection services which require specialized training should be considered
professional services.” Id. The hoist inspection services at issue did not meet
these criteria. Id. The Florida DCA stressed that: (1) the insured inspection firm
did not require its inspectors “to have any specialized training or experience”; (2)
there was “no entity that certifie[d] or accredit[ed] people who perform[ed] such
[hoist] inspections, or that regulate[d] or set[] forth standards for such personnel”;
and (3) this suggested that hoist inspecting did not require “a high level of training
and proficiency” and therefore was not a “professional service.” Id.
Like the Florida DCA in Aerothrust, we consider whether, at the time that
the events occurred here, a Florida home inspector like E.N.D performs a
professional service and receives “specialized training” before inspecting a home.
6
The Florida DCA affirmed the trial court’s conclusion as to a separate policy exclusion,
and therefore did not remand. Id. at 472–73.
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First, during the relevant period, industry standards existed for home
inspectors. The American Society of Home Inspectors, Inc. (the “ASHI”), formed
in 1976, describes itself as a “not-for-profit professional association for home
inspectors” and states that its purpose is “to establish and advocate high standards
of practice and a strict code of ethics for [its] member community.” See About the
American Society of Home Inspectors, Inc., American Society of Home
Inspectors, http://www.ashi.org/about/ (last visited Feb. 5, 2013) (emphasis
added). 7 The ASHI Standards of Practice (the “ASHI Standards”) became
effective on October 15, 2006 and set forth precise requirements for the competent
performance of a home inspection. See American Society of Home Inspectors,
Inc., ASHI Standards of Practice (2006), available at
http://www.homeinspector.org/docs/standards.pdf (last visited Feb. 5, 2013). To
comply with these ASHI Standards, a home inspector needs specialized skills and
training. This contrasts with Aerothrust, where no entity set forth standards for
hoist inspection. See 904 So. 2d at 472.
Second, E.N.D. specifically promised Lazenby and Spowart that its
inspection of the Lazenby Property would comply with the ASHI Standards. 8 In
7
We take judicial notice of these facts. See Fed. R. Evid. 201(b).
8
We do not treat the Inspection Agreement as controlling our analysis. Rather, we treat it
is as merely one factor among many suggesting that E.N.D.’s inspection of the Lazenby
Property, like all home inspections, was a “professional service,” within the meaning of the
exclusion. The Inspection Agreement merely confirms that Defendants Lazenby and Spowart,
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the Inspection Agreement, E.N.D. and Lazenby and Spowart “understood and
agreed that [E.N.D.’s] inspection [would] be performed according to the
STANDARDS OF PRACTICE of the AMERICAN SOCIETY OF HOME
INSPECTORS, INC. . . . .” Moreover, in promotional materials that Lazenby and
Spowart received before they contracted with E.N.D., E.N.D. informed consumers
that “[a] close look by a knowledgeable professional [could] provide a wealth of
valuable information . . . .” E.N.D. then purported to be “a truly professional
property inspection firm . . . .”
Third, in the underlying state court action, Lazenby and Spowart alleged that
E.N.D. breached the Inspection Agreement by failing to provide them with an
inspection report “prepared by a knowledgeable professional inspector” and
“completed in a manner which exceeded the stringent requirements of . . . the
[ASHI].” As for the negligence claim, Lazenby and Spowart alleged that E.N.D.
“undertook a duty to [them] to conduct an inspection . . . and to prepare an accurate
report of its inspection in a manner exceeding the stringent requirements of ASHI .
. . .” Lazenby and Spowart alleged that E.N.D. negligently breached this duty of
care. 9 The fact that E.N.D. ultimately failed to comply with the ASHI Standards
before E.N.D. inspected the Lazenby Property, were aware that home inspections generally are
“professional services.”
9
As for the FDUTPA claim, Lazenby and Spowart alleged that E.N.D. made false
representations to them regarding its ability to “provide a report exceeding the stringent
requirements of ASHI as a result of a thorough inspection of readily accessible areas of the
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does not change the fact that, in 2007, the ASHI Standards existed to ensure that
home inspectors like Minicozzi, who voluntarily chose to be governed by them,
had adequate training and skills.
