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Integrated Technologies, Inc. v. Crum & Forster Specialty Insurance Co.

Supreme Court of Vermont

August 9, 2019

Integrated Technologies, Inc.
Crum & Forster Specialty Insurance Company

          On Appeal from Superior Court, Chittenden Unit, Civil Division. Robert A. Mello, J.

          Bruce Palmer of Downs Rachlin Martin PLLC, St. Johnsbury, for Plaintiff-Appellant.

          Doreen F. Connor of Primmer Piper Eggleston & Cramer PC, Manchester, New Hampshire, and Gary S. Kull of Kennedys CMK, Basking Ridge, New Jersey, for Defendant-Appellee.

          PRESENT: Reiber, C.J., Skoglund, Robinson, Eaton and Carroll, JJ.

          EATON, J.

         ¶ 1. Integrated Technologies, Inc. (ITI) appeals from the trial court's summary judgment decision in favor of Crum & Forster Specialty Insurance Company (Crum). ITI alleged that Crum breached its duty to defend ITI against a suit brought by the GOAD Company. The court granted summary judgment to Crum, finding no claim in the GOAD complaint that was potentially covered by the policy's Errors & Omissions (E&O) Liability Coverage Part. ITI asserts that the court misread the allegations in the GOAD complaint and interpreted the policy coverage too narrowly. We affirm.

         I. Crum Policy

         ¶ 2. ITI is an engineering and project-management firm that works predominantly in the metals plating and finishing industry. Crum insured ITI under two policies between March 16, 2014 and March 16, 2016, identical in all relevant respects and collectively referred to as the policy. The policy provided E&O liability coverage as well as commercial general liability and contractors' pollution liability coverage.

         ¶ 3. Generally speaking, an E&O policy is" 'a specialized and limited type of coverage . . . designed to insure members of a particular professional group from the liability arising out of a special risk such as negligence, omissions, mistakes and errors inherent in the practice of the profession.'" Crum & Forster Managers Corp. v. Resolution Tr. Corp., 620 N.E.2d 1073, 1078 (Ill. 1993) (quoting 7A J. Appleman & J. Appleman, Insurance Law & Practice § 4504.01, at 310 (rev. 1979) (emphasis omitted)). It is" 'the equivalent to malpractice insurance for occupations other than those in the legal and medical fields.'" Id. (quoting 11 Couch on Ins. 2d § 44:396, at 573-74 (rev. ed. 1982)). As Couch explains,

The provision of "professional services," as defined in professional liability policies, necessarily entails an application of special learning unique to the insured's profession. . . .
No matter the occupation of the insured, the terms of the policies are quite similar, requiring that an act or omission arise out of the provision of "professional services" in the context of the particular occupation of the insured. Accordingly, while certain general principles can be gleaned which apply to all such policies, the determination of what constitutes a "professional service" is unique to each insured profession.

9A S. Plitt, et al., Couch on Ins. § 131:42 (3d ed. 2018).

         ¶ 4. By its terms, the E&O policy here covered "damages" that the insured becomes legally obligated to pay "because of" a "wrongful act" to which the insurance applies. Under the policy:

"Wrongful act" means an act, error or omission in the rendering or failure to render "professional services" by any insured . . . .
"Professional services" means those functions performed for others by you . . . that are related to your practice as a consultant, engineer, architect, surveyor, laboratory or construction manager.

         The E&O Part is limited by the policy's "Common Exclusions," including exclusions for damages based upon or arising out of "[a]ny criminal, fraudulent, or dishonest act, omission or offense committed by the insured" and "[a]ny act, omission or offense committed by the insured with knowledge of its wrongful nature or with the intent to cause damage." See generally 7 Couch on Ins. § 101:22 ("In general, it is against public policy for an insurance contract to provide coverage for the intentional or willful misconduct of an insured.").

         II. GOAD Complaint

         ¶ 5. GOAD is a vendor of materials and services to customers with metal plating facilities. In November 2015, GOAD sued ITI in Missouri state court on four counts: breach of contract-teaming agreement; breach of contract-commission agreement; tortious interference with business expectancy; and injurious falsehood.

         ¶ 6. GOAD alleged the following facts. In 2012, the U.S. Army requested proposals for an Energy Improvement Project (the "Project"). Honeywell Building Solutions sought to be selected as the Project's Energy Service Company (ESCO). If selected, Honeywell would submit a final proposal, with pricing, which the Army would accept if fair and reasonable.

         ¶ 7. The Project included a substantial process-plating component and Honeywell asked GOAD to work with it to support its bid. GOAD agreed to do so with the understanding that it would be Honeywell's sole-source subcontractor as long as GOAD's pricing was fair and reasonable. GOAD developed proposed schedules, budgets, and forecasts for the Project, in addition to securing subcontractors as needed. In late 2012, the Army selected Honeywell as the ESCO and awarded it the "Right to Bid" for the Project.

         ¶ 8. To support Honeywell's final proposal, GOAD was tasked with developing detailed scopes of work, with pricing, for all phases of the process plating improvements. To assist in this endeavor and in the subsequent work on the Project, GOAD "found ITI . . . to provide certain engineering and certain project ...

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