USCA11 Case: 21-13313 Date Filed: 05/25/2022 Page: 1 of 9
[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 21-13313
Non-Argument Calendar
____________________
ALABAMA SPACE SCIENCE EXHIBIT COMMISSION,
d.b.a. U.S. Space & Rocket Center,
Plaintiff-Counter Defendant-
Third-Party Defendant-Appellant,
versus
MARKEL AMERICAN INSURANCE COMPANY,
Defendant-Counter Claimant-
Third-Party Plaintiff-Appellee,
DEBORAH BARNHART, et al.,
Counter Defendants-Third-Party Defendants.
USCA11 Case: 21-13313 Date Filed: 05/25/2022 Page: 2 of 9
2 Opinion of the Court 21-13313
____________________
Appeal from the United States District Court
for the Northern District of Alabama
D.C. Docket No. 5:19-cv-00594-LCB
____________________
Before WILSON, GRANT, and ANDERSON, Circuit Judges.
PER CURIAM:
Alabama Space Science Exhibit Commission (ASSEC)
entered into an agreement to produce a children’s television show
with funding from NASA. When the funding never came through,
an arbitration panel found ASSEC liable for breaching the
agreement. ASSEC then sued Markel American Insurance
Company, which had agreed to provide coverage for liability
unless it resulted from a breach of contract. The question before
us, then, is whether Markel’s insurance policy covers ASSEC’s
losses.
It does not. The insurance policy at issue excludes liability
“under a written or express contract or agreement,” and ASSEC’s
liability flows solely from its breach of such an agreement. Because
ASSEC’s arguments to the contrary do not alter the plain meaning
of the insurance contract, we affirm.
I.
In 2016 ASSEC signed a Memorandum of Agreement with
Space Race, LLC to produce a children’s television show called
USCA11 Case: 21-13313 Date Filed: 05/25/2022 Page: 3 of 9
21-13313 Opinion of the Court 3
Space Racers. 1 The two companies promised to “work together to
promote” the series and to “collaborate on all press, public
relations, events and activities.” Most importantly, ASSEC
promised to fund the project—a commitment of over $4 million—
provided that it received a NASA grant for that purpose. Around
the same time, ASSEC entered a “Cooperative Agreement” with
NASA, which pledged $4.5 million to the project to be disbursed
over three years.
Space Racers enjoyed a successful launch. But by 2018,
ASSEC had stopped providing the promised funding. So Space
Race filed an arbitration demand against ASSEC pursuant to the
Memorandum’s terms, alleging “a straightforward breach of
contract—the refusal to fund by [ASSEC] in contravention of the
parties’ Agreement and in violation of the duty of good faith and
fair dealing inherent in every contract.” In Space Race’s view,
ASSEC had created a “false pretext to prevent NASA, a willing
funder, from funding,” and had therefore violated the terms of the
Memorandum.
ASSEC promptly notified its insurer, Markel, about the
arbitration complaint. ASSEC had taken out a “Directors and
Officers” insurance policy ensuring that Markel would pay “all Loss
which [ASSEC] becomes legally obligated to pay on account of any
Claim”—including an arbitration claim—“for a Wrongful
1 In the Memorandum of Agreement and elsewhere, ASSEC is sometimes
referred to as “U.S. Space & Rocket Center” or “USSRC.”
USCA11 Case: 21-13313 Date Filed: 05/25/2022 Page: 4 of 9
4 Opinion of the Court 21-13313
Act.” “Wrongful acts” generally included any “actual or alleged
error, misstatement, misleading statement, act, omission, neglect,
or breach of duty” committed by ASSEC. But there were
exceptions. As relevant here, the policy clearly stated that Markel
would not be liable to “pay any Loss on account of,” and would
“not be obligated to defend,” a claim for “any actual or alleged
liability of [ASSEC] under any written or express contract or
agreement, except to the extent that [ASSEC] would have been
liable in the absence of such contract or agreement.”