It is true that, in 2007, the State of Florida did not require home inspectors to
be licensed. Only in 2010 did Florida’s statutes regulating the home inspection
industry take effect. See Fla. Stat. §§ 468.83–468.8325.10 We view the State’s
decision to formally regulate the home inspection industry as an acknowledgement
of the industry’s preexisting character as one that provides services that are
professional in nature and is therefore in need of state regulation. 11
Fourth, we also recognize that E.N.D.’s Minicozzi stated that, before he
began inspecting homes for E.N.D., he received “on-the-job training” from an
experienced home inspector to “acquaint [him] with the business.” Defendants
argue that, because Minicozzi received only on-the-job training, he did not render a
[Lazenby] Property . . . .” This false representation “amount[ed] to unfair methods of
competition, or unconscionable, deceptive, or unfair acts or practices . . . in violation of the
[FDUTPA].”
10
The Florida Legislature enacted these provisions during its 2007 session, and the
governor of Florida approved them on June 27, 2007. See Act of June 27, 2007, No. 2234, 2007
Fla. Sess. Laws Serv. 235 (2007). However, the enacting legislation provided that the statutes
would not take effect until July 1, 2010. Id. The provisions require anyone who wishes to
perform home inspections in Florida to obtain a license, which the State will issue only after the
applicant completes certain coursework. Fla. Stat. §§ 468.8313–14. Moreover, the provisions
impose continuing education requirements on licensed home inspectors. Fla. Stat. § 468.8316.
11
Significantly, Florida law now defines “[h]ome inspection services” as “a limited visual
examination of [certain] readily accessible installed systems and components of a home . . . for
the purposes of providing a written professional opinion of the condition of the home.” Fla. Stat.
§ 468.8311(4).
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“professional service” when he inspected homes for E.N.D. Defendants are wrong.
Courts construing similar provisions have repeatedly held that a service is
“professional” even though the skills that it demands can be acquired primarily
through work experience. See, e.g., Nat’l Ben Franklin Ins. Co. of Ill. v. Calumet
Testing Servs., Inc., 60 F. Supp. 2d 837, 845 (N.D. Ind. 1998) (“For [a professional
services] exclusion to apply, the activity need not be one for which traditional
professional training, e.g. doctor, lawyer or engineer, is required.”); Hollingsworth
v. Commercial Union Ins. Co., 256 Cal. Rptr. 357, 362 (Cal. Ct. App. 1989) (ear-
piercing constituted the rendering of professional services, although “the activity . .
. did not require extensive training or technical skill” and the only training that the
insured and her employees received was a brief “instruction in the use of the ear-
piercing instrument by a manufacturer’s representative”).
Perhaps Minicozzi was inadequately trained or would have benefitted from
additional training before he began performing home inspections unassisted.
However, in concluding that E.N.D. rendered “professional services,” we “focus[]
upon the particular act itself, as opposed to the character of the individual engaging
in the act.” Estate of Tinervin v. Nationwide Mut. Ins. Co., 23 So. 3d 1232, 1237
(Fla. 4th Dist. Ct. App. 2009). The act undertaken by E.N.D., through
Minicozzi—inspecting a home—required specialized skills and training in order to
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be completed effectively. Minicozzi’s alleged shortcomings simply prove this
proposition.
E.N.D. cannot take refuge in Minicozzi’s alleged incompetence in home
inspections. A source provider’s incompetence does not render “professional
services” exclusions, like the one here, inapplicable. In effect, Defendants ask us
to construe the professional services exclusion so that the least competent home
inspector, i.e., one who was not adequately trained in the first place, would receive
coverage from a CGL policy for a work-related activity, but a competent, well-
trained home inspector would not. The test is not Minicozzi’s level of competence
but whether home inspections require specialized skills and training. They do and
thus the professional services exclusion applies.
III. CONCLUSION
E.N.D. rendered a “professional service” when it inspected the Lazenby
Property. The exclusion’s plain language establishes that Auto-Owners owed no
duty to defend E.N.D. in the underlying state court litigation where Lazenby and
Spowart alleged that E.N.D. failed to competently inspect the Lazenby Property.
Because Auto-Owners owed no duty to defend E.N.D., it does not owe any duty to
indemnify E.N.D. for the adverse monetary judgment rendered by the state court.
See WellCare of Fla., Inc. v. Am. Int’l Specialty Lines Ins. Co., 16 So. 3d 904, 906
(Fla. 2d Dist. Ct. App. 2009) (explaining that “because the duty to indemnify is
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narrower than the duty to defend[,]” it “cannot exist if there is no duty to defend”).
Accordingly, Auto-Owners was entitled to summary judgment on all counts.
In light of the foregoing, we affirm the district court’s order granting Auto-
Owners summary judgment on all counts.
AFFIRMED.
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