The scope of coverage for "real estate professional services" was at stake in St. Paul Fire and Marine Ins. Co. v. ERA Oxford Realty Co. Greystone, LLC., No. 07-00921-CV (11th Cir. June 23, 2009) [here].
The underlying suit alleged ERA employees approached two real estate brokers to discuss a merger. A verbal agreement was reached, but then allegedly breached by ERA. Subsequently, ERA entered a written agreement to merge with a realty company. Again, ERA allegedly breached the merger agreement. The underlying complaint alleged nine causes of action, including breach of contract and willful misrepresentations.
ERA was insured under a Real Estate Agents or Brokers Professional Liability Protection Policy with St. Paul, which covered loss resulting from the performance of, or failure to perform, real estate professional services caused by a wrongful act. "Real estate professional services" were defined as "those professional services performed, or failed to be performed, for others . . . in the capacity of a real estate agent or broker."
When ERA sought coverage for the underlying suit, St. Paul filed for declaratory relief. The district court ruled St. Paul must defend the allegations relating to losses resulting from the providing of "real estate professional services."
The Eleventh Circuit reversed. The entire policy indicated the parties intended for the term "professional services" to apply only to those services which require the specialized knowledge of a real estate agent in performing professional duties for others. The actions in connection with attempted mergers between real estate businesses was not part of the "professional services" provided by the real estate agents. Therefore, there was no coverage.
