COLONY INSURANCE COMPANY

v.

COASTAL CONSTRUCTION MANAGEMENT, LLC

ROSALYNE’S MOTION TO DISMISS OR STAY

This matter is before the Court on “Colony Insurance Company’s Motion for Judgment on the Pleadings,” filed on May 6, 2022. (Doc. 60). Defendant Rosalyne Holdings, LLC, filed a response in opposition on May 24, 2022. (Doc. 62). Defendant WPC III filed a response in opposition on June², 2022. (Doc. 68). Rosalyne Holdings, LLC, moved the Court to dismiss the declaratory judgment action or to stay consideration of the action as it relates to the duty to indemnify. (Doc. 62). Colony Insurance Company filed a response in opposition to that motion on June 7, 2022. (Doc. 69). Based on the motions and responses, the court file, and the record, the Court finds as follows. Background Rosalyne Holdings, LLC (“Rosalyne”) filed an action in state court against WPC III, LLC (“WPC”), styled Rosalyne Holdings, LLC v. WPC III d/b/a “Winter

Park Construction Company,” No. 2017-CA-3299-NC (12th Jud. Cir., Sarasota Cty., Fla.) (the “underlying action”). According to Rosalyne’s second amended complaint and its exhibits, Rosalyne hired Forum Architecture & Interior Design, Inc. (“Forum”), as the architect for the construction of a four-story, 228-unit apartment complex in Sarasota, Florida. Rosalyne engaged Ascentia Development Group (“ADG”) as the project’s developer, and hired WPC as the general contractor, with a guaranteed maximum price of approximately $30 million. ADG in turn engaged Coastal Construction Management, LLC (“Coastal”) under a “Professional Services Agreement” to provide “construction management services” as “construction manager” and “construction consultant.” In 2016, Rosalyne and ADG agreed to remove those services from ADG’s scope of work and instead to have Rosalyne contract directly with Coastal. Rosalyne and Coastal then entered into a “Letter of Understanding” for Coastal’ s services.¹

Rosalyne contends that the completed project exhibited numerous defects and deficiencies, and in 2017 it filed the underlying action against WPC. Rosalyne’s second amended complaint (the “complaint”), filed in October 2019, added Forum

By waiving a technical procedural objection on the pleading ground described above, Defendants will not thereby waive for purposes of appeal or otherwise any other properly preserved objection or argument as to this Order or as to the entry of judgment for Colony. With that preface, the Court now turns to the merits of the parties’ dispute. Controlling Legal Principles When, as here, an insurer relies on an exclusion to avoid coverage, the insurer must show the allegations of the underlying complaint place the claims solely and entirely within the exclusion. Hartford Accident & Indem. Co. v. Beaver, 466 F. 3d 1289, 1296 (11th Cir. 2006). If the complaint alleges claims within the exclusion and claims outside its reach, the insurer must defend the entire case. Lime Tree Vill. Cmty. Club Ass’n v. State Farm Gen. Ins. Co., 980 F. 2d 1402, 1405 (11th Cir. 1993). In determining the insurer’s duty to defend, the allegations of the complaint control, even if the actual facts are inconsistent with those allegations.

Lawyers Title Ins. Corp. v. JDC (Am.) Corp., 52 F. 3d 1575, 1580 (11th Cir. 1995). Ambiguities in an exclusion are construed against the insurer. Sphinx Int'l, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 412 F. 3d 1224, 1228 (11th Cir. 2005); State Farm Fire & Cas. Ins. Co. v. Deni Assoc. of Fla., Inc., 678 So. 2d 397, 401 (Fla. 4th DCA 1996), approved, 711 So. 2d 1135 (Fla. 1998). At the same time, courts should not strain to find ambiguities where none exist or entertain unreasonable interpretations of the policy language. See, e.g., Sphinx Int’l, 412 F. 3d at 1228 (“[I]f there is no genuine ambiguity, there is no reason to bypass the policy's plain meaning.”); Thomas v. Prudential Prop. & Cas., 673 So. 2d 141, 142 (Fla. 5th DCA 1996) (“[O]ur courts should not put strain and unnatural construction on the terms of the policy in order to create uncertainty or ambiguity.”). An ambiguity exists only where the relevant policy language is susceptible of more than one reasonable interpretation, after applying the ordinary rules of construction. See, e.g., Travelers Prop. Cas. Co. of Am. v. Salt ‘N Blue LLC, 731 F. App’x 920, 923-25 (11th Cir. 2018) (citing Taurus Holdings, Inc. v. U.S. Fidelity & Guar. Co., 913 So. 2d 528, 532 (Fla. 2005)).

