The Federal Insurance
Company policy defines a products-completed operations hazard as follows: 1
[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’
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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.
