Rel: October 9, 2026
Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-0650), of any typographical or other errors, in order that corrections may be made before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2026-2027
SC-2025-0165
OMS Pharmacy, Inc., d/b/a The Pharmacy at Midtown; and
Hannah D. Browne
v.
Nationwide Property and Casualty Insurance Company; BaldoDowns Insurance, LLC; and Roger Downs, Inc.
Appeal from Tuscaloosa Circuit Court
(CV-14-901325)
STEWART, Chief Justice.
SC-2025-0165
Hannah D. Browne obtained a $4.75 million judgment against OMS
Pharmacy, Inc. ("OMS"), in the Tuscaloosa Circuit Court ("the trial
court") after she was injured by a medication that had been improperly
compounded by OMS. This appeal arises from a separate related action
to determine whether Browne's claim, and subsequent judgment, is
covered under a liability-insurance policy issued to OMS by Nationwide
Property and Casualty Insurance Company ("Nationwide") and, if not,
whether Roger Downs, Inc., and/or Baldo-Downs Insurance, LLC ("the
agency defendants"),1 were negligent or wanton in failing to procure the
proper insurance coverage for OMS. The trial court entered separate
summary judgments in favor of Nationwide and the agency defendants.
Browne and OMS appeal from those judgments. We affirm.
Facts and Procedural History
The basic underlying facts are undisputed. OMS was founded and
incorporated by Tim Wright, an Alabama-licensed pharmacist, and it
1Roger Downs, Inc., is the agency that obtained the Nationwide
policy for OMS, and it was dissolved in 2021. OMS contends that BaldoDowns Insurance, LLC, is a successor to Roger Downs, Inc.
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began its compounding-pharmacy business in 1984.2 For 22 years OMS
operated as a franchise of The Medicine Shoppe. By the year 2008, OMS
had become an independent pharmacy doing business as The Pharmacy
at Midtown.
In March 2013, Browne's doctor prescribed her a "pink cocktail"
liquid medication for the treatment of stomach pain. As prescribed, the
medication was to be composed of equal parts phenobarbital, maalox, and
belladonna. In 2013, OMS's supplier had discontinued its commercial
generic version of the "pink cocktail," known as Donnatal. Thus, about
two weeks before receiving Browne's prescription, OMS had entered the
formula for the "pink cocktail" into its computer system so that it would
be able to easily compound future prescriptions for the medication.
Unfortunately, the OMS pharmacy technician who entered the "pink
cocktail" formulation into the computer system made an error and
entered the belladonna component of the formula in grams instead of
milligrams. That formula was followed when OMS's pharmacy
technician compounded the "pink cocktail" prescription for Browne, and,
2Itappears that, at all relevant times, Wright was OMS's sole
shareholder.
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thus, the belladonna contained in the medication provided to Browne was
one-thousand times stronger than prescribed. Browne consumed one
tablespoon of the improperly compounded "pink cocktail," which caused
her to suffer belladonna poisoning. Browne was treated in the intensivecare unit of a hospital, underwent a laparoscopic cholecystectomy, and
suffered other serious complications from her consumption of the
compound.
In October 2013, Browne sued OMS and Wright in the Tuscaloosa
Circuit Court ("the Browne action"). Browne's complaint, as amended,
included the following factual allegations:
"7. … Dr. Philpot … ordered a 'pink cocktail' mixture
of Phenobarbital, Belladonna, and Maalox in an effort to give
[Browne] some relief from her symptoms. Dr. Philpot's office
called in the compound prescription to a compound pharmacy,
[OMS], in Tuscaloosa on or about March 4, 2013. Dr. Philpot's
office also noted the dosage to be taken as one-half (1/2)
teaspoon every 12 hours.
"8. [OMS] accepted the compound prescription for
[Browne] on March 4, 2013 and prepared the prescription and
label. [Browne] picked up the prescription on or about March
6, 2013. The label on the prescription stated to take 1
TABLESPOONFUL by mouth as directed 4 TIMES A DAY for
2 WEEKS.
"9. [Browne] took the one (1) tablespoon dosage on
March 6, 2013 and within an hour of taking the dosage, she
began suffering from nausea, vomiting, hallucinations,
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convulsions, bloodshot eyes, confusion, and ultimately became
unresponsive. [Browne] was transported … to DCH Regional
Medical Center.
"….
"12. [OMS & Wright] should never have instructed
[Browne] to take one (1) tablespoon of the compound produced
by Defendant Wright containing Belladonna. [Browne]
suffered from Belladonna poisoning after consuming one
tablespoon of the pink cocktail. Upon information and belief,
Dr. Philpot will testify that the compounded drug Defendant
Wright produced, and the instructions provided to [Browne],
were not in accordance with what Dr. Philpot prescribed and
told the representatives of the pharmacy to give to [Browne].
"13. Upon information and belief, Defendant Wright
negligently and/or wantonly formulated, adopted,
implemented, supervised, oversaw, and otherwise approved
the compound drug given to [Browne] discussed herein in his
role as the pharmacist in charge."
Browne asserted against OMS and Wright a negligence/wantonness
claim, a products-liability claim, a claim alleging a breach under the
Alabama Extended Manufacture's Liability Doctrine ("AEMLD"); a claim
alleging breach of the implied warranty of merchantability; and a claim
alleging failure to warn. Browne's complaint included the following
negligence/wantonness allegations:
"16. Defendant Wright had a duty under the standard
of care of a pharmacist to ensure that any medications and
instructions regarding the consumption of said medications
were safe and would not cause harm to [Browne] when
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consumed. Defendant Wright and/or [OMS and its
employees] negligently and/or wantonly breached the
standard of care by failing to follow the order of Dr. Craig
Philpot in producing the compounded drug and/or in
instructing [Browne] of the amount of said drug that she
should consume …. Defendant Wright … failed to ensure that
the compounded drug and the instructions given to [Browne]
were safe for [Browne]'s consumption of said drug.