Professional Services Exclusion The exclusion for professional services at issue here provides, in relevant part: This insurance does not apply to:

Professional Services any “bodily injury”, “property damage” or “personal and advertising injury” arising out of the rendering or failure to render any professional service. This includes but is not limited to: . . .
(3) inspection, supervision, quality control, architectural or engineering activities done by or for you on a project on which you serve as construction manager;

(4) engineering services, including related supervisory or inspection services;

The Meaning of “Professional Services” That the Policies do not expressly define “professional services” does not render the exclusion ambiguous. See, e.g., Sphinx Int’l, 412 F. 3d at 1229. The terms “professional” and “professional services” have a commonly understood meaning, which Rosalyne acknowledges in its response: professional services are those that require a high degree of training or proficiency or involve specialized knowledge, skill, or labor that is primarily mental rather than physical. See (Doc. 62 at 7-9) (quoting Westchester Gen. Hosp., Inc. v. Evanston Ins. Co., 19-22831-Civ- WILLIAMS/TORRES, 2020 WL 4501947, at *11 (S.D. Fla. May⁴, 2020), report and recommendation adopted, 2020 WL 6870875 (S.D. Fla. July 13, 2020), aff'd, 48

F. 4th 1298 (11th Cir. 2022)); Laboss Transp. Services, Inc. v. Glob. Liberty Ins. Co. of New York, 208 F. Supp. 3d 1268, 1276-77 (S.D. Fla. 2016)); see also Auto-Owners Ins. Co. v. E.N.D. Servs., Inc., 506 F. App'x 920, 927 (11th Cir. 2013) (holding that home inspection services are professional services because they require “specialized skills and training”); Travelers Indem. Co. v. Figg Bridge Engineers, Inc., 389 F. Supp. 3d 1060, 1071 (S.D. Fla. 2019) (“[P]rofessional services are those which require specialized skill, training, or experience.”); Goldberg v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA., 143 F. Supp. 3d 1283, 1297 (S.D. Fla. 2015) (“Although the term ‘professional services’ is undefined in the Policies, the Court concludes that the term is unambiguous and that banking services constitute professional services.”), aff'd sub nom. Stettin v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 861 F. 3d 1335 (11th Cir. 2017). Allegations of Rosalyne’s Complaint

The complaint alleges that Rosalyne was engaged as a “construction manager” to provide “construction management services” on a multi-year, $30 million project to construct a 228-unit, four story apartment building. Count XI for breach of contract alleges that Coastal, under a “Professional Services Agreement,” undertook and breached duties to “[m]ake site inspections to observe the status of constructive activity, carefully review quality and adherence to finish quality standards for all components of the Project,” and to “[c]oordinate the punch-list process with the design team and [WPC], and manage same, to ensure a finished product of the quality we all require.” Under the subsequent Letter of

Understanding, Coastal undertook to “be responsible for coordinating and supervising management and administration of the Project and construction of the improvements comprising the Project” and to “ensure quality of workmanship of all [WPC]’s construction work to a standard as described in all parts of [the Direct Contract] for the Project.” Count XII for negligence similarly alleges that Coastal, as the “construction manager/construction consultant/owner’s representative,” breached its duty to exercise the “reasonable degree of care, skill, knowledge, and judgment in the performance of its services that is ordinarily employed by building professionals in this or similar localities under the same or similar circumstances” [emphasis supplied] to ensure that WPC performed in compliance with applicable building codes, industry standards, plans and specifications, and other project documents. The Professional Services Exclusion Applies

Applying the principles set forth above to the language of the exclusion and the allegations of Rosalyne’s complaint, the Court concludes the professional services exclusion applies and Colony has no duty to defend or indemnify Coastal. As a matter of common sense, the management, supervision, and quality control activities alleged in the complaint in the context of a construction project of the size and scope alleged are not activities a layperson could undertake. Therefore, reading the exclusion in context and from the perspective of an ordinary person, see Goldberg, 143 F. Supp. 3d at 1293, the Court has no difficulty concluding without extensive analysis that these duties and tasks by their nature require specialized skill, training, and/or experience. See Witkin Design Group, Inc. v. Travelers Prop. & Cas. Co., No. 16-20484-CIV, 2016 WL 7670051, at *10 (S.D. Fla. Dec. 15, 2016) (“The construction of an intersection is not an endeavor that would be undertaken by a lay person. Because the construction of an intersection is an activity that requires specialized skill or training, it constitutes a professional service under the policy and thus, the PS Exclusion applies.”), report and recommendation adopted,

