A Defect in CGL Policy Language: Eleventh Circuit Certifies Whether a Florida Ch. 558 Notice and Repair Process Is a "Suit" that Triggers a Defense
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On August 2nd, the Eleventh Circuit Court of Appeals certified to the Florida Supreme Court the issue of whether the notice and repair process of Chapter 558, Florida Statutes constitutes a "suit" under widely used CGL policy language, thus triggering the insurer's duty to defend. Altman Contractors, Inc. v. Crum & Forster Speciality Ins. Co., No. 15-12816 (11th Cir. Aug. 2, 2016).

Chapter 558 sets forth a pre-suit process that allows a property owner to serve a contractor, subcontractor or design professional with a written notice of claim of an alleged construction defect. In response, the contractor may inspect or otherwise investigate the defect within a prescribed time, serve a copy of the notice on other parties the contractor believes responsible, or serve a written response offering to remedy the defect, offering to settle the claim, or disputing the claim. If the contractor disputes the claim or fails to respond within the prescribed time, the property owner may then proceed with a civil action or arbitration proceeding against the contractor.

In this suit, the insured contractor, Altman Contractors, Inc., ("Altman"), was served with Chapter 558 notices by a condominium and tendered the notice to its insurer for defense and indemnity. The insurer, Crum & Forster Specialty Ins. Co., ("C&F") denied a defense stating that the matter was "not in suit." Altman sued C&F for breach of the insurance contract and also sought a declaration that the insurer owed duties to defend and indemnify the Chapter 558 notices. The Southern District of Florida, applying Florida law, granted summary judgment for the insurer, finding the policy language unambiguous and determining that the Chapter 558 process did not constitute a "suit."

On appeal, the Eleventh Circuit found that the terms "suit" and "civil proceeding" as used in the policies may be ambiguous in light of cases outside of Florida addressing a CGL insurer's duty to defend an insured during a statutory notice and repair process.. However, because of important public policy considerations raised by both parties and amici curiae for each (including that suit should include Chapter 558 proceedings so policyholders would not ignore ch. 558 notices to trigger the duty to defend), the Eleventh Circuit certified the following question to the Florida Supreme Court: "Is the notice and repair process set forth in Chapter 558 of the Florida Statutes a 'suit' within the meaning of the CGL policies issued by C&F to ACI?"

An affirmative determination will greatly impact coverage available for Florida's construction and design professionals. We will monitor this case as we await input from Florida's high court.

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    Andrea helps companies navigate disasters and swiftly recover insurance funds to restore operations with minimal impact to the bottom line. She leads the Firm’s cyber insurance practice.

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