What's Professional, Doc?

Setting the stage: Two Georgia employees allegedly self-deal corporate funds, misappropriate trade secrets and steal proprietary software to form a rival insurance brokerage agency. Their former employer sues them. The employees and their new agency have a professional liability policy that covers "damages because of an act, error or omission arising from professional services rendered or should have been rendered."

The question that follows: What types of actions by an insured constitute "professional services" under Georgia law?

The U.S. Court of Appeals for the Eleventh Circuit's recent decision in Joseph Matthew Queen, Gabriel Mayer, Grand Hook Agency LLC v. Berkley Assurance Company, No. 26-10878, 2026 WL 2137843 (11th Cir. July 24, 2026), addressed that issue in part.

Case Background

Sherbrooke Corporate Ltd. (Sherbrooke) sued two former employees in the U.S. District Court for the Eastern District of North Carolina, alleging, among other claims, that the former employees misappropriated trade secrets and stole proprietary software to establish and operate their own competing insurance brokerage firm, Grand Hook Agency (Grand Hook).

Grand Hook was insured by Berkley Assurance Company (Berkley) against claims arising from "professional services that were rendered or that should have been rendered." The policy defined professional services as "those services performed by the insured for others in the insured's capacity as a duly licensed agent, broker or insurance consultant, employee benefits counselor or notary public and as described in the Declarations," as well as those services provided "[s]olely as a managing general agency and insurance agent/broker."

Berkley denied coverage. The insureds sued Berkley over this denial because, in their view, they had rendered "professional services" for Grand Hook by providing insurance brokerage services to clients, even though Sherbrooke alleged they did so using its confidential information and trade secrets.

What Happened

The U.S. District Court for the Northern District of Georgia dismissed the case for failure to state a claim because the conduct leading to the creation of the competing business was not an aspect of "professional services" that an insurance agent provides under Georgia law, even if the business was created to provide the professional services of an insurance agent. The court noted that Sherbrooke did not bring any claims arising from the rendering of professional services. Instead, Sherbrooke sued the employees for allegedly breaching their fiduciary and contractual obligations owed to their former employer, as well as for misappropriation. Thus, the former employees' establishment of a competing business was not considered part of an insurance agent's professional services covered under the policy.

The Appeal

On appeal, the insureds argued that the district court erred when it concluded that Berkley did not have a duty to defend because Sherbrooke's allegations were arguably covered under their insurance policy. The group maintained that the court considered only the formation of Grand Hook, not its operation as a competing insurance brokerage, in deciding whether the conduct fell within the policy's definition of professional services.

The Eleventh Circuit, per curiam, disagreed with the appellants. It cited Garland, Samuel & Loeb, P.C. v. American Safety Casualty Insurance Company, 651 S.E.2d 177 (Ga. Ct. App. 2007), for the proposition that, in determining what types of actions by insureds constitute professional services, courts look to the nature of the act the insured performed rather than their title or status. The court wrote that the conduct giving rise to the allegations of liability must itself be "the use or application of special leaning or attainments of some kind."

The Eleventh Circuit held that the district court had correctly found that Sherbrooke's underlying action alleged that the former employees used Sherbrooke's resources to establish and operate a separate corporate entity to compete with Sherbrooke. The alleged conduct did not constitute professional services. Notably, it also mentioned the former employees had conceded on appeal that the policy did not cover "competition." Thus, the ruling affirmed the district court's dismissal of the suit.

The Significance

Grand Hook Agency shows that professional liability insurance policies are not all-encompassing. When a lawsuit against an insured does not allege behavior that constitutes a professional service, courts will likely find there is no duty to defend the insured.

Beyond the insurance coverage question, Grand Hook Agency is a useful reminder of how trade secret disputes typically arise and unfold. The underlying Sherbrooke litigation asserted 14 separate causes of action against Queen and Mayer, including a stand-alone claim for theft of trade secrets, alongside claims for breach of fiduciary duty, conversion, breach of the duty of loyalty and breach of employment contracts arising from the same course of conduct: the alleged use of Sherbrooke's confidential and proprietary software technology to launch a competing insurance brokerage.

This pattern is common. Trade secret misappropriation claims against departing employees rarely travel alone. As the Eleventh Circuit's decision illustrates, that pleading choice can have significant downstream consequences for whether a professional liability or other insurance policy will respond to the claim. Such policies may not cover alleged trade secret theft or unfair competition.

The case also highlights a related drafting issue that frequently arises when trade secret claims and contractual relationships intersect: whether a forum selection or venue clause will actually capture a trade secret misappropriation claim, which typically sounds in tort rather than contract. The Sherbrooke litigation proceeded in the Eastern District of North Carolina, while the separate coverage dispute proceeded in the Northern District of Georgia, underscoring how trade secret-related disputes can end up litigated across multiple forums.

As Holland & Knight's Trade Secrets Blog has cautioned, a forum selection clause that references only "this Agreement" may not be broad enough to direct a trade secret misappropriation claim to the contractually selected forum. In Zemcar, Inc. v. Uber Technologies, Inc., No. 2484CV01525-BLS2 (Suffolk Sup. Ct. Mass. Jan. 29, 2025), a Massachusetts trial court declined to send a trade secret misappropriation claim to Brazil under a clause providing for exclusive jurisdiction there, reasoning that the exclusive jurisdiction language was tied only to disputes over the agreement itself and did not extend to tort claims that did not have their "inception" in the contract. Companies seeking to centralize trade secret disputes in a single forum should consider using broader language – such as claims "relating to" or "arising out of" the relevant agreement or relationship – and should expressly identify the types of claims (contract, tort, statutory, etc.) intended to be covered.

Taken together, these developments underscore that trade secret disputes touch numerous overlapping bodies of law, including professional liability and insurance coverage, forum selection and choice of law, and the enforceability of restrictive covenants. Companies facing the departure of key employees to form competing ventures should evaluate not only their non-compete and confidentiality agreements but also whether their insurance policies, forum selection clauses and trade secret identification practices are aligned to protect their interests if litigation follows.