2017 WL 105918 (S.D. Fla. Jan. 10, 2017), aff’d, 712 F. App’x 894 (11th Cir. 2017).4 As such, the only reasonable conclusion is that Rosalyne’s claims against Coastal fall within the exclusion. Rosalyne tries to avoid this by focusing on the reference in paragraph (3) of the exclusion to “inspection, supervision, [and] quality control” activities performed by the insured as a “construction manager.” Rosalyne does not dispute that “inspection, supervision, and quality control” were the very activities Coastal was hired to perform. Rosalyne argues, however, that before the exclusion applies, it must be determined that Coastal performed these functions as a “construction manager,” as opposed to a “construction consultant” or an “owner’s representative.”

Finally, paragraph (3), if anything, supports the application of the exclusion here because “inspection, supervision [and] quality control” are precisely the types of activities Rosalyne’s complaint alleges Coastal undertook to perform. The fact that those activities as listed in the exclusion are linked to Coastal acting as “construction manager” does not mean that the activities themselves would change their character if Coastal were somehow acting solely as a “construction consultant” or as an “owner’s representative.” See Witkin, 2016 WL 7670051, at *10 (rejecting argument that professional services exclusion did not apply to allegations that insured “negligently constructed the intersection” simply because “construction” did not appear by itself in the exclusion, but only in connection with other terms such as “management”). In any event, the nature of the activities themselves controls, and the activities alleged in the complaint plainly required specialized training and experience. See Estate of Tinervin v. Nationwide Mut. Ins. Co., 23 So. 3d 1232, 1237 (Fla. 4th DCA 2009) (holding that whether an act constitutes a professional service “is determined by focusing upon the particular act itself, as opposed to the character of the individual engaging in the act”) (internal quotation omitted). Accordingly, there is no coverage under the Policies for the claims asserted in Rosalyne’s complaint in the underlying action, and Colony has no duty to defend Coastal in that action. Because there is no coverage and no duty to defend, Colony also has no duty to indemnify Coastal. See Witkin, 712 F. App’x at 897 (“Thus, the professional services exclusions apply, and Travelers need not defend or indemnify the wrongful death action.”); Trailer Bridge, Inc., v. Illinois Nat’l Ins. Co, 657 F. 3d

1135, 1146 (11th Cir. 2011) (“[A] court's determination that the insurer has no duty to defend requires a finding that there is no duty to indemnify.”) (internal quotation omitted); Fun Spree Vacations, Inc. v. Orion Ins. Co., 659 So. 2d 419, 422 (Fla. 3d DCA 1995)). Colony’s motion for judgment on the pleadings will therefore be granted, subject to any objection by Defendants regarding the technical pleading issue discussed above.⁵ Rosalyne’s motion asking the Court to exercise its discretion to dismiss Colony’s request for a declaratory judgment or alternatively to stay this case as it relates to the duty to indemnify will be denied.

Accordingly, it is ORDERED, ADJUDGED, and DECREED: 1. “Colony Insurance Company’s Motion for Judgment on the Pleadings” (Doc. 60) is GRANTED. 2. Rosalyne’s “Renewed Motion to Deny Discretionary Jurisdiction or Alternatively to Stay” (Doc. 62) is DENIED.

3. The Court declares that that there is no coverage under the Policies as to Rosalyne Holdings, LLC’s claims against Coastal Construction Management, LLC, in the action styled Rosalyne Holdings, LLC v. WPC III d/b/a “Winter Park Construction Company,” No. 2017-CA-3299-NC (12th Jud. Cir., Sarasota Cty. Fla.), and that Colony has no duty to defend Coastal in that action or to indemnify Coastal for any damages awarded to Rosalyne in that action.

4. Defendants are directed to advise the Court in writing on or before November 16, 2022, whether they object to entry of judgment due to the technical pleading issue raised by the Court in this Order. In the absence

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TOM BARBER

UNITED STATES DISTRICT JUDGE