Taurus Holdings, Inc. v. U.S. Fidelity and Guar., 03-14720.

• Decision Date: 29 April 2004
• Docket Number: No. 03-14720.,03-14720.
• Citation: 367 F.3d 1252
• Parties: TAURUS HOLDINGS, INC., Taurus International Manufacturing, Inc., Plaintiffs-Appellants, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Pacific Insurance Company, Limited, Federal Insurance Company, Great Northern Insurance Company, United National Insurance Company, Fireman's Fund Ins., Defendants-Appellees, Nautilus Insurance Company, Defendant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1252

367 F.3d 1252

TAURUS HOLDINGS, INC., Taurus International Manufacturing, Inc., Plaintiffs-Appellants, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Pacific Insurance Company, Limited, Federal Insurance Company, Great Northern Insurance Company, United National Insurance Company, Fireman's Fund Ins., Defendants-Appellees, Nautilus Insurance Company, Defendant.

No. 03-14720.

United States Court of Appeals, Eleventh Circuit.

April 29, 2004.

John W. Harbin, Simon H. Bloom, Powell, Goldstein, Frazer & Murphy, Atlanta, GA, Christopher Edson Knight, Fowler, White, Burnett, Hurley, Banick & Strickroot P.A., Miami, FL, for Plaintiffs-Appellants.

Zorian Ihor Sperkacz, Ponzoli, Wassenberg & Sperkacz, P.A., Miami, FL, Charles M.P. George, Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Mitchell L. Lundeen, Coral Gables, FL, Jonathan A. Constine, Hogan & Hartson, Washington, DC, Richard Hodyl, Jr., Alyssa M. Campbell, Chicago, IL, Michael S. Levine, Walter J. Andrews, Amy K. Savage, McLean, VA, Thomas J. Morgan, Coconut Grove, FL, for Defendants-Appellees.

Appeal from the United States District Court for the Southern District of Florida (No. 01-02236-CV-AJ); Adalberto Jordan, Judge.

Before ANDERSON, CARNES and FAY, Circuit Judges.

PER CURIAM:

Certification from The United States Court of Appeals for the Eleventh Circuit to the Supreme Court of Florida, pursuant to Article V, section 3(b)(6) of the Florida Constitution.

Plaintiffs-Appellants Taurus Holdings, Inc. and Taurus International Manufacturing, Inc. (collectively "Taurus") appeal a final judgment in favor of Defendants-Appellees United States Fidelity and Guaranty Company, Pacific Insurance Company, Limited, Federal Insurance Company, Great Northern Insurance Company, and United National Insurance Company (collectively "Insurance Providers"). Taurus filed suit against Insurance Providers, seeking, among other things, a declaratory judgment that insurance policies issued by Insurance Providers required them to contribute to the defense costs of about 30 lawsuits pending against Taurus. The district court found that the "products-completed operations hazard" provision contained in these insurance policies excluded coverage for defense of these lawsuits and dismissed Taurus' complaint. Because we find that this case turns on an important question of state law for which there is no controlling precedent, we defer our decision pending certification of the question to the Supreme Court of Florida.

BACKGROUND

Taurus is in the business of manufacturing, selling, and distributing firearms. Government municipalities have sued Taurus and other handgun manufacturers seeking compensation for expenses allegedly incurred as a result of gun violence in their communities. These suits allege, among other things, negligence, negligent supervision, negligent marketing, negligent distribution, negligent advertising, negligent entrustment, public and private nuisance, failure to warn, false advertising and unfair and deceptive trade practices. As a result of Taurus' actions, the municipalities claim they have spent substantial sums of money toward police operations, emergency medical costs, and legal prosecutions relating to gun violence and crimes committed involving handguns. Although most of these lawsuits seek compensatory damages, some request only equitable relief. When Taurus initiated this suit against Insurance Providers, Taurus had already notified them of about 30 such lawsuits pending against it.

Insurance Providers issued commercial general liability insurance policies to Taurus between the years 1991 and 1999. Under these policies, Insurance Providers have the duty to defend Taurus against lawsuits seeking damages for bodily injury, property damage, advertising injury, or personal injury. These policies, however, do not afford coverage for damages included within the "products-completed operations hazard" provision. The Federal Insurance Company policy¹ defines a products-completed operations hazard as follows:

[A]ll bodily injury and property damage occurring away from premises you own or rent and arising out of your product or your work except:

a. products that are still in your physical possession; or

b. work that has not yet been completed or abandoned.

The policy then defines "your product" as follows:

[A]ny goods or products, other than real property, manufactured, sold, handled, distributed or disposed of by:

1. you;

2. others trading under your name; or

3. a person or organization whose business or assets you have acquired.

The question presented in this appeal is whether the products-completed operations hazard exclusion applies to the lawsuits pending against Taurus. Insurance Providers argue that the injuries complained of in the underlying suits arose out of Taurus' products — handguns — and therefore the products-completed operations hazard provision excludes coverage. Taurus, however, contends that because at least one claim in each of the underlying suits alleges injuries caused by Taurus' on-premises tortious conduct (i.e. negligent marketing, negligent distribution, failure to warn, false advertising, unfair and deceptive trade practices ...), the exclusion does not preclude coverage.

Initially, the district court concluded that because the underlying suits allege that injuries were caused by Taurus' tortious business practices and because the "arising out of" language in the products-completed operations hazard provision was ambiguous under Florida law, the exclusion did not apply. However, in response to Insurance Providers' motion for reconsideration, the district court set aside its initial determination and found that (1) the products-completed operations hazard exclusion was not ambiguous and (2) the injuries alleged in the lawsuits against Taurus arose out of Taurus' handguns and not out of its on-premises negligence. Accordingly, the district court concluded that the plain language of the products-completed operations hazard exclusion did not afford coverage for the lawsuits against Taurus and dismissed the complaint. This appeal followed.

DISCUSSION

In reaching its decision, the district court relied on Koikos v. Travelers Ins. Co., 849 So.2d 263 (Fla.2003), a case recently decided by the Supreme Court of Florida. Koikos involved a shooting at a restaurant where two patrons were shot by one gunman. 849 So.2d at 265. In the underlying suit, the victims alleged that the restaurant owner negligently failed to provide adequate security. Id. The restaurant owner then sued the insurance company, claiming the two shootings constituted two occurrences under the applicable insurance policy. Id. The insurance company, however, contended that there was only a single occurrence — the failure to provide adequate security. Id. The Supreme Court of Florida, applying the "cause theory," discussed the following:

It is the act that causes the damage, which is neither expected nor intended from the standpoint of the insured, that constitutes the "occurrence." The insured's alleged negligence is not the "occurrence"; the insured's alleged negligence is the basis upon which the insured is being sued by the injured party.

Id. at 271. Thus, there were two "occurrences" — the two shootings.

Although Koikos is not a case about products-completed operations hazard exclusions, the district court found that the Supreme Court of Florida's discussion on insurance occurrences eliminated any perceived ambiguity in the phrase "arising out of." The district court...