"17. Defendants were negligent and/or wanton in the
breach of the standard of care in compounding, design,
manufacture, testing, warning, distribution, labeling and/or
sale of the prescription that is the subject matter of this
lawsuit."
Browne's product-liability claim and AEMLD claim alleged that OMS
and Wright had "manufactured, compounded, formulated" a product in a
"dangerous and defective condition" and that the product was caused to
be defective "because of [their] work in manufacturing the product
specially for [Browne]." Browne further alleged that the medication "as
manufactured by [OMS and Wright] was not of merchantable quality,
was unsafe, and unsuitable for the purposes for which it was intended."
Finally, Browne alleged that OMS and Wright had failed to warn her
about the dangers inherent in the compounded drug.
OMS's insurer, Nationwide, declined to defend OMS and Wright in
the Browne action. The Nationwide policy was a general-liability policy,
which did not provide professional-liability coverage, and it contained a
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professional-services exclusion, which excluded coverage for bodily injury
and property damage arising out of "the rendering of, or failure to render,
any professional service, treatment, advice or instruction," including
"[s]ervice, treatment, advice or instruction in the practice of pharmacy."
Nationwide contended that coverage for Browne's injuries was excluded
under the professional-services exclusion. The Nationwide policy was
obtained for OMS by Roger Downs, Inc., in 2008, and it replaced an
insurance policy issued to OMS by Zurich American Insurance Company
("the Zurich policy"). Unlike the Nationwide policy, the Zurich policy had
not excluded coverage for bodily injury caused by professional
pharmacological services.
On April 29, 2015, Browne, OMS, and Wright reached a settlement
of the Browne action, and, as part of that settlement, a consent judgment
in the amount of $4,750,000 was entered in favor of Browne and against
OMS. Browne's claims against Wright were dismissed.
On November 11, 2014, while the Browne action was pending, OMS
commenced in the trial court a seperate action against Nationwide
alleging breach of contract and bad faith ("the insurance action").
Alternatively, it sued the agency defendants alleging negligent and/or
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wanton failure to procure insurance. In June 2015, Browne was
permitted to intervene in the insurance action for the purpose of
asserting a direct action against Nationwide pursuant to § 27-23-2, Ala.
Code 1975, and she sought to have Nationwide pay the judgment entered
against OMS in the Browne action.
In 2016, the agency defendants filed a motion for a summary
judgment, which was denied. In 2018, the parties filed cross-motions for
a summary judgment as to the insurance-coverage issues. Those motions
were denied in January 2020. Nationwide and the agency defendants
renewed their respective summary-judgment motions in 2022. On
September 21, 2022, the trial court entered a summary judgment in favor
of Nationwide, concluding that Browne's claims against OMS fell within
the scope of the Nationwide policy's professional-services exclusion and
that, therefore, the Nationwide policy did not provide coverage to OMS
for Browne's claims. On August 10, 2023, the agency defendants again
renewed their motion for a summary judgment.3 On February 6, 2025,
3In response to the agency defendants' renewed motion for a
summary judgment, OMS's counsel submitted an affidavit pursuant to
Rule 56(f), Ala. R. Civ. P., seeking additional time to complete discovery
and noting that Roger Downs had not yet been deposed. On appeal, OMS
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the trial court entered a summary judgment in favor of the agency
defendants, concluding that, because OMS had received the Nationwide
policy that, the trial court concluded, unambiguously excluded coverage
for professional services, OMS's claims alleging negligent and/or wanton
failure to procure such coverage was precluded by Alabama law. This
appeal followed.
Standard of Review
" ' "This Court's review of a
summary judgment is de novo.
Williams v. State Farm Mut. Auto. Ins.
Co., 886 So. 2d 72, 74 (Ala. 2003). We
apply the same standard of review as
the trial court applied. Specifically, we
must determine whether the movant
has made a prima facie showing that no
genuine issue of material fact exists
and that the movant is entitled to a
judgment as a matter of law. Rule
56(c), Ala. R. Civ. P.; Blue Cross & Blue
Shield of Alabama v. Hodurski, 899 So.
2d 949, 952-53 (Ala. 2004). In making
such a determination, we must review
the evidence in the light most favorable
to the nonmovant. Wilson v. Brown,
496 So. 2d 756, 758 (Ala. 1986). Once
the movant makes a prima facie
showing that there is no genuine issue
of material fact, the burden then shifts
does not challenge the trial court's failure to grant it additional time for discovery.
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to the nonmovant to produce
'substantial evidence' as to the
existence of a genuine issue of material
fact. Bass v. SouthTrust Bank of
Baldwin Cnty., 538 So. 2d 794, 797-98
(Ala. 1989); Ala. Code 1975, § 12-21-12."
" 'Dow v. Alabama Democratic Party, 897 So. 2d
1035, 1038-39 (Ala. 2004).'
"Tender Care Veterinary Hosp. Inc. v. First Tuskegee Bank,
168 So. 3d 33, 37 (Ala. 2014). 'When a trial court interprets
an insurance policy as a matter of law, that interpretation is
subject to a de novo review.' Hartford Cas. Ins. Co. v.
Merchants & Farmers Bank, 928 So. 2d 1006, 1009 (Ala.
2005)."
St. Paul Fire & Marine Ins. Co. v. Britt, 203 So. 3d 804, 809 (Ala. 2016).
