Carnes Funeral Home v. Allstate Ins. Co., No. 20-780 (S.D. Tex. Dec. 23, 2020) seems out of place on the annual Top 10 list.  It is an unpublished decision from a federal trial court.  While it is obviously meaningful to the litigants, it looks pretty unimportant in the grand scheme of coverage jurisprudence.  But I choose Carnes anyway because it offers a valuable lesson for insurers.  It involves an issue that comes up often and demonstrates a trend seen in other cases.  Thus, the case was chosen not for its own sake, but as a representation of an issue that warrants attention.

Carnes v. Allstate is one of several cases – this year and for a long time – that shows the challenges that insurers have faced in determining whether injury or damage was caused by a “professional service.”  The issue usually arises in determining whether the insuring agreement, of a professional liability policy, has been satisfied, as well as whether a professional services exclusion, in a commercial general liability policy, is applicable. 

The number of disputes and amount of case law addressing this issue is remarkable.  By my count, in 2020 alone, there were at least 20 decisions that addressed whether conduct as issue, for purposes of determining coverage, involved the performance of a “professional service.”

Insurers have it in their hands to correct this situation – or at least make a good effort – but many don’t, despite all of the evidence that they should.  Instead, they continue with disputes and coverage litigation over the meaning of “professional services.”  Carnes is one such case.  I could have chosen several other decisions from this year to demonstrate this same point.  But I chose Carnes because it is interesting and I believe the last one decided in 2020.      

Carnes is an unusual and particularly sad case.  Confronting sad cases is de rigueur for those involved with liability coverage.  I tell my Temple Law students, on the first day of class, to get ready to read a lot of sad cases.  I ask them why that’s so.  Their response: stare at their laptops and avoid making eye contact with me.  After some prodding and discussion, they realize that the answer is quite obvious: By definition, liability insurance claims only arise when things go wrong -- and sometimes awfully so.  In other words, when things go as planned, when there is no tragedy, nobody needs to make an insurance claim.

In Carnes, the court addressed coverage for a situation that went horribly wrong.          

In January 2018, Laura Lee Jones passed away. Her daughter, Kristin Parras, contacted Carnes Funeral Home to transport her mother’s body from Harris County Institute of Forensic Sciences to the funeral home to be cremated.  Of note, in the funeral business, there is a term for this – “removal.”  I’ll use the court’s verbatim description of what happened next:

“On January 19, 2018, Carnes sent two licensed funeral directors to HCIFS, and they placed the Decedent in a special vehicle—a ‘removal vehicle’—that is allegedly designed with multiple roll up doors on each side and removable trays and tables for loading bodies.  Carnes was picking up eight bodies at HCIFS, including the Decedent. According to the underlying petition, when Carnes was traveling back to the funeral home, it ‘carelessly allowed the body of Ms. Jones to fall out of the vehicle on Old Spanish Trail in Houston, Texas’ and Carnes ‘failed to realize the body of Ms. Jones left the vehicle and continued on leaving the body behind.’ This allegedly happened because the licensed funeral home directors failed to use a checklist when placing the Decedent in the removal vehicle and thus did not notice that they failed to set the ‘stop’ on the gurney and did not close the roll up door. The Decedent was found in a ditch on the side of the road by good Samaritans. The good Samaritans contacted authorities, who eventually notified Carnes, which retrieved the body.  According to Parras, the Executive Director of Carnes said that it appeared ‘a door was not properly secured, which allowed the decedent to come out.”

Parras filed suit against Carnes, asserting claims for violations of the Texas Deceptive Trade Practices Act and negligence.  She alleged that, on account of Carnes’s actions, she has suffered mental anguish and will suffer additional mental anguish in the future.

Allstate undertook Carnes’s defense, under a reservation of rights, under a Commercial General Liability Policy with a Funeral Directors Liability Coverage Endorsement.  Carnes filed a coverage action.

