19 Fla. L. Weekly Supp. 629a

Online Reference: FLWSUPP 1908PRIVInsurance — Homeowners — Excess liability — Coverage — Exclusions — Business pursuits exception in homeowners and excess liability policies applies to action against insured for alleged conduct of advertising psychic services on internet which, while allegedly intentional and criminal, fell squarely within natural range and scope of his business pursuits for company that provides psychic hotlines — Allegations of intentional and criminal acts also fall within policy provisions excluding coverage for intentional acts — Provision of insurance for intentional torts or criminal acts would be contrary to Florida common law and public policy — Summary judgment granted in favor of insurer

PRIVILEGE UNDERWRITERS RECIPROCAL EXCHANGE, Plaintiff, vs. DAVID FELGER, and LINDA GEORGIAN, Defendants. Circuit Court, 15th Judicial Circuit in and for Palm Beach County, Civil Division. Case No. 2011CA011404AXX, Division “AB.” April 10, 2012. John S. Kastrenakes, Judge. Counsel: Valerie M. Jackson, Cole, Scott and Kissane, P.A., Miami, for Plaintiff. Keith T. Grumer, Grumer and Macaluso, P.A., Ft. Lauderdale, for David Felger.

ORDER GRANTING PLAINTIFF’S MOTIONFOR SUMMARY JUDGMENT

THIS CAUSE having come before the Court on February 17, 2012, upon the Plaintiff’s, PRIVILEGE UNDERWRITERS RECIPROCAL EXCHANGE (“PURE”), Motion for Summary Judgment, filed pursuant to Fla. R. Civ. P. 1.510, and the Court having reviewed the Motion and written submissions in support of, and in opposition thereto, having heard arguments of counsel, having reviewed post-argument submissions of counsel, and being otherwise fully advised in the premises, makes the following findings of fact and conclusions of law, as set forth below.

SUMMARY OF CASE

1. This case arises from PURE’s denial of the duty to defend its insured, DAVID FELGER (“FELGER”), in the case styled Linda Georgian v. The Zodiac Group, Inc., David Felger, Daniel Felger and Matthew Perez, case number 10-CV-60037 (the “Federal Litigation”). The operative action for purposes of this Motion is the Third Amended Complaint filed in the Federal Litigation.

2. PURE insured Felger’s homeowner insurance and excess insurance policies for the applicable time period.

3. PURE contends that it had no duty to defend FELGER because the Third Amended Complaint’s allegations fall within the business pursuits exclusion within the policy. This exclusion applies to acts the insured takes that are primarily taken in the furtherance of a business interest. Landis v. Allstate Ins. Co., 546 So. 2d 1051 (Fla. 1989).

4. FELGER contends that PURE’s duty to defend was not excluded as Georgian sued him individually for his acts separate and distinct from his legal business activities and duties with The Zodiac Group, Inc (“Zodiac”). FELGER’s position is the Third Amended Complaint alleged acts that are outside the scope of his business and his duties as President of Zodiac and expose him personally, separate from his legitimate Zodiac-related business operations.

5. Although the Parties dispute facts, this factual dispute does not extend to the issue before the Court, and the Parties agree that the issue at hand is one of a matter of law. Therefore, for this Court’s determination is the narrow issue of whether or not the allegations in the Federal Litigation’s Third Amended Complaint against the insured are for acts Felger conducted in furtherance of his business.

FINDINGS OF FACT

6. FELGER maintained a Homeowners Insurance Policy, policy number HO001133700, and an Excessive Liability Insurance Policy, policy number EX002734801, with PURE at all material times hereto.

7. The Policies obligated PURE to defend FELGER even if the allegations against him were frivolous in nature. (Section III (A) (2)).

8. The undisputed facts include:

a. Zodiac legally engaged in legitimate business activities and it was not part of its business model to violate the law;

b. FELGER’s duties as the President of Zodiac extended to general overview of the company and management of the print advertisements within legal, legitimate activities;

c. Zodiac did not advertise their celebrity endorsers through the internet, nor engage in illegal, illegitimate activities as part of their business model;

d. The Third Amended Complaint alleged FELGER’s acts occurred after March 2007, a time when Georgian had no business relationship with Zodiac or FELGER;

e. FELGER’s business, The Zodiac Group, Inc., is engaged in providing psychic hotlines to the public in which it advertises celebrity endorsers through print advertisements with an 800 number corresponding to each advertisement;

f. The Third Amended Complaint alleged, among other things, that FELGER, “separately and distinctly” (individually) committed intentional violations of Federal and Florida law. FELGER’s actions were alleged to be done not in the furtherance of a Zodiac’s interest, but for his own personal profit (See ¶ 48);

g. Specifically, the Third Amended Complaint alleged that FELGER acted for his personal gain, independent of the other defendants, including Zodiac (See ¶ 215).

h. FELGER operated the business from his home.