Analysis
Coverage Under the Nationwide Policy
We first address the summary judgment as to the claims seeking
coverage under the Nationwide policy. The Nationwide policy at issue is
a standard-form "premier businessowners" liability policy that includes
coverage for bodily injury caused by an "occurrence." The basic insuring
agreement contained in the Nationwide policy provided, in pertinent
part:
"I. COVERAGES
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"A. COVERAGE A -- BODILY INJURY AND PROPERTY
DAMAGE LIABILITY
"1. INSURING AGREEMENT
"a. We will pay those sums up to the applicable Limit
of Insurance that the insured becomes legally
obligated to pay as damages because of 'bodily
injury' or 'property damage' to which this
insurance applies. We will have the right and duty
to defend the insured against any 'suit' seeking
those damages for which there is coverage under
this policy. HOWEVER, we will have no duty to
defend the insured against any 'suit' seeking
damages for 'bodily injury' or 'property damage' to
which this insurance does not apply.
"….
"b. This insurance applies to 'bodily injury' and
'property damage' only if:
"(1) The 'bodily injury' or 'property damage' is
caused by an 'occurrence' that takes place in
the 'coverage territory'; and
"(2) The 'bodily injury' or 'property damage'
occurs during the policy period …."
(Capitalization in original.) An "occurrence" is defined in the policy as
"an accident, including continuous or repeated exposure to substantially
the same general harmful conditions."
The trial court concluded that Browne's claims fell within the
Nationwide policy's basic insuring agreement. Nevertheless, it concluded
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that those claims were excluded from coverage by the professionalservices exclusion contained in the Nationwide policy. That exclusion
provides, in pertinent part:
"2. EXCLUSIONS
"This insurance, including any duty we have to defend
'suits', does not apply to:
"….
"v. Professional Services
" 'Bodily injury' or 'property damage' that arises
out of or is a result of the rendering of, or failure to
render, any professional service, treatment, advice
or instruction. This exclusion includes, but is not
limited to, any:
"....
"(9) Service, treatment, advice or instruction in
the practice of pharmacy.
"….
"This exclusion applies even if the claims allege
negligence or other wrongdoing in the supervision,
hiring, employment, training or monitoring of others by
an insured, if the 'occurrence' which caused the 'bodily
injury' or 'property damage' involved the rendering or
failure to render of any professional service."
(Capitalization in original.)
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On appeal, Browne and OMS challenge the trial court's conclusion
that Browne's claims against OMS fell within the professional-services
exclusion. In analyzing an insurance policy, we apply the following
principles:
" 'When analyzing an insurance policy, a
court gives words used in the policy their common,
everyday meaning and interprets them as a
reasonable person in the insured's position would
have understood them. Western World Ins. Co. v.
City of Tuscumbia, 612 So. 2d 1159 (Ala. 1992); St.
Paul Fire & Marine Ins. Co. v. Edge Mem'l Hosp.,
584 So. 2d 1316 (Ala. 1991). If, under this
standard, they are reasonably certain in their
meaning, they are not ambiguous as a matter of
law and the rule of construction in favor of the
insured does not apply. Bituminous Cas. Corp. v.
Harris, 372 So. 2d 342 (Ala. Civ. App. 1979). Only
in cases of genuine ambiguity or inconsistency is it
proper to resort to rules of construction. Canal Ins.
Co. v. Old Republic Ins. Co., 718 So. 2d 8 (Ala.
1998). A policy is not made ambiguous by the fact
that the parties interpret the policy differently or
disagree as to the meaning of a written provision
in a contract. Watkins v. United States Fid. &
Guar. Co., 656 So. 2d 337 (Ala. 1994). A court must
not rewrite a policy so as to include or exclude
coverage that was not intended. Upton v.
Mississippi Valley Title Ins. Co., 469 So. 2d 548
(Ala. 1985).'
"B.D.B. v. State Farm Mut. Auto. Ins. Co., 814 So. 2d 877, 879-80 (Ala. Civ. App. 2001). However, if a provision in an
insurance policy is found to be genuinely ambiguous, 'policies
of insurance should be construed liberally in respect to
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persons insured and strictly with respect to the insurer.'
Crossett v. St. Louis Fire & Marine Ins. Co., 289 Ala. 598, 603,
269 So. 2d 869, 873 (1972)."
State Farm Mut. Auto. Ins. Co. v. Brown, 26 So. 3d 1167, 1169-70 (Ala.
2009). Furthermore,
" '[e]xceptions to coverage must be interpreted as narrowly as
possible in order to provide maximum coverage for the
insured, and must be construed most strongly against the
company that drew the policy and issued it.' Alliance Ins. Co.
v. Reynolds, 494 So. 2d 609, 612 (Ala. 1986). Where there is
no ambiguity in the terms of an insurance contract, the
language must be enforced as written, and courts cannot
defeat express provisions in a policy, including exclusions
from coverage, by making a new contract for the parties;
however, ' "when ambiguity exists in the language of an
exclusion, the exclusion will be construed so as to limit the
exclusion to the narrowest application reasonable under the
wording." ' Carpet Installation & Supplies of Glenco v. Alfa
Mut. Ins. Co., 628 So. 2d 560, 562 (Ala. 1993) (quoting St. Paul
Mercury Ins. Co. v. Chilton-Shelby Mental Health Ctr., 595
So. 2d [1375,] 1377 [(Ala. 1992)]."
Porterfield v. Audubon Indem. Co., 856 So. 2d 789, 806 (Ala. 2002).
The Nationwide policy does not expressly define the term
"professional services." The fact that the policy does not define a term,
however, does not render it inherently ambiguous. See Safeway Ins. Co.
of Alabama, Inc. v. Herrera, 912 So. 2d 1140, 1143 (Ala. 2005). One
frequently cited decision has explained the term "professional services"
as used in an insurance policy as follows:
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"The act or service must be such as exacts the use or
application of special learning or attainments of some kind.
