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No. 11-1781
No. 11-1782
Appeals from the United States District Court for the Eastern
District of Virginia, at Richmond.
Henry E. Hudson, District
Judge. (3:09-cv-00550-HEH-MHL)
Argued:
Before TRAXLER,
Judges.
Chief
Judge,
Decided:
and
DIAZ
and
THACKER,
Circuit
PER CURIAM:
Global Title, LLC, served as the closing agent for mortgage
loans originated by Financial Mortgage, Inc. (FMI), and funded
by First Tennessee National Bank.
scheduled
loans
funds
FMI
to
would
not
instead
close,
of
First
Tennessee.
Global
liability
St.
Company.
issued
the
FMIs
unused
president
returned
by
sought
Paul
Fire
coverage
&
Marine
under
Insurance
and
realigning,
plaintiff
asserting
the
claims
case
against
proceeded
St.
Paul;
with
First
Global
as
Tennessee
St.
Global.
Paul
therefore
Global
and
had
First
no
duty
Tennessee
to
defend
appeal.
or
We
indemnify
agree
with
I.
The central question in this case is whether St. Paul is
obligated
under
the
policy
to
defend
Global
in
the
action
defense
where
the
ultimate
that
the
insurer
even
demonstrates
indemnification.
resolution
is
not
of
the
case
liable
for
Co. v. Northbrook Prop. & Cas. Ins. Co., 475 S.E.2d 264, 265
(Va. 1996) (internal quotation marks omitted).
Conversely, an
under
allegations.
its
contract
for
any
judgment
based
upon
the
247, 249 (Va. 1978); see Virginia Elec. & Power, 475 S.E.2d at
of
the
duty-to-defend
question
thus
requires
coverage
and
(2)
the
underlying
complaint
to
determine
corners
rule
the
determination
is
made
by
four
corners
of
the
policy
AES
Corp.
v.
With these
services,
including
services
performed
in
the
Policy at SP00021.
Id. at SP00022.
relevant
resulting
part,
from
excludes
[a]ny
from
coverage
unauthorized
5
act
for
by
loss
any
protected
funds.
person
that
deprives
an
owner
of
the
use
of
its
amended
intervening
plaintiff)
against Global. 2
First
Tennessee
established
complaint
filed
asserted
by
First
single
Tennessee
count
of
(as
negligence
line
of
into
credit
an
agreement
through
which
with
First
FMI
and
Tennessee
The
J.A.
The
complaint alleged that when Global later learned from FMI that
the transactions had been cancelled, [i]nstead of returning the
2
support
of
J.A. 34.
its
negligence
cause
of
action,
First
First
Tennessees
alleged
that
interest
Global
in
breached
the
the
funds.
duty
it
First
owed
to
alleged
no
additional
facts
J.A. 34.
describing
how
or
The
why
C.
Adopting the report and recommendation of the magistrate
judge, see 28 U.S.C. 636(b)(1)(B), the district court granted
summary judgment in favor of St. Paul on the coverage question.
Because the policy did not define unauthorized, the district
court, looking to Blacks Law Dictionary, defined unauthorized
as
[d]one
without
authority
[t]he
right
behalf; . . .
relations
by
or
or
made
without
actual,
permission
to
act
legally
on
anothers
done
in
accordance
with
the
others
J.A. 153.
as
matter
of
law.
The
magistrate
judge
question.
As we will explain, the allegations of First
Tennessees
complaint,
even
without
consideration
of
the
attached exhibits, are sufficient to trigger St. Pauls duty to
defend.
8
explained
this
conclusion
in
the
report
and
recommendation
II.
On
appeal,
district
erroneous.
agent
is
courts
Global
and
First
interpretation
Tennessee
of
the
contend
HOF
that
Exclusion
the
was
to
perform
does
not
become
unauthorized
And
We agree.
A.
Because the policy did not define unauthorized act, the
district court properly defined unauthorized act as an act
9
taken
without
authority.
See,
e.g.,
Scottsdale
Ins.
Co.
v.
Glick, 397 S.E.2d 105, 108 (Va. 1990) (In the absence of a
definition,
words
used
in
an
insurance
policy
must
be
given
same
rules
of
construction
as
any
other
contract.
See
Virginia Farm Bureau Mut. Ins. Co. v. Williams, 677 S.E.2d 299,
302
(Va.
S.E.2d
2009);
405,
409
Harleysville
(Va.
Mut.
1959).
Ins.
The
Co.
v.
primary
Dollins,
goal
in
109
the
L.L.C., 547 S.E.2d 216, 226 (Va. 2001) (internal quotation marks
omitted); see Bender-Miller Co. v. Thomwood Farms, Inc., 179
S.E.2d 636, 639 (Va. 1971) ([T]he intent of the parties as
expressed in their contract controls.).
When
determining
the
intent
of
the
contracting
parties,
language,
by
the
subject
matter,
10
and
the
condition
and
the
language
employed,
surrounding
circumstances,
the
insurance
policy
when
determining
the
meaning
of
The
contract
is
professional
liability
insurance
law
another,
of
agency
there
relationship,
is
-no
however,
absent
agency
authority
to
act
relationship.
questions
about
on
Within
liability
behalf
an
turn
of
agency
not
on
The principal is
liable for the actions of the agent committed within the scope
of
authority,
but
agents authority.
not
for
actions
outside
the
scope
of
the
persons
for
wrongful
acts
11
an
agent
commits
within
the
as
referring
insureds authority.
to
an
act
outside
the
scope
of
the
White & Bros., 49 S.E.2d 254, 259 (Va. 1948) (explaining that
insurance policy must be construed in the light of the subject
matter
with
which
the
parties
are
dealing
and
the
words
or
Just as
the principal would be liable for the wrongful act of his agent
committed within the scope of the agents authority but not for
acts
outside
the
scope
of
authority,
the
policy
provides
insureds authority but not for acts committed outside the scope
of the insureds authority.
Accordingly, the HOF Exclusion, as we conclude it must be
interpreted, precludes coverage for claims of loss caused by any
act outside the scope of the insureds authority that deprives
an
owner
of
the
use
of
its
funds.
The
question,
then,
is
Ins.
Co.,
effective,
the
427
S.E.2d
193,
exclusionary
196
language
1993)
must
([T]o
clearly
be
and
Virginia
law,
an
act
need
not
be
expressly
or
but
[on]
whether
the
13
service
itself
in
which
the
tortious
act
authority.
was
done
was
within
the
scope
of
such
([A]
liable
principal
is
for
negligent
acts
that
its
agent
self-interest
were
not
conclusively
outside
scope
of
against
Global.
First
Tennessee
did
not
allege
that
537
S.E.2d
at
577
(listing
factors
relevant
to
HOF
Exclusion
thus
does
not
clearly
and
unambiguously
does not allege that Global was attempting to return the funds
to First Tennessee when it transferred them to FMI, Globals
claim
that
it
negligently
performed
an
authorized
act
is
We disagree.
The
by
returning
the
funds
to
FMI
instead;
and
that
First
could
negligence,
and
without
the
amendment
allegations
support
are
therefore
judgment
sufficient
for
to
concluding
that
coverage
was
barred
by
the
HOF
Exclusion, the district court held that St. Paul had no duty to
defend Global or indemnify Global for any judgment that might be
entered against it.
of
law,
the
district
courts
ruling
on
the
obligation
to
indemnify
Global
for
the
judgment.
The
the
judgment,
however,
has
no
effect
on
St.
Pauls
16
III.
For
the
reasons
discussed
above,
we
hold
that
the
coverage
under
the
policys
insuring
clause
and
do
not
The
Upon resolution
17