In Taurus Holdings, Inc. v. United States Fidelity and Guaranty Co., No. SC04-771, 2005 WL 2296481 ( Fla. Sept. 22, 2005), the Florida Supreme Court ruled that a commercial liability policy's products-completed operations exclusion precluded coverage for lawsuits against a gun manufacturer stemming from gun violence.

 Various municipalities sued gun manufacturers, including Taurus Holdings, for gun violence in their communities resulting from the use of the manufacturers' products.

 The municipalities alleged "that the gun manufacturers failed to make guns safe and prevent foreseeable misuse, and failed to provide appropriate warnings about the dangers of guns; that they designed, manufactured and marketed guns in excess of the demand that might be expected from consumers, thereby guaranteeing that the surplus would enter the illegal firearms market, and that they were aware that the guns they manufactured and sold would fall into the hands of criminals, but they took no action to prevent it; and that they falsely and deceptively claimed through advertising and promotion of their handguns that the ownership and possession of handguns in the home increases one's security."

 Taurus was insured under various commercial general liability polices that all contained exclusions for products-completed operations hazards. The insurers asserted that coverage for the defense of the lawsuits and for any damages for which Taurus would be liable were excluded by the products-completed operations hazard exclusion.

 Taurus argued that the phrase "arising out of" in the exclusion was ambiguous, and thus the exclusion could not apply. The court, however, found that the phrase was not ambiguous and should be interpreted broadly. The court, quoting another case (Hagen v. Aetna Cas. & Sur. Co., 675 So.2d 963, 965 (Fla. 5th DCA 1996), stated "The term 'arising out of' is broader in meaning than the term 'caused by' and means 'originating from,' 'having its origin in,' 'growing out of,' 'flowing from,' 'incident to,' or 'having a connection with.'" While the phrase requires some causal connection, the court reasoned, it does not require proximate cause.

 Taurus next claimed that the products-completed operations hazard exclusion applied only to defective products. The court refuted this argument, acknowledging that most courts have not interpreted the exclusion regarding its application to only defective products; the ones that have are split. So, turning to the language of the policy as the most important factor, the court noted that the word "defective" did not appear in the exclusion.

 The exclusion applied to "all bodily injury and property damage…arising out of your product." "Your product" is defined in the policy as "any goods or products…manufactured, sold, handled, distributed, or disposed of by" the insured. The court concluded that the use of "any goods or products" indicates a broader meaning than just defective products. Thus, the plain language of the policy excluded all product-related injuries.

 Taurus also argued that if the exclusion applied to all products, and not just defective ones, a coverage gap is created. The court, though, pointed out that optional products-completed operations hazard coverage that covered everything excluded by the exclusion was available to Taurus.

 Thus, the court ruled that coverage was excluded by the products-completed operations hazard exclusion.

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