The term 'professional' in the context used in the policy
provision means something more than mere proficiency in the
performance of a task and implies intellectual skill as
contrasted with that used in an occupation for production or
sale of commodities. A 'professional' act or service is one
arising out of a vocation, calling, occupation, or employment
involving specialized knowledge, labor, or skill, and the labor
or skill involved is predominantly mental or intellectual,
rather than physical or manual."
Marx v. Hartford Accident & Indem. Co., 183 Neb. 12, 13-14, 157 N.W.2d
870, 871-72 (1968). Importantly in this case, the Nationwide policy
identifies the practice of pharmacy as a profession within the meaning of
the term "professional services." The policy expressly provides that the
term "professional services" includes "[s]ervice, treatment, advice or
instruction in the practice of pharmacy."4 Further, the word "service" is
generally understood as "the performance of some useful act or series of
acts for the benefit of another, usu[ally] for a fee," or as "an intangible
commodity in the form of human effort, such as labor, skill, or advice."
Black's Law Dictionary 1647 (12th ed. 2024).
4Alabama also recognizes the practice of pharmacy as a
"profession." See § 34-23-1(20), Ala. Code 1975.
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Furthermore, the compounding of medicine is acknowledged as
being a traditional component of the practice of pharmacy. See, e.g.,
Thompson v. Western States Med. Ctr., 535 U.S. 357, 360-61 (2002)
("Drug compounding is a process by which a pharmacist or doctor
combines, mixes, or alters ingredients to create a medication tailored to
the needs of an individual patent. … It is a traditional component of the
practice of pharmacy, … and is taught as part of the standard curriculum
at most pharmacy schools."). Indeed, compounding practices are
regulated as part of Alabama's statutory scheme regulating the
profession of pharmacy,5 and the compounding of medication in Alabama
5Alabama law defines the term "pharmacy" as a place where
"prescriptions, drugs, [and] medicines … are sold, offered for sale,
compounded, or dispensed," § 34-23-1(21), Ala. Code 1975 (emphasis
added), and it defines "compounding" as "[t]he preparation, mixing,
assembling, packaging, and labeling of a drug or device as the result of a
licensed practitioner's prescription drug order or initiative based on the
practitioner/patient/pharmacist relationship in the course of professional
practice." § 34-23-150(3), Ala. Code 1975. Further, under Alabama law,
a compounding pharmacist has the responsibility to, among other things:
"(1) Verify all prescriptions.
"(2) Approve or reject all components of the
compounded product, drug product containers, closures, and
labeling.
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may only be performed by, or under the supervision of, a licensed
pharmacist. See § 34-23-151, Ala. Code 1975.
In the Browne action, Browne specifically alleged that OMS and
Wright had breached the professional standard of care by improperly
compounding and labeling her prescription, which, she said, proximately
resulted in her injuries. Clearly, such claims relate directly to the
practice of the profession of pharmacy. Moreover, her claims specifically
arose out of the compounding of medication -- an act recognized as
involving professional skill and training in the practice of pharmacy and
required by Alabama law to be performed by, or under the supervision of,
"(3) Prepare and review all compounding records to
assure that no errors have occurred in the compounding
process."
§ 34-23-151(c), Ala. Code 1975. Alabama law also charges the Alabama
State Board of Pharmacy to establish written procedures for the
compounding of drug products. § 34-23-156, Ala. Code 1975.
"Components shall be accurately weighed, measured, or
subdivided, as appropriate. The operations shall be checked
and rechecked by the compounding pharmacist at each stage
of the process to ensure that each weight and measure is
correct as stated in the written compounding procedures."
Id. See also Ala. Admin. Code, (State Bd. of Pharmacy) r. 680-X-2-.14(1)
("The practice of pharmacy shall mean … the compounding, dispensing,
administering and labeling of drugs ….").
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a licensed pharmacist. Furthermore, it is undisputed that the act of
compounding the medication was performed in direct response to
Browne's request that OMS fill her prescription. Under these
circumstances, we recognize that the compounding of medication is a
"professional service" and that Browne's bodily injury claims "arise[] out
of or [are] a result of the rendering of … [s]ervice, treatment, advice or
instruction in the practice of pharmacy."6 See Cincinnati Ins. Co. v.
Quorum Mgmt. Corp., 186 F. Supp. 3d 1307 (M.D. Fla. 2016) (excluding
coverage under professional-services exclusion based on pharmacy's
error in compounding veterinary nutritional supplement that led to
death of 21 horses); and Philadelphia Indem. Ins. Co. v. Ronin Staffing
LLC, No. 3:20-CV-00374-FDW-DSC, Mar. 3, 2022 (W.D. N.C. 2022) (not
reported in Federal Supplement) (excluding coverage under professionalservices exclusion based on pharmacy technician's error in compounding
6Browne argues that her claims are based on a "keyboarding error"
in entering the compounding formula into the computer, which, she
posits, is not a "professional" act. We disagree. As set out above, and
consistent with the allegations of Browne's complaint, it is within a
pharmacist's professional responsibility to confirm that medications are
correctly compounded as prescribed.
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saline bag; the compounding required professional skill and training and
was intended for patient's treatment).
Browne, however, argues that, even if the professional-services
exclusion applies to her claims asserting professional negligence, it does
not bar coverage for her defective-product claims. Browne notes that
such claims are related to her purchase of a product and not the rendition
of a service and that the defective-product claims do not require proof of
professional negligence. She, therefore, argues that product-liability
claims never fall within the scope of a professional-services exclusion.
Browne cites several cases for the proposition that the sale of a product
does not constitute a "professional service" within the meaning of a
professional-services exclusion. See North Carolina Mut. Wholesale
Drug Co. v. Federal Ins. Co., 687 F. Supp. 3d 689 (M.D. N.C. 2023)
(holding that commercial distribution of opioid pharmaceutical
commodities by pharmaceutical wholesaler to pharmacies was not a
professional "service" and that the wholesaler's internal compliance
reviews were done to meet its own regulatory obligations and were not
provided to the customer in exchange for a fee); Hartford Cas. Ins. Co. v.
