A Massachusetts state court recently found that a professional services exclusion applied to claims against a contractor for improper “siting” of a house. Western World Insurance Company v. Azoff, No. 07-0494-BLS2 (Ma. Super. Ct., Suffolk County May 15, 2008).
The insured, Charles Azoff, contracted with the landowner, Steven Newcomb, to build a house in East Bridgewater, Massachusetts. Azoff hired Silva Engineering to perform certain tasks in the project, including “staking out” the location of the house, driveway and septic system prior to construction. Once the house was complete, however, Newcomb’s application for an occupancy permit was rejected. The Building Inspector found that the house violated the town’s zoning ordinances by being set back from the adjacent property by less than 25 feet. An earlier plan by Silva Engineering had indicated a setback of only 15 feet. After his permit was rejected, Newcomb hired another engineering firm to measure the setback again, and this firm came up with a measurement of over 26 feet. Nevertheless, the Building Inspector continued to refuse to grant the permit. Newcomb then sued Azoff and Silva for failing to properly “stake out” or supervise the “staking out” of the property in conformance with zoning regulations.
Azoff had a Commercial General Liability policy with Western World Insurance Co. The policy contained an “Engineers, Architects or Surveyors Professional Liability” exclusion for damages “arising out of the rendering of or the failure to render any professional services by [Azoff] or any engineer, architect or surveyor who is either employed by [Azoff] or performing work on [Azoff’s] behalf in such capacity.” Western World brought an action for declaratory judgment, and both Western World and Azoff moved for summary judgment.
The superior court found that the “failure to properly site the house” indisputably fit within the professional services exclusion. The policy defined “professional services” specifically to include “preparing, approving, or failing to prepare or approve, maps … surveys … or drawings and specifications.” The court further held that the “identity of the entity (Azoff, Hanover, or Silva) that actually staked the property is irrelevant”; all that matters is that Azoff, “as the general contractor and policy holder, failed to supervise or otherwise ensure that the professional service of preparing an accurate survey” was done. The court also noted that the later survey finding compliance with the zoning ordinance was likewise irrelevant, because, if the house was correctly sited, “Newcomb’s claim fails and neither Azoff nor Western World have any liability.” Despite the possibility that the house could turn out to be correctly sited, and then arguably no “professional” error was made, the court found no duty to defend, as Newcomb’s claim is “based on circumstances that, as the Court concludes, fall within the Exclusion.”