OREGON FED. CT. DENIES INSURER’S SUMMARY JUDGMENT MOTION THAT PROFESSIONAL SERVICES EXCLUSION APPLIES TO MANAGING, COORDINATING AND OVERSEEING WORK OF SUBCONTRACTORS
A general contractor’s managing, coordinating, and overseeing the work of its subs raises a jury question of whether such activities fall within the “supervisory or inspection services” language of Professional Services Exclusion in Contractors Policy.
In State Farm v. Lorrick Pacific, LLC, 2012 WL 1432603 (D.Or.)(4/24/12), State Farm filed a dec action against the contractor (Lorrick) that it had insured pursuant to a Contractors Policy of insurance. State Farm argued in its partial summary judgment motion that its Professional Services Exclusion excluded coverage for Lorrick’s alleged failure to properly “manage, coordinate, and oversee the work of subcontractors” as alleged in the underlying complaint. State Farm’s Professional Services Exclusion stated, in part, that State Farm would not pay for:
[B]odily injury, property damage or personal injury due to rendering or failure to render any professional services or treatments. This includes but is not limited to:
a. legal, accounting or advertising services;
b. engineering, drafting, surveying or architectural services, including preparing, approving, or failing to prepare or approve maps, drawings, opinions, reports, surveys, change orders, designs or specifications;
c. supervisory or inspection services;
State Farm relied heavily on Multnomah County v. Oregon Automobile Insurance Co., 256 Or. 24, 28 (1970) for the proposition that the term “professional service” includes managing, coordinating, and overseeing the work of subcontractors. After extensively analyzing State Farm’s exclusion and arguments, the Court concluded that “State Farm’s argument fails. Even if this court were to adopt the dictionary definition of the words ‘supervise,’ ‘superintend,’ and ‘superintendent’ as State Farm would have this court do here, it would not resolve the issue of whether the term ‘professional services’ includes coordinating the work of subcontractors.” The Court noted that “although the Policy states that ‘supervisory’ services fall under the term ‘professional services,’ it makes no mention of coordinating services, including coordinating the work of subcontractors. The absence of coordinating services is significant in this instance.” The Court declined to conclude that the term “professional services” can only plausibly be interpreted as including managing, coordinating, and overseeing the work of subcontractors, and held that a jury could determine that Lorrick’s work in this instance did not involve “specialized knowledge” as contemplated in Multnomah County, 256 Or. at 26–27.