Dental Org. for Conscious Sedation, LLC, Civil Action No. 10-3483, Apr.
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1, 2011 (E.D. Pa. 2011) (not reported in Federal Supplement) (holding
that the marketing and sale of dentistry sedation products did not fall
within a professional-services exclusion); Nationwide Mut. Ins. Co. v.
Kavanaugh Supply, LLC, Civil Action No. 2:11-CV-232-KS-MTP, Feb. 26,
2013 (S.D. Miss. 2013) (not reported in Federal Supplement) (holding
that, because insured was seller/renter of medical equipment who did not
provide home-health services, coverage for claims against insured for
failure of ventilator were not barred under a professional-services
exclusion); Leverence v. United States Fid. & Guar., 158 Wis. 2d 64, 462
N.W.2d 218 (Ct. App. 1990) (holding that coverage for claims arising out
of the defective manufacture of a prefabricated home was not barred by
a professional-services exclusion).
Those cases cited by Browne are distinguishable. Those cases
involved the sale or distribution of existing commercial commodities. In
contrast, the act of compounding the medication for Browne required the
use of professional skill and training and was performed solely for the
purpose of filling Browne's immediate need for a prescription -- facts
underlying all of Browne's claims.
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Furthermore, the policy language does not except product-liability
claims from the scope of the professional-services exclusion. To the
contrary, the professional-services exclusion excludes coverage for all
" '[b]odily injury' or 'property damage' that arises out of or is a result of
the rendering of, or failure to render, any professional service."
(Emphasis added.) The "arises out of" language is broad, but
unambiguous, and it encompasses all claims for bodily injury arising
from the rendering of a professional service, regardless of the claimant's
theory of recovery. See, e.g., Taliaferro v. Progressive Specialty Ins. Co.,
821 So. 2d 976, 980 (Ala. 2001) (recognizing that the phrase "arising out
of," as used in an insurance policy, has been defined to mean
" ' "origination from," "having its origin in," "growing out," or "flowing
from" ' "), and State Farm Fire & Cas. Co. v. Erwin, 393 So. 2d 996, 998
(Ala. 1981) (recognizing that "[t]he phrase 'arising out of' has been
broadly construed" and is ordinarily understood to mean " ' "originating
from," "having its origin in," "growing out of" or "flowing from" ' " (citation
omitted)). Here, all of Browne's claims -- even her defective-product
claims -- have their origin in, grow out of, or flow from OMS's error in
compounding her prescription medication. Thus, they fall within the
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plain language of the professional-services exclusion. We, therefore,
affirm the summary judgment entered in favor of Nationwide.
Failure-to-Procure-Insurance Claims
Having determined that the Nationwide policy does not provide
coverage for Browne's claims, we next turn to OMS's claims against the
agency defendants alleging negligent and/or wanton failure to procure
insurance. With regard to those claims, we note the following additional
facts.
OMS had, for many years, been operated as a franchise of The
Medicine Shoppe. Wright testified that The Medicine Shoppe's insurance
department had recommended and approved the Zurich policy and had
represented to him that it provided specialized coverage for pharmacies.
Wright testified that, in the years after OMS had become an independent
pharmacy, he had become dissatisfied with the way Zurich had handled
claims made by OMS. In 2008, Wright asked Roger Downs, an insurance
agent with Roger Downs, Inc., and a regular customer of OMS, to replace
the Zurich policy with like coverage. It is undisputed that Wright at least
provided Downs with a two-page policy-declarations form for the Zurich
policy. The evidence is disputed as to whether Wright provided Downs
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with a copy of the Zurich policy, but there is no dispute that Wright would
have made that policy available for Downs to review had he sought it.
Ultimately, Roger Downs, Inc., procured the Nationwide policy for OMS
in 2008.
The Zurich and Nationwide policies differed in at least one critical
respect that was not evident from a mere review of the policies'
declarations pages. Although both polices were commercial generalliability policies containing a professional-services exclusion, the Zurich
policy's professional-services exclusion had expressly excepted and did
not apply to certain pharmacological services -- "[t]his exclusion does not
apply to … [p]harmacological services if … [y]ou do business as a retail
drug store and do not manufacture or compound in bulk pharmaceuticals
for sale by others." The Nationwide policy, on the other hand, expressly
excluded coverage for bodily injury and property damage arising out of
"[s]ervice, treatment, advice or instruction in the practice of pharmacy."
Although Wright received a copy of the Nationwide policy in 2008, and at
each subsequent renewal period, he admitted that he did not read the
policy exclusions until after Browne's 2013 injury. Wright did read
portions of the policy "on occasions," and he testified that he believed that
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the policy had provided coverage for products made by OMS, like
compounded medications. The Nationwide policy was renewed each year
between 2008 and the 2013 injury to Browne. Wright never requested
any change in coverage during that time.
" '[W]hen an insurance agent or broker, with a view to
compensation, undertakes to procure insurance for a client, and
unjustifiably or negligently fails to do so, he becomes liable for any
damage resulting therefrom.' " Highlands Underwriters Ins. Co. v.
Elegante Inns, Inc., 361 So. 2d 1060, 1065 (Ala. 1978). This Court has
recognized that a claim alleging the negligent failure of an insurance
agent to procure insurance " 'requires demonstration of the classic
elements of a negligence theory, i.e., "(1) duty, (2) breach of duty, (3)
proximate cause, and (4) injury." ' " Alfa Life Ins. Corp. v. Colza, 159 So.
3d 1240, 1248 (Ala. 2014) (quoting Kanellis v. Pacific Indem. Co., 917 So.
2d 149, 153 (Ala. Civ. App. 2005), quoting in turn Albert v. Hsu, 602 So.
