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Auto-Owners Insurance Company v. E.N.D. Services

December 15, 2011



THIS CAUSE comes before the Court upon Defendants' Motion for Summary Judgment (Dkt. 9) and Plaintiff's Response (Dkt. 11). The Court, having considered the motion and response, concludes that Defendants' Motion should be denied.


Plaintiff Auto-Owners Insurance Company ("Auto-Owners") brought this declaratory judgment action seeking a declaration that it has no duty to indemnify its insured for a default judgment rendered in a separate state court action. Defendants E.N.D. Services, Inc. ("END"), Soosie L. Lazenby and George W. Spowart (collectively "homeowners" or "home purchasers") later counterclaimed for breach of contract and statutory bad faith.

The underlying state court action involves a suit over the purchase of real estate. In 2007, Soosie L. Lazenby and George W. Spowart purchased real estate in Belleair, FL. Subsequent to closing the sale and after taking occupancy of the property, Lazenby and Spowart allegedly discovered undisclosed defects with the property including a history of infestation by pests, water intrusion, and serious structural deficiencies.

Prior to purchasing the property, Lazenby and Spowart hired the home inspection company END to inspect the property (at all relevant times Dominic Minicozzi was the sole owner and employee of END). The homeowners later sued END for breach of contract, negligence, and a violation of the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"). Specifically, Lazenby and Spowart allege that END failed to discover certain undisclosed defects with the property as a result of END's failure to follow the professional home inspector standards promulgated by the American Society of Home Inspectors ("ASHI"), despite END's promise to exceed such standards.

At the time that END performed the home inspection, END was covered by a commercial general liability ("CGL") insurance policy issued by Auto-Owners. After the homeowners filed suit in state court, Auto-Owners notified END that it believed END's coverage for the state court action to be excluded by a professional services exclusion included in the policy; thus, it notified END that it would not provide it with a defense.

Lacking legal representation, END failed to contest the action. As a result, the state court entered a default judgment against END in the amount of $245,940.00. END subsequently assigned its rights under its Auto-Owners insurance contract to Lazenby and Spowart. Defendants now move for summary judgment, asking this Court to declare that the "professional services exclusion" contained in END's insurance policy is not applicable and that Auto-Owners does in fact have a duty to indemnify its insured for the default judgment entered in state court.

Summary Judgment Standard

Motions for summary judgment should only be granted when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The existence of some factual disputes between the litigants will not defeat an otherwise properly supported summary judgment motion; "the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (emphasis in original). The substantive law applicable to the claimed causes of action will identify which facts are material. Id. Throughout this analysis, the court must examine the evidence in the light most favorable to the non-movant and draw all justifiable inferences in its favor. Id. at 255.

Once a party properly makes a summary judgment motion by demonstrating the absence of a genuine issue of material fact, whether or not accompanied by affidavits, the nonmoving party must go beyond the pleadings through the use of affidavits, depositions, answers to interrogatories and admissions on file, and designate specific facts showing that there is a genuine issue for trial. Celotex, 477 U.S. at 324. The evidence must be significantly probative to support the claims. Anderson, 477 U.S. at 248-49 (1986).

This Court may not decide a genuine factual dispute at the summary judgment stage. Fernandez v. Bankers Nat'l Life Ins. Co., 906 F.2d 559, 564 (11th Cir. 1990). "[I]f factual issues are present, the Court must deny the motion and proceed to trial." Warrior Tombigbee Transp. Co. v. M/V Nan Fung, 695 F.2d 1294, 1296 (11th Cir. 1983). A dispute about a material fact is genuine and summary judgment is inappropriate if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson, 477 U.S. at 248; Hoffman v. Allied Corp., 912 F.2d 1379 (11th Cir. 1990). However, there must exist a conflict in substantial evidence to pose a jury question. Verbraeken v. Westinghouse Elec. Corp., 881 F.2d 1041, 1045 (11th Cir. 1989).


A. Legal Standard

Both parties agree that Florida law governs this action. In Florida, the interpretation and construction of an insurance contract is a question of law to be decided by the Court using generally accepted rules of contract construction. National Union Fire Ins. Co. of Pittsburgh, PA v. Underwriters at Lloyd's, London, 971 So.2d 885, 888 (Fla. 3rd DCA 2007); U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So.2d 871, 877 (Fla. 2007). Insurance provisions granting coverage are to be construed ...

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