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Los Angeles Federal Court Dismisses United Talent Agency's Breach-of-Contract Claim Brought Over Denial of Insurance Coverage

The U.S. District Court for the Central District of California granted summary judgment to an insurer on a breach-of-contract claim brought by United Talent Agency (UTA) over the insurer's refusal to cover allegations brought against UTA that the agency had improperly lured agents and talent away from an agency competitor. United Talent Agency LLC v. Markel American Insurance Co., 2:21-cv-00369. UTA's policy with Markel American contained a "Professional Services" exclusion clause that stated: "The Insurer shall not be liable to pay any Loss on account of, and shall not be obligated to defend, any Claim based upon, arising out of, or in any way involving any actual or alleged error, misstatement, misleading statement, act, omission, neglect, or breach of duty in connection with the rendering or failure to render any professional services to others for a fee, commission, or other compensation by any Insured." In his ruling, Central District Judge Mark C. Scarsi explained: "Plaintiff argues that the underlying suit did not arise out of or happen in connection with the rendering of professional services because a competitor sued Plaintiff, not a customer, and because the underlying acts did not involve rendering professional services to others for a fee, commission, or other compensation. This argument, however, is contrary to the facts and the language of the exclusions." District Judge Scarsi added: "First, the fact that an act harms a competitor instead of a customer does not take the act out of the realm of professional services. … Second, Plaintiff has no serious argument that the allegations of hiring agents from a competitive entertainment company have no connection with the rendering of professional services to others for compensation. The Court cannot imagine, and Plaintiff did not provide, any other motive for the alleged acts than for Plaintiff to increase its profits."