St. Paul Fire & Marine Ins. Co. v. ERA Oxford Real Estate Co. et. al.
(United States Court of Appeals, Eleventh Circuit, June 23, 2009)
The insurer appealed an order from the United States District Court for the Northern District of Alabama holding that a professional liability insurance policy issued by the insurer to a real estate company obligated the insurer to provide a legal defense for certain fraud, deceit, and antitrust claims pending in state court against the insured. Specifically, the policy defined "real estate professional services" as those professional services performed, or failed to be performed, for others as duties in the capacity of a real estate agent or broker. Further, the term "real estate agent or broker" was defined to include a mortgage broker, real estate consultant or counselor, or real estate leasing agent.
The policyholder was sued by the underlying plaintiffs over the insured's conduct in connection with attempted mergers between real estate businesses. At issue was whether, under Alabama law, the attempted mergers were part of the "professional services" provided by the real estate agents, thus putting the mergers within the coverage of the policy. The Court of Appeals held that the underlying complaint alleged losses which did not result from the provision of services unique to real estate agents, such as negotiating the sale of a property, but which arose from common business transactions that any professional might perform.
As such, the policy did not impose a duty to defend any party in connection with the underlying suit.
For a copy of the decision click here
By Paul C. Steck