The Burlington Insurance Co. v. German Motors Corporation

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 17, 2019
• Docket: 18-15835
• Status: Unpublished

Opinion

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS FILED FOR THE NINTH CIRCUIT DEC 17 2019 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS THE BURLINGTON INSURANCE No. 18-15835 COMPANY, D.C. No. 4:17-cv-04734-YGR Plaintiff-Appellee,

v. MEMORANDUM*

GERMAN MOTORS CORPORATION; FEDERATED MUTUAL INSURANCE COMPANY,

Defendants-Appellants.

Appeal from the United States District Court for the Northern District of California Yvonne Gonzalez Rogers, District Judge, Presiding

Submitted November 12, 2019** San Francisco, California

Before: W. FLETCHER, BENNETT, and BADE, Circuit Judges.

The Burlington Insurance Company (“Burlington”) does not have a duty to

defend and indemnify Bay One Security (“Bay One”). We affirm the district

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). court’s grant of summary judgment.

The relevant facts are undisputed. German Motors Corporation (“German

Motors”) hired Bay One to provide security for its BMW dealership in San

Francisco. Bay One purchased a commercial general liability (“CGL”) insurance

policy (“Policy”) from Burlington at a cost of $10,307.00 per year. In June 2015,

while a Bay One security guard was on duty, a man broke into German Motors’

dealership and caused significant damage to multiple cars and the dealership.

German Motors sued Bay One in state court for breach of contract and negligence,

and Bay One then tendered the claim to Burlington.

Burlington concedes that “absent the exclusions, this policy would cover this

claim.” However, Burlington asserts that the damage claimed by Bay One is

excluded from coverage by the Policy’s Professional Services Exclusion, which

reads, “This insurance does not apply to ‘any injury or damage’ arising out of the

rendering of or failure to render any professional services by or for you.”

We review the district court’s grant of summary judgment to Burlington de

novo. See Attorneys Liab. Prot. Soc’y, Inc. v. Ingaldson Fitzgerald, P.C., 838 F.3d

976, 980 (9th Cir. 2016). “[A]n insured’s claim of coverage for ‘professional

services’ must be evaluated in light of all the relevant circumstances in which that

claim arises, including, but not limited to, [1] the term’s commonly understood

2 meaning, [2] the type and cost of the policy, and [3] the nature of the enterprise.”

Hollingsworth v. Commercial Union Ins. Co., 256 Cal. Rptr. 357, 360 (Ct. App.

1989).

The Policy’s Professional Services Exclusion applies here. First, Bay One’s

security services fall within the commonly understood meaning of “professional

services”: “those ‘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, rather than physical or manual.’” Energy Ins.

Mut. Ltd. v. Ace Am. Ins. Co., 221 Cal. Rptr. 3d 711, 719 (Ct. App. 2017) (internal

quotation marks omitted). Bay One’s services met each criterion: they arose out of

employment, involved specialized knowledge, and were predominantly mental.

Second, the type of policy Burlington issued Bay One was a CGL policy.

CGL policies typically do not cover professional negligence, such as a security

guard’s negligent failure to watch a video monitor. Id. at 292.

Finally, the nature of the security enterprise suggests that it is a professional

service. German Motors’ agreement with Bay One involved an exchange for

value: Bay One provided security, and German Motors paid an hourly rate of

$45.00 for the service. Additionally, Bay One’s services required employees to

have specialized knowledge, training, and qualifications. Moreover, each guard’s

3 individual duties were primarily mental: the responsibilities included monitoring

live surveillance footage and “otherwise remain[ing] vigilant for any signs of

suspicious activity.” Overall, the nature of Bay One’s security services places

them squarely within the Professional Services Exclusion.

AFFIRMED.