2d 895, 897 (Ala. 2002)). Furthermore, as is true regarding any other
type of negligence claim, contributory negligence is a complete defense to
a negligent-failure-to-procure-insurance claim. Colza, 159 So. 3d at 1248.
"With regard to establishing contributory negligence as a
matter of law, this Court has stated:
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" 'The question of contributory negligence is
normally one for the jury. However, where the
facts are such that all reasonable persons must
reach the same conclusion, contributory
negligence may be found as a matter of law.
Brown [v. Piggly-Wiggly Stores, 454 So. 2d 1370,
1372 (Ala. 1984)]; see also Carroll v. Deaton, Inc.,
555 So. 2d 140, 141 (Ala. 1989).
" 'To establish contributory negligence as a
matter of law, a defendant seeking a [judgment as
a matter of law] must show that the plaintiff put
himself in danger's way and that the plaintiff had
a conscious appreciation of the danger at the
moment the incident occurred. See H.R.H. Metals,
Inc. v. Miller, 833 So. 2d 18 (Ala. 2002); see also
Hicks v. Commercial Union Ins. Co., 652 So. 2d
211, 219 (Ala. 1994). The proof required for
establishing contributory negligence as a matter of
law should be distinguished from an instruction
given to a jury when determining whether a
plaintiff has been guilty of contributory
negligence. A jury determining whether a plaintiff
has been guilty of contributory negligence must
decide only whether the plaintiff failed to exercise
reasonable care. We protect against the
inappropriate use of a summary judgment to
establish contributory negligence as a matter of
law by requiring the defendant on such a motion
to establish by undisputed evidence a plaintiff's
conscious appreciation of danger. See H.R.H.
Metals, supra.'
"Hannah v. Gregg, Bland & Berry, Inc., 840 So. 2d 839, 860-61 (Ala. 2002)."
Colza, 159 So. 2d at 1248-49.
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OMS argues that it was not contributorily negligent as a matter of
law because, it says, even if Wright had read the entire Nationwide
policy, it would not have been clear to him that the policy did not provide
coverage for product-liability claims. Indeed, Wright recalled that he had
seen language in the Nationwide policy relating to "products" and
thinking that such language potentially covered losses arising from
medications compounded by OMS. Presumably, Wright was referencing
policy language related to the "products-completed operations hazard."
Generally, provisions regarding the products-completed operations
hazard contemplate liability coverage for bodily injury or property
damage caused by an insured's products or completed work and occurring
away from the insured's premises.7 Although OMS concedes that liability
coverage for the products-completed operations hazard remained subject
to the general bodily injury and property-damage liability exclusions,
including the professional-services exclusion, it argues that Wright
should not have been expected to understand the import of such
language.
7The declarations page for the Nationwide policy provided a
separate aggregate policy limited regarding the products-completed
operations hazard.
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In addressing OMS's argument, we note that this case is similar to
Hickox v. Stover, 551 So. 2d 259 (Ala. 1989). In Hickox, an insurance
agent represented to an insured that he could replace the insured's
existing policy insuring oilfield equipment with identical coverage at a
lower premium. The replacement policy, however, had a different coinsurance requirement than the insured's original policy, and, when the
insured suffered a loss to the oilfield equipment, the replacement
insurance covered only one-third of the loss. The insured sued the agent
alleging negligent failure to procure insurance. The trial court entered a
summary judgment in favor of the agent on the negligent-procurement
claim, in part because it concluded that the insured had been
contributorily negligent. This Court reversed the summary judgment
because, even though the insured's manager had received the policy and
a letter from the agent referencing the co-insurance provision, the
insured's manager had testified that he had not understood them.
"[The insured] argues on appeal that the question of
whether [its manager] and, through [its manger], the
[insured] was contributorily negligent for failing to take some
action or to investigate further so as to learn that [its new]
policies differed from the [replaced] policy in an unfavorable
way is a question of fact that precludes summary judgment on
the contributory negligence issue. We have held that '[t]he
burden of proving contributory negligence and that it
27
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proximately caused the injury is on the defendant, and [that]
a determination of the existence of contributory negligence is
for the jury when there is a scintilla of evidence to the
contrary.' Hatton v. Chem-Haulers, Inc., 393 So. 2d 950, 954
(Ala. 1981) (citing Elba Wood Products, Inc. v. Brackin, 356
So. 2d 119 (Ala. 1978)). We hold that the defendants have
failed to carry their burden of proving that, as a matter of law,
[the insured's manager] and [the insured] were guilty of
contributory negligence. [The insured's manager] presented
testimony indicating that he did not understand the letter
from [the agent] or the policy endorsements. Moreover,
neither the April 4 letter nor the receipt of the policy, as
shown above, triggered a conclusion that the plaintiffs' claim
for negligence is barred as a matter of law."
551 So. 2d at 265.8
In Colza, supra, this Court sharply criticized the above holding in
Hickox, essentially finding it inconsistent with a plaintiff's " 'general duty
… to read the documents received in connection with a particular
transaction,' " which was recognized in Foremost Insurance Co. v.
Parham, 693 So. 2d 409 (Ala. 1997), and its progeny. 159 So. 3d at 1251
(citation omitted). The Court in Colza explained:
"[T]he Hickox Court effectively held that the defendants had
not established contributory negligence as a matter of law
because the insured had submitted evidence that its manager
did not understand a letter from the selling agent and the
terms of the actual insurance policy -- which explained the
extent of the insurance coverage actually procured by the
8Section 12-21-12, Ala. Code 1975, abolished the "scintilla rule"
referenced in Hickox in favor of the substantial-evidence rule.
28
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agent for the insured and revealed that the coverage was not
equivalent to the coverage the insured alleges he charged the
agent to procure.