Markel refused to defend and indemnify ASSEC against
Space Race’s claims. In its view, the breach-of-contract exclusion
put the claims squarely outside ASSEC’s insurance policy. Because
“all liability alleged against” ASSEC was “for breach of the parties’
Agreement,” Markel explained, the policy provided no coverage.
Nine months later, ASSEC received more bad news. After a
four-day hearing, the arbitration panel concluded that ASSEC had
“materially breached” its obligations under the Memorandum and
the Cooperative Agreement with NASA. The panel ordered
ASSEC to pay the rest of the amount promised in the
Memorandum—over $1.3 million, plus interest.
ASSEC sued Markel, alleging breaches of the duties to
defend and indemnify and bad faith. The district court granted
summary judgment for Markel. Like the arbitration panel, it found
that Space Race’s arbitration claims alleged no “wrongful acts”
beyond a breach of the Memorandum, meaning that there was no
coverage under the policy. ASSEC now appeals.
USCA11 Case: 21-13313 Date Filed: 05/25/2022 Page: 5 of 9
21-13313 Opinion of the Court 5
II.
We review a district court’s grant of summary judgment de
novo, “viewing all facts and drawing all inferences in the light most
favorable to the nonmoving party.” Pelaez v. Gov’t Emps. Ins. Co.,
13 F.4th 1243, 1249 (11th Cir. 2021) (quotation omitted). Summary
judgment is proper when a “movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a).
III.
ASSEC argues that the insurance policy requires Markel to
defend and indemnify it against Space Race’s claims. We are not
persuaded. The plain language of the policy and the nature of the
arbitration claims make clear that the breach-of-contract exclusion
applies to those claims. Because Markel thus had no duty to defend
or indemnify ASSEC, we affirm the district court’s grant of
summary judgment.
The text of the insurance policy is not in dispute. As
explained above, the policy covered liability incurred by ASSEC for
claims brought against it for “wrongful acts,” subject to an
exception “[f]or any actual or alleged liability of [ASSEC] under any
written or express contract or agreement, except to the extent that
[ASSEC] would have been liable in the absence of such contract or
agreement.” The question, then, is whether Space Race brought
any claim based on a “wrongful act” that was not “under any
USCA11 Case: 21-13313 Date Filed: 05/25/2022 Page: 6 of 9
6 Opinion of the Court 21-13313
written or express contract or agreement.” Unless it did so, the
policy provides no coverage.
Space Race brought three claims against ASSEC in its
arbitration action. Each of these claims asserts liability based on
ASSEC’s failure to honor its Memorandum of Agreement with
Space Race; none of them alleges bad acts independent of that
agreement. The first cause of action is an explicit claim for breach
of contract. The second is a request, in the alternative, for “a
declaratory judgment that [ASSEC] owes Space Race $1.5 million
under the Agreement, plus interest.” (Emphasis added.) And the
third is a claim sounding in quantum meruit, or implied contract,
for the same alleged failure to adhere to the agreement. On its face,
then, the arbitration complaint alleges just what it purports to
allege: “a straightforward breach of contract.”
ASSEC’s counterarguments do not convince us otherwise.
ASSEC first attacks the scope of the breach-of-contract exclusion in
the insurance policy. Under Alabama law (which the parties agree
governs), insurance contracts are “construed liberally in favor of
the insured and strictly against the insurer,” in order to “provide
maximum coverage for the insured.” Allstate Ins. Co. v. Skelton,
675 So. 2d 377, 379 (Ala. 1996). ASSEC explains that in the
insurance policy at issue, other exclusions apply to claims “based
upon, arising out of or in any way involving” certain
circumstances. But the breach-of-contract exclusion does not use
such expansive language. According to ASSEC, this difference in
wording shows that “the Breach of Contract Exclusion was
USCA11 Case: 21-13313 Date Filed: 05/25/2022 Page: 7 of 9
21-13313 Opinion of the Court 7
intended to be narrow.” And because of that, it says, Space Race’s
claims should not fit within it.
