Wimberly Allison Tong & Goo, Inc. v. Travelers Property Casualty Company of America

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 08-2976
_____________
WIMBERLY ALLISON TONG & GOO, INC.,
Appellant
v.
TRAVELERS PROPERTY CASUALTY
COMPANY OF AMERICA;
GULF UNDERWRITERS INSURANCE GROUP
Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil No. 05-cv-2550)
District Judge: Honorable Jerome B. Simandle
Submitted Under Third Circuit LAR 34.1(a)
November 17, 2009
Before: RENDELL, BARRY and CHAGARES, Circuit Judges.
(Filed: November 18, 2009)
OPINION OF THE COURT
RENDELL, Circuit Judge.
Plaintiff Wimberly, Allison, Tong & Goo, Inc. (“WATG”) appeals the District
Court’s grant of summary judgment to Defendants Travelers Property Casualty Company

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of America (“Travelers”) and Gulf Underwriters Insurance Group (“Gulf”). The District
Court held that Travelers and Gulf did not have a duty to defend WATG in the underlying
actions against WATG arising out of a parking garage collapse during construction on the
Tropicana Casino Resort in Atlantic City, New Jersey (“Tropicana”).
I. The Underlying Occurrence
In November 2000, WATG, an architectural firm, entered into an Owner-Architect
agreement with Tropicana for the construction of a parking garage. On October 30, 2003,
six levels of that parking garage collapsed, causing numerous deaths and serious injuries.
Govathlay Givens filed the first lawsuit against WATG and numerous other defendants
seeking compensatory and punitive damages arising out of injuries he sustained during
the collapse. Givens alleged that WATG failed “to perform as a reasonable architect
would under the same or similar circumstances,” “failed to properly design the parking
garage, failed to properly supervise the construction of the parking garage, failed to
provide proper specifications for the construction . . . failed to inspect and supervise the
work . . . and otherwise deviated from the standard of care expected of architects.” A.
314. Givens also alleged that WATG “knew or should have known of the dangerous
condition of the parking garage . . . but failed to take action . . .” and that Given suffered
injuries as a “result of the negligence, carelessness, recklessness, and/or willful and
wanton conduct of [WATG] . . . .” A. 314-15.
A hotel/restaurant near the site of the garage collapse called Another Time, Inc.

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also filed a complaint against WATG. Another Time alleged negligence, private
nuisance, and public nuisance against numerous defendants, including WATG, and
sought compensatory and punitive damages. Specifically, Another Time alleged that
defendants “unreasonably interfered with the use and enjoyment of the property of the
Plaintiff,” which resulted in economic loss and diminished property value and that
defendants interfered with the right of the public to use and traverse the public streets. A.
341-42. The factual allegations against the defendants that formed the basis for Another
Time’s claims include violating construction codes, failure to design, construct, and
maintain the garage in a way that would ensure it did not collapse, failure to properly
supervise the construction, failure to design and follow proper blue prints, and failure to
notice warning signs of a danger of collapse.
Many other plaintiffs filed similar suits that were consolidated using a Master
Complaint alleging that WATG deviated from the standard of care of professional
architects, that the engineering design of the garage did not conform to Occupational
Safety and Health Administration (“OSHA”) standards, which caused the collapse of the
garage, and that WATG was otherwise careless and negligent. The Master Complaint
brought the following claims against all defendants, including WATG: loss of
consortium, wrongful death, wrongful death - survivorship, and bystanders’ claims for
emotional distress.

