832 F.3d 1318
11th Cir.2016Background
- In 2003 Florida enacted Chapter 558, a pre-suit notice-and-repair scheme for construction defect claims that requires written notice, inspections, document exchange, and a response offering repair, settlement, or dispute; failure to comply limits later litigation to noticed defects.
- Altman Contractors, Inc. (ACI) was served Chapter 558 notices by a condominium alleging property damage; ACI had consecutive CGL policies (2005–2012) from Crum & Forster (C&F) containing a duty-to-defend clause that applies to a “suit,” defined to include a “civil proceeding” and certain ADR proceedings to which the insured submits with the insurer’s consent.
- ACI demanded defense and indemnity; C&F declined, saying Chapter 558 notices are not a “suit” under the policy, but agreed to participate discretely and retained counsel without consulting ACI; ACI sued for declaratory relief and breach of contract.
- The district court granted summary judgment to C&F, holding Chapter 558 is not a “suit” or “civil proceeding” as used in the policy; it relied on Black’s definition requiring an adjudicatory forum and decision-maker.
- On appeal the Eleventh Circuit found reasonable, competing interpretations of the policy term “suit” and whether Chapter 558 falls within it, and—given the absence of Florida decisional guidance and the significant state policy implications—certified the dispositive legal question to the Florida Supreme Court rather than resolving the issue on the merits.
Issues
| Issue | Plaintiff's Argument (ACI) | Defendant's Argument (C&F) | Held |
|---|---|---|---|
| Whether Chapter 558 notice-and-repair process is a “suit” under the CGL policies | Chapter 558 is a civil proceeding or at least an ADR proceeding; it is part of the larger enforcement process and thus fits the policy’s definition of “suit” | Chapter 558 provides no adjudicatory forum or mechanism to determine legal liability to pay damages and therefore is not a “suit” | Court declined to decide; certified the question to the Florida Supreme Court because reasonable interpretations exist and Florida courts haven’t ruled |
| Whether §558.004(13) prohibits treating a Chapter 558 notice as an insurance claim triggering duty to defend | (Implicit) Statute does not bar defense obligation; the statute is silent on insurer duty to defend | Relies on statutory language (pre-2015) stating providing notice to insurer shall not constitute a claim for insurance purposes, arguing that Chapter 558 cannot create a duty to defend | Court rejected C&F’s statutory-bar reading as controlling; concluded statute does not expressly preclude defense and focused on policy language instead; certified question remains about policy meaning |
| Whether Chapter 558 qualifies as an “alternative dispute resolution proceeding” in the policy’s defined list | Legislature called Chapter 558 an “alternative dispute resolution mechanism,” so it fits the policy’s ADR clause, which would make C&F’s consent relevant | Even if Chapter 558 is ADR-like, ACI did not submit to it with C&F’s consent, so the policy’s ADR extension is inapplicable | Court found reasonable dispute on this point and left it for Florida Supreme Court to resolve via certified question |
| Whether C&F’s participation equates to consent to ACI’s submission to Chapter 558 (impacting ADR clause) | ACI argued insurer’s actions in participating created an issue of fact about consent | C&F maintained it never consented to treat Chapter 558 as a covered “suit” and only participated discretely without conceding duty | Court noted factual/contention exists but did not resolve it; certified legal question to Florida Supreme Court |
Key Cases Cited
- Ave. CLO Fund, Ltd. v. Bank of Am., N.A., 723 F.3d 1287 (11th Cir.) (summary judgment standard and de novo review of legal questions)
- Hegel v. First Liberty Ins. Corp., 778 F.3d 1214 (11th Cir.) (contract interpretation principles under Florida law)
- State Farm Fire & Cas. Co. v. Steinberg, 393 F.3d 1226 (11th Cir.) (start with plain language of the policy)
- Penzer v. Transportation Ins. Co., 545 F.3d 1303 (11th Cir.) (policy terms given plain and ordinary meaning)
- Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29 (Fla.) (ambiguities construed against drafter)
- Raymond James Fin. Servs., Inc. v. Phillips, 126 So. 3d 186 (Fla.) (interpretation of “proceeding” in statutory context includes arbitration)
- Clarendon Am. Ins. Co. v. Starnet Ins. Co., 113 Cal. Rptr. 3d 585 (Cal. Ct. App.) (prelitigation construction-defect process treated as part of litigation for coverage)
- Melssen v. Auto-Owners Ins. Co., 285 P.3d 328 (Colo. App.) (state defect-action process held to be ADR and thus a “suit” under CGL policy)