CONCLUSIONS OF LAW

The Court must look solely at the four corners of the Third Amended Complaint to determine whether coverage applies. Tropical Park v. U.S. Fid. & Guar. Co., 357 So. 2d 253 (Fla. 3d DCA 1978). If the Complaint alleges facts that fairly and potentially bring the case within coverage, the duty to defend arises. McCreary v. Fla. Residential Prop. & Cas. Joint Underwriting Ass’n, 758 So. 2d 692, 695 (Fla. 4th DCA 1999) [24 Fla. L. Weekly D2257c]. Moreover, if an insurer has a duty to defend at least one count in the underlying complaint, it follows that the insurer has the duty to defend the entire action. Travelers Co. Of Ill. v. Royal Oak Enterprises, Inc., 344 F.Supp.2d 1358, 1365 (M.D. Fla. 2004) [18 Fla. L. Weekly Fed. D47a]. If the court has doubts as to coverage, it must decide these doubts in favor of the insured, and conclude that the insurer has a duty to defend. Jones v. Florida Ins. Guar. Ass’n, Inc., 908 So. 2d 435, 443 (Fla.2005) [30 Fla. L. Weekly S581a].

Felger claims that the business pursuits exception to the PURE policy coverage does not apply because Felger was accused of committing intentional criminal acts in violation of Florida and Federal Laws outside of the business model for Zodiac and separate and distinct from the legitimate operation of Zodiac as a business concern. In support of this argument, FELGER cites Scheer v. State Farm Fire and Casualty Co., 708 So. 2d 312 (Fla. 4th DCA 1998) [23 Fla. L. Weekly D679b]. There, the sole allegations of the complaint against Dr. Scheer involved his touching a co-employees’ breasts and buttocks and making sexually offensive remarks. The allegations of the complaint which alleged the conduct occurred within the course of his employment were not pertinent to the claims against Dr. Scheer individually but were relevant to the count against his employer. Thus, there were no allegations that Dr. Scheer’s conduct occurred during the course of a business pursuit. The District Court found that fondling an employee did not arise out of Dr. Scheer’s profession.

PURE points to several cases in support of their argument that the business pursuits exclusion applies to similar facts, including intentional torts amounting to criminal acts. In Santos v. State Farm Mut. Auto. Ins. Co., 707 So. 2d 1181 (Fla. 2d DCA 1998) [23 Fla. L. Weekly D839b], Santos was employed as an office assistant for the University of South Florida College of Public Health. She worked for the chairperson of the department, Jay Studnicki. It was her job to take minutes at department meetings. At a department meeting, Dr. Studnicki adjourned the meeting and Santos attempted to leave the meeting with him. Jay Wolfson, a department member and the insured, allegedly insisted she stay at the meeting, grabbed her, pushed her back into her chair, jumped on her back and attempted to wrestle a tape recorder from her possession. Santos was injured as a result of the incident. The actions by Dr. Wolfson constituted an assault and battery which is both intentional and criminal. Both the trial court and appellate court found that the business pursuits exclusions in the primary and umbrella policies precluded coverage for Santos’ injuries. Similarly in Liberty Mutual Insurance Co. v. Miller, 549 So. 2d 1200 (Fla. 3d DCA 1989), two doctors engaged in a confrontation in which one doctor grabbed and grabbed and pulled on the stethoscope of another doctor in the course of an altercation over the care of a mutual patient. The action by Dr. Miller also constituted an assault and battery and was also illegal. The court nonetheless found the business pursuits exclusion applied. See also Otero v. U.S. Fire Ins. Co., 314 So. 2d 208 (Fla. 3d DCA 1975).

Significantly, the Fourth District distinguished Scheer from Liberty Mutual v. Miller, supra. First, the Fourth District noted that the conduct in Miller was actually an assault, which, of course, undermines Defendant’s position that an intentional tort or criminal act is not barred by the subject business exclusion. The Fourth District went on to discuss the fact that in Miller the alleged assault arose out of a professional dispute about a patient while Dr. Scheer’s conduct was not related to his profession at all. See also Lindheimer v. St. Paul Fire and Marine Ins. Co., 643 So. 2d 636 (Fla. 3d DCA 1994) (finding sexual assault not connected to provision of professional services). The alleged conduct of Felger herein is much more akin to the excluded coverage in Miller than the covered conduct in Scheer.