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WATG alleges that the costs of defense and settlement exceeded the $1 million limit of1
the CNA primary professional liability policy and the $2 million per occurrence/$5
million aggregate limit of the CNA excess professional liability policy. Specifically,
WATG claims that it incurred $2,323,000 in defense costs that were never reimbursed.
Appellees contend that WATG’s required contribution to a global settlement was
$500,000, which was paid by CNA. Appellees’ Br. 15, A. 14, A. 402-03.
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II. The Liability Policies
At the time of the garage collapse, WATG had a professional liability policy and
an excess professional liability policy with Continental Casualty Company (“CNA”), a1
commercial liability policy with Travelers, and a commercial excess liability policy with
Gulf. The Travelers policy covered damages arising out of “‘bodily injury’ or ‘property
damage’” caused by an “‘occurrence’” in the “‘coverage territory.’” The Travelers policy
also contained the following exclusion:
This insurance does not apply to “bodily injury,” “property
damage,” “personal injury” or “advertising injury” arising out of
the rendering of or failure to render any professional services by
you or any engineer, architect or surveyor who is either
employed by you or performing work on your behalf in such
capacity.
Professional services include:
1. The preparing, approving, or failing to prepare or
approve maps, shop drawings, opinions, reports, surveys,
field orders, change orders, or drawings and
specifications; and
2. Supervisory, inspection, architectural or engineering
activities.
A. 136.

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The Gulf commercial excess liability policy provided that Gulf would pay the
“‘ultimate net loss’ . . . which the insured becomes legally obligated to pay as damages
because of ‘bodily injury,’ ‘property damage,’ ‘personal injury’ or ‘advertising injury’ to
which this insurance applies.” A. 179. Gulf agreed to defend any suit for damages that
are not payable by the underlying insurance policy, either because the damages were not
covered or because the underlying insurance was exhausted by the payment of claims.
Like the Travelers policy, the Gulf policy “does not apply to ‘bodily injury,’ ‘property
damage,’ ‘personal injury,’ or ‘advertising injury’ arising out of: 1. the rendering of; or 2.
failure to render; any professional services by or for you.” A. 166.
III. Denial of Coverage
On April 16, 2004, WATG notified Travelers of the Givens complaint and several
other complaints. On May 12, 2004, Travelers denied coverage based on the professional
liability exclusion in the policy, stating that “due to the services you and your
subcontractors were performing on this construction project, as architects, coverage
would be excluded . . . .” A. 1048. WATG subsequently notified Travelers of additional
suits that had been filed and asked Travelers to reconsider its coverage position. On
December 17, 2004, Travelers again denied coverage but noted that if a claim against
WATG was brought that was unrelated to its professional activities, a duty to defend
would arise. Travelers further invited WATG to provide Travelers with any additional
information that may impact its decision. In March and May 2005, WATG notified

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Travelers of additional claims but Travelers’ position on the denial of coverage did not
change.
On April 16, 2004, WATG also notified Gulf of the underlying lawsuits and
requested defense and indemnification. On February 4, 2005, Gulf responded that this
request was premature as WATG did not state that primary coverage was exhausted or
denied, but nonetheless reserved its right to deny coverage based on the professional
liability exclusion. In March 2005, WATG notified Gulf of additional suits and in May
2005 WATG notified Gulf that Travelers was not providing coverage, but Gulf never
agreed to defend or indemnify WATG.
IV. Standard of Review
Summary judgment is appropriate if there are no genuine issues of material fact
and the moving party is entitled to summary judgment as a matter of law. Fed.R.Civ.P.
56(c). After giving the nonmoving party all reasonable inferences, there is a genuine issue
of material fact if a reasonable jury could find for the nonmoving party. Reliance Ins. Co.
v. Moessner, 121 F.3d 895, 900 (3d Cir. 1997) (citations omitted). Our review of the
district court's grant of summary judgment is plenary. Id. In addition, our review of the
interpretation of an insurance contract and the applicability of a policy exclusion is
plenary. Harad v. Aetna Cas. & Sur. Co., 839 F.2d 979, 982 (3d Cir. 1988).

