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Negligent Broker Saved by Exclusion\\n\\nBoulevard RE Holdings, LLC, (Boulevard) sued Mixon Insurance Agency, \\nInc., (Mixon), alleging breach of contract and negligent procurement of \\ninsurance only to find that if the policy had been issued protecting \\nBoulevard there would be no coverage because of a clear and unambiguous \\nexclusion requiring operative fire sprinkler systems.\\n\\nIn Boulevard RE Holdings, LLC v. Mixon Insurance Agency, Inc., No. \\n22-1895, United States Court of Appeals, Eighth Circuit (July 20, 2023) \\nthe Eighth Circuit applied Missouri law to resolve the dispute.\\n\\nFACTUAL HISTORY\\n\\nBoulevard owned commercial property in which BMG Service Group, LLC, \\n(BMG) operated a bar (Property). Boulevard entered into a contract for \\ndeed with BMG for the sale of the Property for $1,275,000. Under the \\ncontract, Boulevard retained the Property\'s legal title until BMG paid \\nthe purchase price in full. The contract also obligated BMG to obtain, \\nat its own expense, fire insurance in the amount of the purchase price. \\nThe insurance was to be issued in Boulevard\'s name.\\n\\nBMG asked its broker, Mixon, to have Boulevard listed as a "named \\ninsured, loss payee, additional insured, and mortgagee" on the insurance\\n policy. Mixon procured the policy from Berkley Assurance Co. The policy\\n was issued and contained an endorsement called the Fire Protective \\nSafeguard Endorsement (Endorsement). The Endorsement required the \\ninsured to maintain a working automatic sprinkler system on the \\nProperty. The Endorsement also excluded all coverage for loss or damage \\nby fire if the sprinkler system was inoperative.\\n\\nThe policy, as issued, did not list Boulevard as a "named insured, loss \\npayee, additional insured, and mortgagee."\\n\\nApproximately one year later, the Property was destroyed by fire. At the\\n time of the fire, the sprinkler system was inoperative.\\n\\nBoulevard submitted a proof of loss to Berkley Assurance, claiming to \\nhave an interest in the property as a "lender." The district court held \\nthat Boulevard was not entitled to recover as a mortgagee because \\nsellers in a contract for deed are not mortgagees under Missouri law. \\nThe district court also concluded that even if Boulevard was an insured \\nor a mortgagee, noncompliance with the Endorsement barred recovery.\\n\\nBOULEVARD\'S COMPLAINT AGAINST MIXON\\n\\nThe operative complaint raises two causes of action against Mixon: \\nnegligent failure to procure insurance and breach of contract. Under \\nMissouri law, both causes of action require showing that the defendant \\ncaused the plaintiff to suffer damages.\\n\\nThe Eighth Circuit noted that on the record facts, even if Boulevard had\\n been named as a mortgagee, coverage would still be barred because of \\nthe Endorsement.\\n\\nThe Endorsement required the Property to have a working sprinkler \\nsystem. The Property was destroyed by a fire that occurred while the \\nProperty lacked a working sprinkler system. Indeed, had Mixon procured \\nthe Policy in precisely the manner requested by BMG, and had the Policy \\nissued with Boulevard listed as a mortgagee or other additional insured,\\n Boulevard would nonetheless be in the same position in which it found \\nitself.\\n\\nIf the policy had issued listing Boulevard as requested, the Endorsement\\n would still have barred coverage.\\n\\nZALMA OPINION\\n\\nIt is usual for insurers of restaurant and bar risks to require the \\npresence of fire sprinkler systems. The bar that burned had no operative\\n fire sprinkler systems and, as a result, had no available coverage for \\ndamage by fire. Boulevard, who sold the property under contract tried to\\n avoid the condition precedent and its own negligence by failing to \\nreview the policy or insist on the fire sprinklers, by suing the broker \\nfor not naming it as an insured.\\n\\n(c) 2023 Barry Zalma & ClaimSchool, Inc.