Finally in State Farm Fire and Cas. Co. v. Steinberg, 2003 WL 25730505 (S.D. Fla. 2003), the underlying lawsuit in which the insured defendants were sued for claims of tortious interference, misappropriation of trade secrets, unfair competition, and civil conspiracy, all brought by Defendant Nicholson/Kenny. The policy excluded coverage “for any loss caused by [the insured’s] business operations or arising out of [the insured’s] business property” and intentional conduct. The court found that “although his actions may have been illegal,” the insured was “undoubtedly engaged in business pursuits,” whether or not he worked as an attorney. Because the complaint alleged that the insured was engaged in business, the “business pursuit” exclusion is triggered and served to preclude coverage.

The Court concludes that Felger’s alleged conduct, while allegedly intentional and criminal, squarely fell in the natural range and scope of his business pursuits for Zodiac, that is, the internet advertisement of psychic services. Therefore, the conclusion that Felger’s alleged conduct was excepted by PURE’ s business pursuits exception is mandated and controlled by Santos, Miller, and Steinberg. Actions are considered business pursuits when the party’s conduct is “primarily taken in furtherance of a business interest.” Lambert v. Allstate Ins. Co., 593 So.2d 1172, 1173 (Fla. 1st DCA 1992), citing Landis v. Allstate Ins. Co., 546 So.2d 1051 (Fla.1989). This is not a case where Felger was alleged to have sexually assaulted a business partner or employee which would fall outside the business exclusion and in line with the holding of Scheer.

Moreover, Felger has argued that his claim is not barred because the allegations of the complaint alleged acts which are intentional and criminal. The policies contain an intentional acts provision which provides as follows:

Expected or Intended Injury¹

Personal injury or property damage resulting from any criminal, willful, intentional or malicious act or commission by any insured which is intended to result in, or would be expected by a reasonable person to cause personal injury or property damage.

Expected or Intended Injury²

Resulting from any criminal; willful; intentional; or malicious act or omission by an insured. We will not cover any loss resulting from acts or omissions of any person which was intended to result in, or would be expected by a reasonable person to cause personal injury or property damage.

Based on Felger’s concession, the allegations in the underlying complaint which allege intentional torts or criminal acts fall squarely within the above mentioned provision. See Landis v. Allstate Ins. Co., 546 So. 2d 1051 (Fla. 1989) (Court found both the business pursuits exclusion and the intentional acts exclusion applied to a case in which children at a home day care location were sexually battered). See also Hrynkiw v. Allstate Floridian Ins. Co., 844 So. 2d 739, 742 (Fla. 5th DCA 2003) [28 Fla. L. Weekly D1146e] (finding “the everyday meaning of this clause is that the policy does not insure against damages that an insured intentionally inflicts or that are reasonably expected to result from an insured’s intentional or criminal acts.”)

Finally, Felger argues that the policy does not provide coverage for negligent acts committed during a business pursuit but that the policy provides coverage for intentional torts or criminal acts committed during that business pursuit. This is contrary to Florida common law and Florida’s public policy. Public policy forbids against insuring for losses from intentional or criminal acts. Ranger Ins. Co. v. Bal Harbour Club, Inc., 549 So. 2d 1005 (Fla.1989); Griffin Bros. Co., Inc. v. Mohammed, 918 So. 2d 425 (Fla. 4th DCA 2006) [31 Fla. L. Weekly D292a]. If such insurance were available, the financial burden of the loss would shift from the wrongdoer to the insurer. Hrynkiw v. Allstate Floridian Ins. Co., 844 So. 2d 739, 742 (Fla. 5th DCA 2003) [28 Fla. L. Weekly D1146e].

Apparently, Felger obtained a business policy with another insurance company which has denied coverage alleging that Felger’s conduct alleged in the Third Amended Complaint fell outside that policy’s business coverage. The Court will not, and cannot, evaluate the pure issues of law presented herein based on the conduct of another insurance company not before the Court.³ WHEREFORE, it is hereby

ORDERED and ADJUGDED that Plaintiff PURE’ s Motion for Summary Judgment is GRANTED.

__________________

¹This is located in the primary policy and is part of the record.

²This is located in the excess policy and is part of the record.

³PURE correctly objected to the submission by Felger in this regard as it is outside the record evidence. Nevertheless, this evidence (if it is evidence at all), even if correctly submitted, does not dictate a different result.

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