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All parties agree that New Jersey law is applicable to this case.2
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V. Duty to Investigate
Under New Jersey law, after an insured notifies an insurer of a potential claim, the2
insurer has a duty to promptly investigate the claim and notify the insured of the results of
the investigation within a reasonable time. Griggs v. Bertram, 443 A.2d 163, 170 (N.J.
1982).
Although the insurer cannot ignore known information simply because it is not
included in the complaint, the insurer has no duty to investigate possible
ramifications of the underlying suit that could trigger coverage. Rather, the
insured being sued is responsible for promptly conveying to its insurance
company the information that it believes will trigger coverage.
SL Indus., Inc. v. Am. Motorists Ins. Co., 607 A.2d 1266, 1272 (N.J. 1992).
Even WATG concedes that the defendants need only perform “some semblance” of an
investigation and that this need not be “‘fool-proof.’” Appellant’s Br. 29 (citing
Universal-Rundle Corp. v. Commercial Union Ins. Co., 725 A.2d 76, 89 (N.J. Super. Ct.
App. Div. 1999)).
WATG claims that the defendants did not even perform a cursory investigation
into the claims prior to denying coverage and that the District Court failed to address this
issue. While the District Court did not specifically discuss this, it is clear that the
defendants fulfilled their duty to investigate the claims. Upon receipt of the letter
informing Travelers of the Givens complaint, Dawn Minell, a technical specialist at
Travelers, spoke to both WATG’s corporate counsel and “broker.” A. 1034. Minell also

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reviewed the complete policy and, based on the facts provided as well as the counts in the
Givens complaint, decided that coverage should be declined. After Minell denied the
claim and WATG challenged this denial, the case was reassigned to Lorraine Ankosko, a
senior liability technical specialist. Ankosko immediately obtained outside counsel, John
Tinker, to ensure an independent and thorough review of coverage. Tinker sent WATG a
seven-page letter outlining Travelers’ reasons for denying coverage and listing numerous
documents that were reviewed in making that decision. Furthermore, Tinker asked
WATG to provide Travelers with any addition information if “discovery in the underlying
case generates facts supporting a claim of liability against [WATG] unrelated to its
professional activities . . . .” A. 1084.
Likewise, Clay Woodman, on behalf of Gulf, reviewed numerous documents
provided by WATG and wrote a detailed letter to WATG explaining Gulf’s denial of
coverage. Furthermore, Gulf maintained that WATG’s request for a defense and
indemnification was premature because WATG did not indicate that their primary
coverage was either exhausted or denied.
Based on the above facts, it is clear that Travelers and Gulf fulfilled their
obligation to investigate the underlying claims prior to making a decision on coverage.
VI. Duty to Defend
An insurer has a duty to defend if the allegations in the complaint, on its face, are
encompassed by the risks insured against by the policy. W9/PHC Real Estate LP v. Farm

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Family Cas. Ins. Co., 970 A.2d 382, 391 (N.J. Super. Ct. App. Div. 2009) (citations
omitted). Coverage is determined by the “nature of the claim” against the insured, not by
how the underlying plaintiff chooses to phrase the complaint. SL Indus., Inc., 607 A.2d at
1272. The duty to defend may arise even if the underlying complaint is meritless because
an insurer’s duty to defend is broader than its duty to indemnify. W9/PHC Real Estate
LP, 970 A.2d at 391 (citing Voorhees v. Preferred Mut. Ins. Co., 607 A.2d 1255, 1259
(N.J. 1992). Insurance policies should be given their plain and ordinary meaning, but
should be interpreted “liberally in favor of the insured and strictly against the insurer.”
Id. (citations omitted). If a complaint is ambiguous it should be interpreted in favor of the
insured. Voorhees, 607 A.2d at 1259 (citations omitted). When the underlying complaint
contains multiple causes of action, the insurer has a duty to defend until “every covered
claim is eliminated.” Id.
Professional liability policies and general liability policies are intended to cover
different types of risk. Search EDP, Inc. v. Am. Home Assurance Co., 632 A.2d 286, 288
(N.J. Super. Ct. App. Div. 1993). Professional liability policies are intended to cover
risks inherent to a particular profession, such as the failure to perform with a standard of
skill expected, as opposed to risks that arise as with many types of businesses. Id. For
example, the ‘professional’ aspects of a law practice include giving legal advice, filing
suits, etc., whereas the commercial aspects include setting up a business, dealing with
staff, paying bills, etc. Harad, 839 F.2d at 985. “A professional act or service is one