"However, when Hickox was overruled by Foremost
Insurance Co.[ v. Parham], [693 So. 2d 409 (Ala. 1997),] this
Court held that, with regard to a fraud claim, a
" 'trial court can enter a judgment as a matter of
law in a fraud case where the undisputed evidence
indicates that the party or parties claiming fraud
in a particular transaction were fully capable of
reading and understanding their documents, but
nonetheless made a deliberate decision to ignore
written contract terms.'
"693 So. 2d at 421. The Foremost Court also recognized a
plaintiff's 'general duty … to read the documents received in
connection with a particular transaction,' along with a duty to
inquire and investigate. Id. In Ex parte Caver, 742 So. 2d
168, 172 (Ala. 1999), we subsequently summarized the effect
of Foremost by noting that 'Foremost ended the era of
"ostrichism" ' that had begun with Hickox. We have since
applied Foremost in numerous cases to justify a judgment as
a matter of law when plaintiffs have ignored clear written
terms in documents provided them in association with a
transaction. …
"As evidenced by … Foremost's … progeny, we have
essentially held that it is almost never reasonable for an
individual to ignore the contents of documents given him or
her in association with a transaction. Although the Foremost
line of cases deals primarily with fraud claims, there is no
reason this principle should not apply to other claims as well."
Id. at 1251-52 (footnote omitted). Thus, Colza pronounced the rule
authorizing "a judgment as a matter of law in favor of an agent on a
29
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negligent-procurement claim when documents available to the insured
clearly indicate that the insurance in fact procured for the insured is not
what the insured subsequently claims he or she requested the agent to
procure." Id. at 1255.
Having reaffirmed an insured's duty to read the documents, the
Court in Colza reversed a judgment entered on a jury verdict in favor of
the plaintiffs on a negligent-failure-to-procure-insurance claim when the
documents provided to the plaintiffs upon their application for life
insurance clearly apprised them that immediate coverage was not
guaranteed. The Court reasoned:
"The documents in this case clearly apprised the Colzas that
Dante was not guaranteed immediate coverage upon
submitting his application for life insurance to [the agent]. By
not reading the documents, they took a risk and put
themselves in danger's way. We do not think it unreasonable
to conclude as a matter of law that, in this day and age, any
adult of sound mind capable of executing a contract
necessarily has a conscious appreciation of the risk associated
with ignoring documents containing essential terms and
conditions related to the transaction that is the subject of the
contract. Thus, we … hold that, because the Colzas ' " 'put
[themselves] in danger's way' " and had a " 'conscious
appreciation of the danger' " of suffering a monetary loss,'
Kanellis[ v. Pacific Indem. Co.], 917 So. 2d [149,] 155[ (Ala.
Civ. App. 2005)], in the event Dante died before conditions for
immediate coverage were met, any negligent-procurement
claim is barred by the doctrine of contributory negligence."
30
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Id. at 1252-53 (footnote omitted).
The Court in Colza also adopted the analysis of the Court of Civil
Appeals in Kanellis, supra. In Kanellis, the plaintiffs obtained insurance
on a valuable sports car. When the car was damaged in an accident, the
insurer paid to have the car repaired, but the policy did not cover the loss
of value to the car resulting from its having been wrecked and repaired.
The plaintiffs sued their insurance agent alleging that it had negligently
failed to procure insurance that would have covered the car's diminution
in value. The Court of Civil Appeals affirmed a summary judgment
entered in favor of the insurance agent on the basis that the plaintiffs
had been contributorily negligent as a matter of law. The court
explained:
"In this case, the Kanellises were issued a policy of
insurance by [the insurer] that provided that [the insurer]'s
sole duty, in the event of a collision that caused the Kanellises'
Porsche automobile to be 'partially damaged,' was to 'pay the
amount required to repair or replace, whichever is less, the
damaged part(s) without deduction for depreciation, up to the
amount of coverage.' … There is no language in the … policy
that would tend to indicate that [the insurer] would pay the
Kanellises a separate benefit to compensate them for any
depreciation in the value of the Porsche that might result
from a collision, and a review of the policy would have
revealed that no such depreciation coverage was afforded
thereunder. Moreover, the Kanellises adduced no evidence
that would tend to indicate that they were anything less than
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'competent in intelligence and background to understand
insurance policy language.' Allstate Ins. Co.[ v. Ware], 824
So. 2d [739,] 745 [(Ala. 2002)].
"… [A]s a matter of law, the Kanellises ' "put
[themselves] in danger's way" ' and had a ' "conscious
appreciation of the danger" ' of suffering a monetary loss in
the event of a collision involving the Porsche automobile
resulting in a diminution of the value of the Porsche. See
Hannah v. Gregg, Bland & Berry, Inc., 840 So. 2d 839, 860
(Ala. 2002)."
917 So. 2d at 154-55.
More recently, in Crook v. Allstate Indemnity Co., 314 So. 3d 1188
(Ala. 2020), a property owner, through his insurance agent, obtained
property insurance on his lake front home and other structures.
Coverage A of the policy covered the home and attached structures, and
Coverage B covered structures separated by a "clear space" from the
home. Coverage B had significantly lower policy limits. After the
property owner's boat dock and deck structures were damaged in a storm,
the insurer determined that the policy limit for Coverage B applied. The
property owner sued, alleging, among other claims, a breach-of-contract
claim against the insurer and a negligent-failure-to-procure-insurance
claim against the agent. On appeal from a summary judgment entered
in favor of the insurer and the agent, this Court, as a matter of first
32
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impression, held that the boat dock and deck, which were connected to
the home by a wooden staircase, were not attached structures under the
plain language of the policy. This Court also affirmed the summary
judgment as to the negligent-procurement claim. Id. at 1202. Applying
the holdings of Colza and Kanellis, the Court concluded that the property
owner had been contributorily negligent as a matter of law because he
had not read the policy.