The trouble with this argument is that even when narrowly
construed, the plain language of the breach-of-contract exclusion
still applies to Space Race’s claims. Space Race alleged a breach of
the Memorandum of Agreement (and, in the alternative, two other
claims based on the same behavior). The only basis for its
allegations that ASSEC owed it $1.5 million was a “written or
express contract or agreement,” as explicitly contemplated by the
exclusion.
ASSEC disagrees. In its view, the “plethora of allegations of
wrongdoing in the Statement of Claim suggest potential liability
for torts such as negligence, misrepresentation, breach of fiduciary
duty, and wantonness.” But a passing reference in a complaint,
especially when placed in the introduction rather than the “Facts”
section (as much of the language quoted by ASSEC was), does not
by itself generate an independent cause of action. The district court
correctly explained that while no precedent suggests that
“statements in the introduction of a complaint can put an insurer
on notice for a claim of a wrongful act triggering a duty to defend,
courts have found no claim to exist where a plaintiff state[d]
various acts and violations of law in the introduction of her
complaint but failed to flesh those assertions out in its body and
into a fully formed count.” See, e.g., Bracewell v. Patrick, No.
1:10–cv–992–MEF,
2011 WL 1431521, at *3 (M.D. Ala. Apr. 14,
2011).
USCA11 Case: 21-13313 Date Filed: 05/25/2022 Page: 8 of 9
8 Opinion of the Court 21-13313
ASSEC does not explain how the arbitration complaint
might encompass another cause of action (one for negligence or
misrepresentation, for example). Instead, it seems to suggest that
the court has the obligation to diligently identify “any potential for
coverage arising out of the allegations” and fill in any gaps left by
the complaint. But ASSEC offers no binding legal support for this
proposition, and we find none ourselves. While Alabama law
requires that insurance contracts be liberally construed, we do not
interpret that principle to require courts to rewrite complaints to
trigger coverage.
ASSEC next argues that Space Race not only alleged a
breach of the Memorandum, but also a breach of the implied duty
of good faith and fair dealing—a breach creating “liability that
could be imposed independent of the contract.” This argument
fails immediately because, as a leading treatise succinctly explains,
“[v]iolation of the duty of good faith and fair dealing constitutes a
breach of contract.” Williston on Contracts § 63:22 (4th ed.). And
Alabama law has long held that a “mere failure to perform” a
“contract-obligation is not a tort, and it furnishes no foundation for
an action on the case.” Bentley-Beale, Inc. v. Wesson Oil &
Snowdrift Sales Co.,
165 So. 830, 832 (Ala. 1936). While Space Race
alleged a breach of an implied contractual duty, that does not
constitute a “wrongful act” independent of a breach of contract.
Finally, ASSEC argues that Space Race’s quantum meruit
claim is based on a wrongful act rather than breach of contract. But
as the district court explained, when “an express contract exists, an
USCA11 Case: 21-13313 Date Filed: 05/25/2022 Page: 9 of 9
21-13313 Opinion of the Court 9
argument based on a quantum meruit recovery in regard to an
implied contract fails” as a matter of Alabama law. Mantiply v.
Mantiply,
951 So. 2d 638, 656 (Ala. 2006) (quotation
omitted). Furthermore, Space Race’s quantum meruit claim
alleged that ASSEC “knowingly induced Space Race to render
cobranding services for [ASSEC] while agreeing to reimburse Space
Race for its submitted invoices,” that ASSEC gave “promises and
assurances” to work with Space Race, and that ASSEC “willingly
accepted the benefits of Space Race’s services on the understanding
that Space Race would be reimbursed for its submitted invoices.”
The entire basis for the quantum meruit claim was ASSEC’s failure
to perform under the Memorandum of Agreement. That claim is
thus not based on an independent wrongful act.
* * *
We AFFIRM the district court’s grant of summary
judgment.