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arising out of a vocation, calling, occupation, or employment involving specialized
knowledge, labor, or skill, and the labor or skill involved is predominantly mental or
intellectual . . . .” Id. at 984 (quotation omitted). The categorization of a party’s liability
is determined based on the activity that party was involved in at the time the liability
arose. Id. at 985. “For example, if an attorney, while hosting a real estate closing in his
office, places his briefcase on the floor and a colleague trips on it, is injured and sues him,
the lawyer’s liability would derive not from the rendering of a professional service, but
rather from his operation of a business.” Id.
In analyzing whether a professional services exclusion in a general liability policy
applies, courts must examine the “character of the [insured’s] conduct” alleged and the
“nature of the services” performed by the insured to determine if the insured’s liability
“flowed directly” from a professional activity. Harad, 839 F.2d at 984-85. Some factors
that affect this consideration are whether or not the underlying acts of the insured required
the specialized skill and knowledge of someone in the insured’s profession, whether the
acts were within the normal practice of that profession, and whether the acts were done
pursuant to a contract which provided the insured with financial compensation. Atl. Mut.
Ins. Co. v. Cont’l Nat’l Am. Ins. Co., 302 A.2d 177, 181 (N.J. Super. Ct. Law Div. 1973).
WATG concedes that the professional malpractice exclusions in the policy are
valid and applicable to the underlying professional malpractice claims. Appellant’s Br.
41. WATG contends, however, that Travelers and Gulf had a duty to defend the

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underlying actions because those complaints contained both excluded professional
malpractice claims and covered claims, such as personal injury, wrongful death, public
and private nuisance, bystander emotional distress, and loss of consortium. WATG
highlights the fact that both the Givens complaint and the Another Time complaint allege
“general negligence.” Appellant’s Br. 36. In further support of requiring coverage,
WATG points out that the Case Information Statements (“CIS”) filed with the underlying
complaints did not categorize the complaints as “professional malpractice” and no
Affidavits of Merit were filed with the complaints, which are required under New Jersey
law if a party alleges professional malpractice.
The bottom line here is that all of the allegations against WATG in the Givens
complaint, the Another Time complaint, and the Master Complaint arose out of WATG’s
professional services as an architect. WATG’s only involvement with the garage
collapse, which is the basis of the underlying suits, is that they had an Owner-Architect
agreement with Tropicana and were performing as an architectural firm in accordance
with that contract. Plaintiffs have not pointed to any allegations of WATG’s conduct that
were unrelated to WATG’s professional architectural services. Under the guidance of
Harad, it is clear that the “character” of WATG’s “conduct” at issue was professional in
“nature” and that therefore WATG’s potential liability “flowed directly” from a
professional activity, namely architecture. 839 F.2d at 984-85. As the District Court
points out, the fact that the plaintiffs did not file Affidavits of Merit or categorize the

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Therefore, we need not address Gulf’s contention that even if the exclusion did not3
apply, WATG is not entitled to coverage from Gulf because CNA had an undisputed duty
to defend all of the underlying claims.
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claims as professional malpractice on the CIS forms is not dispositive because all of the
complaints included numerous defendants, some of whom were acting in a professional
capacity and some of whom were not. The District Court was correct in concluding that
all of WATG’s actions or failures alleged in the underlying complaints flowed directly
from WATG’s professional role as an architect, and that, therefore, the professional
services exclusion in both the Travelers and Gulf policies would apply.3
VII. Genuine Issues of Material Fact
On January 29, 2008, both WATG and Defendants filed cross-motions for
summary judgment, indicating that all parties believed the matter was ripe for such a
decision. The only alleged genuine issues of material fact are discussed above: 1)
evidence indicated that there were potentially covered claims of negligence, nuisance, and
loss-of consortium alleged in the underlying complaints; 2) no Affidavits of Merit were
filed; 3) CIS forms indicated that the underlying claims were not for professional
malpractice; and 4) the Another Time complaint alleges loss of business, which is not a
damage arising from bodily injury or property damage and therefore does not fall under
the policy exclusion. All of these allegations arise from WATG’s role providing
professional architectural services and WATG demonstrates no genuine issue of material

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fact as to the circumstances leading to any of the underlying allegations.
For the reasons set forth above, we will AFFIRM the Order of the District Court.

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