"In the present case, it is undisputed that [the property
owner] did not read the policy or the numerous policy-renewal
notices sent to him from 2006 to 2015 that explicitly set forth
the policy limits and explicitly requested that he read them.
Had he done so, [the property owner] would have discovered
that the policy limit for Coverage B was only $11,455 and
could have, had he desired, requested additional coverage.
[The property owner] failed to do so and thus, ' " 'put [himself]
in danger's way' " and had a " 'conscious appreciation of the
danger' " of suffering a monetary loss.' Kanellis, 917 So. 2d at
155. [The property owner] was contributorily negligent as a
matter of law."
Id. The Court rejected the property owner's argument that his failure to
read the policy was irrelevant because he could not have known whether
the boat dock and deck would be covered under Coverage A or Coverage
B; despite the issue of first impression as to coverage, the Court held that
the plain language of the policy provided that Coverage B applied to those
structures. Id.
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Applying the holdings of Colza, Kanellis, and Crook to the facts of
this case, we conclude that OMS was contributorily negligent as a matter
of law. It is undisputed that Wright did not read the coverage-exclusions
portion of the Nationwide policy. Had he done so, he and OMS would
have discovered that the policy did not provide coverage for bodily injury
or property damage that "arises out of or is a result of the rendering of,
or failure to render, any professional service," including "[s]ervice,
treatment advice or instruction in the practice of pharmacy." (Emphasis
added.) Indeed, the professional-services exclusion contains the only
direct reference to the practice of pharmacy in the Nationwide policy.9
Discovering that the Nationwide policy excluded coverage for bodily
injury or property damage arising from "[s]ervice, treatment, advice or
instruction in the practice of pharmacy" would have provided Wright and
OMS with a clear indication that the Nationwide policy did not provide
the same coverage as the Zurich policy, i.e., the coverage OMS had
engaged Roger Downs, Inc., to procure. By failing to fully read the policy,
Wright placed OMS " ' "in danger's way" ' and had a ' "conscious
9An identically worded professional-services exclusion applies to
Coverage B of the Nationwide policy relating to liability coverage for
personal and advertising injuries.
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appreciation of the danger" ' of suffering a monetary loss." Kanellis, 917
So. 2d at 155. Accordingly, we affirm the summary judgment entered in
favor of the agency defendants regarding OMS's negligent-failure-toprocure claim.
Finally, OMS challenges the summary judgment regarding its
wanton-failure-to-procure-insurance claim against the agency
defendants. Our Court has defined "wantonness" as "the conscious doing
of some act or the omission of some duty while knowing of the existing
conditions and being conscious that, from doing or omitting to do an act,
injury will likely or probably result." Ex parte Essary, 992 So. 2d 5, 9
(Ala. 2007). Here, OMS argues that the evidence indicating that Downs
agreed to replicate the coverage provided to OMS by the Zurich policy
without seeking to actually review the Zurich policy constituted sufficient
evidence of wanton conduct to warrant submission of that claim to a jury.
We note that the undisputed facts also indicate that Downs did review
the declarations page for the Zurich policy but that the difference in each
policy's professional-services exclusion was not evident from a mere
review of the declarations pages. Furthermore, Wright testified that he
did not believe that Downs had had any malicious intent in failing to
35
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procure the requested coverage. Based on our review of the record, we
agree with the trial court that OMS did not offer substantial evidence
demonstrating that Downs or the agency defendants acted or failed to act
while being conscious that injury to OMS would likely or probably result.
Accordingly, we affirm the summary judgment as to OMS's wantonprocurement claim.
Conclusion
Based on the foregoing, we affirm the trial court's summary
judgments in favor of Nationwide and the agency defendants.
AFFIRMED.
Wise, Bryan, Sellers, Mendheim, Cook, and McCool, JJ., concur.
Parker, J., concurs in part and concurs in the result, with opinion.
Shaw, J., recuses himself.
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PARKER, Justice (concurring in part and concurring in result).
I concur in the main opinion's result and in most of its reasoning. I
write separately to clarify why the circuit court correctly entered
summary judgment in favor of the agency defendants on OMS's claim
that those defendants "wantonly" failed to procure insurance.
The main opinion appears to correctly state the standard for
wantonness. It properly focuses on the state of the defendant's actual
knowledge or consciousness -- that is, whether the defendant was truly
aware that the plaintiff would likely be injured by the defendant's acting
or failing to act in a certain way. See Ex parte Dixon Mills Volunteer Fire
Dep't, 181 So. 3d 325, 333 (Ala. 2015); Bishop v. Poore, 475 So. 2d 486,
487 (Ala. 1985). But under this standard, it should not matter whether,
as the main opinion puts it, Downs "had any malicious intent in failing
to procure the requested coverage." __ So. 3d at ___. Indeed, we have
specifically held that wantonness does not require proof of intentional
conduct. See Mazda Motor Corp. v. Hurst, 261 So. 3d 167, 189 (Ala. 2017)
(quoting Wal-Mart Stores, Inc. v. Thompson, 726 So. 2d 651, 654 (Ala.
1998)).
37
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It is more relevant that a reasonable observer could not have
perceived any differences in the old (Zurich) policy and the new
(Nationwide) policy from a "mere review of the [two policies'] declarations
pages." ___ So. 3d at ___. But even that point does not account for the
possibility that Downs may have received OMS's old insurance policy for
review in determining proper insurance coverage. To be clear, I take no
position on whether OMS presented substantial evidence of this fact; its
pharmacist, Wright, testified only that he could not remember whether
he had given the old policy to Downs or had merely offered it to him.
Either way, though, the focus must remain on what Downs actually knew
about the likely consequences of his conduct. And on this front, OMS has
simply presented no substantial evidence.
38