Colony Insurance Company v. Rosalyne Holdings, LLC

[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-14037
Non-Argument Calendar
____________________
COLONY INSURANCE COMPANY,
Plaintiff-Appellee,
versus
COASTAL CONSTRUCTION MANAGEMENT, LLC, et al.,
Defendants,
ROSALYNE HOLDINGS, LLC,
Defendant-Appellant.
____________________
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2 Opinion of the Court 22-14037
Appeal from the United States District Court
for the Middle District of Florida
D.C. Docket No. 8:21-cv-02541-TPB-MRM
____________________
Before WILSON , N EWSOM, and A NDERSON , Circuit Judges.
PER CURIAM:
Defendant-Appellant Rosalyne Holdings, LLC, appeals the
district court’s grant of judgment on the pleadings in favor of Col-
ony Insurance Company regarding the application of a professional
services exclusion exempting Colony from the duty to defend in an
underlying state lawsuit. After a careful review of the record, we
AFFIRM.
I. Background
Before reaching Colony’s federal lawsuit, we briefly outline
the facts and underlying state court proceedings. In 2014, Rosalyne
hired Forum Architecture & Interior Design, Inc. as the architect
for a four-story, 228-unit apartment complex in Sarasota, Florida.
Rosalyne hired Ascentia Development Group (ADG) as the project
developer and WPC III, LLC as the general contractor. ADG then
engaged Coastal Construction Management, LLC under a Profes-
sional Services Agreement to provide construction management
services as a construction manager and construction consultant for
the project. In 2016, Rosalyne began contracting directly with
Coastal under a Letter of Understanding. Coastal has two com-
mercial general liability insurance policies issued by Colony.
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22-14037 Opinion of the Court 3
In 2017, Rosalyne initiated the underlying action against
WPC in Florida state court, alleging numerous defects and defi-
ciencies in the completed project. Coastal and Forum were added
as defendants when the second amended complaint was filed in
2019. Rosalyne alleged one count of breach of contract and one
count of negligence against Coastal.
In 2021, Colony initiated this federal lawsuit against Coastal,
Rosalyne, WPC, and ADG, asserting it had no duty to defend or
indemnify Coastal for the claims alleged by Rosalyne in state court.
Coastal, Rosalyne, and WPC answered and asserted affirmative de-
fenses. Colony moved for judgment on the pleadings based on the
“professional services” exclusion in its policies with Coastal.
Rosalyne and WPC opposed Colony’s motion. The district court
dismissed ADG as a party. Colony dismissed Coastal as a party, but
Coastal stipulated it would be bound by the district court’s judg-
ment. Based on the contents of Rosalyne’s complaint and the gov-
erning policies, the district court granted Colony’s motion for judg-
ment on the pleadings. Rosalyne timely appealed.
II. Standard of Review and Applicable Law
“We review a judgment on the pleadings de novo.” Cannon
v. City of W. Palm Beach, 250 F.3d 1299, 1301 (11th Cir. 2001). “Judg-
ment on the pleadings is appropriate when there are no material
facts in dispute and the moving party is entitled to judgment as a
matter of law.” Cont’l Cas. Co. v. Winder Lab’ys, LLC, 73 F.4th 934,
940 (11th Cir. 2023) (internal quotation omitted). In conducting
this review, we “accept the facts alleged in the complaint as true
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4 Opinion of the Court 22-14037
and view them in the light most favorable to the nonmoving
party.” Cannon, 250 F.3d at 1301.
Because the underlying contract originated in Florida and
comes to this court by way of diversity jurisdiction, we apply the
substantive law of Florida. See Sutton v. Wal-Mart Stores E., LP, 64
F.4th 1166, 1168 (11th Cir. 2023). “‘Under Florida law, insurance
contracts are construed according to their plain meaning.’” Garcia
v. Fed. Ins. Co., 473 F.3d 1131, 1135 (11th Cir. 2006) (quoting Taurus
Holdings, Inc. v. U.S. Fid. & Guar. Co., 913 So. 2d 528, 532 (Fla.
2005)). Florida courts interpret insurance coverage broadly and in-
surance exclusions narrowly. Hudson v. Prudential Prop. & Cas. Ins.
Co., 450 So. 2d 565, 568 (Fla. Dist. Ct. App. 1984). Therefore, “am-
biguities are construed against the insurer and in favor of cover-
age.” Westchester Gen. Hospital, Inc. v. Evanston Ins. Co., 48 F.4th
1298, 1302 (11th Cir. 2022).
We will not search for ambiguity when a contract is clear.
See Sphinx Int’l Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 412 F.3d
1224, 1228 (11th 2005). Further, in Florida, the absence “‘of a defi-
nition of an operative term in a policy does not necessarily render
the term ambiguous and in need of interpretation by the courts.’”
Id. at 1229. (quoting Swire Pac. Holdings v. Zurich Ins. Co., 845 So.
2d 161, 166 (Fla. 2003)).
In Florida, the duty of an insurer to defend an insured arises
“when the complaint alleges facts that fairly and potentially bring
the suit within policy coverage.” Jones v. Fla. Ins. Guar. Ass’n, 908
So. 2d 435, 442–43 (Fla. 2005). An insurer must defend an entire
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22-14037 Opinion of the Court 5
case when the complaint includes claims that fall both within and
beyond the exclusion. See Lime Tree Vill. Cmty. Club Ass’n, Inc. v.
State Farm Gen. Ins. Co., 980 F.2d 1402, 1405–06 (11th Cir. 1993).
