In Admiral Ins. Co. v. Ford, No. 09-50671 (5th Cir. May 21, 2010), Exco hired insured Ford to create an oil well drilling plan and assist in the drilling of the well. Following a blowout in the well, Exco sued Ford for breach of contract failure to prevent the blowout. Admiral filed suit seeking a judicial declaration that a professional services exclusion precluded coverage under the CGL policy. The exclusion provided that, with respect to any professional services shown in the schedule, the insurance did not apply to any damage due to the rendering or failure to render any professional service. The schedule stated “all operations of the insured.” The trial court entered summary judgment for the insured, holding that, because the exclusion purported to apply to “all operations of the insured,” it rendered the coverage illusory. On appeal, the Fifth Circuit reversed, holding that, under Texas law, the exclusion unambiguously meant that it applied to any professional services, applying the legal “specialized knowledge or skill” definition, in any of the insured’s operations, rejecting the insured’s “literal interpretation” of “all operations” as being unreasonable. The court then held that all of the damage alleged in the underlying complaint was due to Ford’s alleged failure to fulfill his contract, “the very subject of which was Ford’s expertise in drilling operations,” thus eliminating any defense obligation.
Texas “professional services” exclusion