The Funeral Directors Liability Coverage Endorsement is essentially a professional liability policy.  In pertinent part, it provides coverage for sums that the insured becomes legally obligated to pay as damages because of the insured’s “wrongful acts,” which is defined as a “negligent act, error or omission in the rendering of professional services as a funeral director or embalmer.”

The parties disputed whether the mental anguish, sustained by Ms. Parras, arose out of Carnes’s rendering of professional services as a funeral director.

As Allstate saw it, it did not.  Allstate maintained that, under Texas law “‘professional services’ are ‘more than ordinary tasks, and instead [the phrase] refers to activities that are particular to a specialized vocation.’ Allstate argues that the alleged harmful conduct here, allowing the body to fall out of a moving vehicle because Carnes failed to properly secure the door, cannot be a ‘professional service’ because it did not involve specialized knowledge, labor, or skill, and it was not a mental or intellectual activity. Additionally, driving the body to the funeral home is, according to Allstate, an ordinary task and not a ‘professional service.’”

Of course Carnes saw it differently, arguing that Allstate could have defined “professional services” in the policy and it also could have specifically excluded “removal services” from the Funeral Directors coverage. Carnes also pointed to a Virginia federal court case in which a funeral director policy endorsement specifically included removal of bodies as a professional service.

 Carnes argued that the body could only be released to a funeral director.  Allstate, as the court saw it, was arguing that what Carnes did was akin to putting a box in a station wagon and shutting the back door before driving away.

The court sided with Carnes, holding that the mental anguish, sustained by Ms. Parras, arose out of Carnes’s rendering of professional services as a funeral director.  The court explained its reasoning as follows:

“Here, ‘professional services’ is not defined, but it is modified by ‘of a funeral home director.’ While some courts seem to struggle with determining what types of professional services the term is meant to describe in a generic context, here the Policy makes clear the professional services at issue are the type of services that funeral home directors would be specifically trained to do. The allegations in the underlying petition indicate that there was a specific checklist that Carnes was supposed to follow while securing the decedent’s body in a specially equipped vehicle. This is the type of knowledge and skill only a professional funeral home director would have, much like going through a pre-flight checklist for an airline is the type of skill only a professional pilot would have. The court finds that ensuring the decedent was properly secured in a specially equipped removal vehicle before the decedent was transported is a ‘professional service of a funeral home director.’”

Of note, the court stated that the term “professional services” was not defined.  This is a common reason why disputes arise over whether injury or damage was caused by a “professional service.”  However, the term “professional service” was modified by “of a funeral home director.”  But even that’s not necessarily a solution.  It still get back to the question – what is a “professional service” “of a funeral home director.”

The court noted that in Bohreer v. Erie Ins. Group (E.D. Va. 2007), the policy specifically stated that the insurer would pay damages because of bodily injury or property damage “arising out of the rendering or failure to render any professional services as a funeral director, including the . . . embalming, handling, disposition, burial, disinterment, eye enucleation, or removal of a body . . .”

“Removal” is obviously something that funeral homes do on a very regular basis. People don’t conveniently die at the funeral home.  If Allstate believed that “removal services” are not “professional services,” but, essentially, loading a box into a car and driving away – the court’s characterization, but it sounds accurate – then it could have excluded it from the definition.  “Removal services” are not some obscure aspect of a funeral home that resulted in a claim that nobody could have seen coming.     

The lack of a definition of “professional services” sometime causes disputes when insurers argue that the claim at issue does not involve “profession services,” but, rather, the administrative functions of being a professional, such a lawyer sending bills to clients or a medical provider billing Medicare for services.

Defining “professional services,” whether for purposes of the insuring agreement, of a professional liability policy, or whether a professional services exclusion, in a commercial general liability policy, is applicable, will not end all disputes over the issue.  But it will surely curtail them.  If often times does not go well for the insurer when a court can say that a disputed term is not defined in the policy.