Florida uses a burden shifting regime when analyzing insurance ex-
clusions. Hudson, 450 So. 2d at 568. An insured must establish that
policy coverage applies, but the burden then shifts to the insurer to
show that the loss falls within an exception. Id. Florida law also
instructs “that as a matter of public policy, commercial liability in-
surance policies . . . do not cover claims for defective or deficient
workmanship,” which can include compliance with regulatory re-
quirements. Sekura v. Granada Ins. Co., 896 So. 2d 861, 862 (Fla.
Dist. Ct. App. 2005).
When determining whether a party rendered a professional
service, Florida courts often use “a fact-intensive analysis” that “fo-
cus[es] on the act itself and not the character of the individual per-
forming the act.” Alicea Enterps., Inc. v. Nationwide Ins. Co. Am., 252
So. 3d 799, 802 (Fla. Dist. Ct. App. 2018). “Florida’s courts have
consistently interpreted the term ‘professional services’ to mean
those types of services that require specialized training,” but the
analysis also weighs the presence of a causal connection between
the act at issue and the professional services provided. Westchester,
48 F.4th at 1304. Overall, “[t]he duty to defend must be determined
from the allegations in the complaint.” Jones, 908 So. 2d at 443.
III. Analysis
We find that the district court properly held that the profes-
sional services exclusion in the commercial liability policy instructs
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6 Opinion of the Court 22-14037
that Colony had no duty to defend Coastal. To reach this conclu-
sion, we rely on the text of the exclusion and the allegations in
Rosalyne’s underlying state court complaint.
Although the policy does not expressly define “professional
services,” the professional services exclusion provides a nonexhaus-
tive list of examples, including:
(2) preparing, approving, or failing to prepare or ap-
prove maps, drawings, opinions, reports, surveys,
change orders, designs or specifications;
(3) inspection, supervision, quality control, architec-
tural or engineering activities done by or for you on a
project on which you serve as construction manager;
[and,]
(4) engineering services, including related supervi-
sory or inspection services[.]
Despite the list’s lack of an explicit definition for “professional ser-
vices,” the policy is not ambiguous by default. See Sphinx, 412 F.3d
at 1228. With the text of the professional services exclusion in
mind, we turn to a discussion of Rosalyne’s allegations against
Coastal.
In its second amended complaint in state court, Rosalyne
brought two counts against Coastal. The first count alleges that
breaches by Coastal’s predecessors are imputed to Coastal, includ-
ing the following conduct:
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22-14037 Opinion of the Court 7
failed to properly and timely complete its Work; failed
to timely and properly complete punch-list items; and
failed to correct inadequate, defective, and noncom-
plying Work at the Project; and failed to perform ser-
vices in a good and workmanlike manner and to pro-
vide necessary materials in accordance with and pur-
suant to approved plans and specifications, industry
standards and all applicable codes.
The second count against Coastal concerns its role as “construction
manager/construction consultant/owner’s representative for the
Project.” Within this count, Rosalyne alleged that Coastal
“breached its duty to Rosalyne . . . by failing to ensure that WPC
correctly and timely constructed the Project.” Individual defects
included the following:
(a) Delivering the Project with the Defects and Defi-
ciencies (exclusive of the trash-compactor claim and
the Air-Flow Report);
(b) Failing to timely complete the Project;
(c) Failing to construct the Project in compliance with
the Florida Building Code and/or other applicable
codes;
(d) Failing to construct the Project in compliance with
the permitted plans, the specifications, shop-drawings
and/or other submittals, manufacturers’ require-
ments, and/or other approved Project documents;
and/or
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(e) Failing to construct the Project in accordance with
the prevailing industry standards.
As we examine each defect enumerated by Rosalyne, our fo-
cus remains rooted in the individual actions, not the actor. How-
ever, the actions at issue in this case are closely intertwined with
Coastal’s role as a construction manager and consultant. As
Rosalyne’s reply brief recognizes, “[a]dmittedly, some of the alle-
gations cited by Colony, such as supervising the construction of the
project, undoubtedly would fall within the [exclusion].” Since the
duty to defend arises as long as only one allegation against the in-
sured party falls beyond an exclusion, see Lime Tree Vill., 980 F.2d at
1405–06, Rosalyne argues that three specific tasks fall beyond the
exclusion: “scheduling, compliance, and liaison tasks.” Rosalyne
alleges that these tasks fall beyond the exclusion because they do
not require any specialized training, experience, or skill. Rosalyne
suggests that because a few tasks fall beyond the exclusion, Colony
has a duty to defend Coastal.
Here, even the scheduling, compliance, and liaison tasks do
not trigger a duty to defend Coastal. First, professional service ex-
clusions can apply in Florida when compliance is at issue. Just as
the duty to defend was not triggered by the allegations of noncom-
pliance with federal regulation in Sekura, 896 So. 2d at 862, the al-
legations related to compliance here do not create a duty to defend.
Similarly, Coastal’s actions in setting schedules and as a liaison can-
not be separated from what Rosalyne’s brief describes as “supervis-
ing the construction.” The text of the exclusion includes inspection
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22-14037 Opinion of the Court 9
and quality control activities done “on a project on which you serve
as construction manager” among the types of claims barred. Over-
all, the allegations brought by Rosalyne closely parallel the specific
provisions of the professional services exclusion within Coastal’s
commercial liability policy with Colony.
Viewing Rosalyne’s allegations against Coastal in its second
amended complaint, the wrongs appear to fall within the profes-
sional services exclusion of the commercial liability policies pro-
vided by Colony to Coastal. Therefore, because the professional
services exclusion applies, Colony had no duty to defend. We thus
find that the district court did not err in granting judgment on the
pleadings in favor of Colony.
AFFIRMED.
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