232 So.3d 273
Fla.2017Background
- Altman Contractors was the general contractor for the Sapphire condominium and was insured under consecutive commercial general liability (CGL) policies issued by Crum & Forster (C&F) covering 2005–2012.
- Sapphire served Altman multiple chapter 558 presuit notices alleging ~800 construction defects; Altman notified C&F and demanded defense and indemnity.
- C&F declined to treat the chapter 558 notices as a “suit” triggering a duty to defend and retained counsel under reservation of rights; Altman later settled the claims without C&F’s participation.
- Altman sued in federal court seeking a declaration that C&F had a duty to defend; the district court granted summary judgment for C&F, finding the chapter 558 process was not a “civil proceeding.”
- The Eleventh Circuit certified the legal question to the Florida Supreme Court: whether the chapter 558 notice-and-repair presuit process is a “suit” under the CGL policy’s definition.
- The Florida Supreme Court held that chapter 558 is an “alternative dispute resolution proceeding” and thus falls within the policy’s definition of “suit,” but did not decide whether the insurer consented (a factual issue) so as to trigger a duty to defend.
Issues
| Issue | Plaintiff's Argument (Altman) | Defendant's Argument (C&F) | Held |
|---|---|---|---|
| Whether chapter 558 presuit process is a “suit” under the policy | Chapter 558 is an alternative dispute resolution/civil proceeding that seeks damages and therefore is a “suit” triggering duty to defend | Chapter 558 is not a civil proceeding or a covered ADR proceeding for covered damages, so it is not a “suit” | Yes — chapter 558 qualifies as an “alternative dispute resolution proceeding” included in the policy’s definition of “suit”; not a “civil proceeding,” but is covered as ADR |
| Whether participation in chapter 558 requires insurer consent to trigger duty to defend | Insurer should have duty to defend presuit participation | Policy requires insurer consent for ADR participation; no consent shown | The policy’s ADR clause conditions duty to defend on insurer consent; Court did not decide whether consent was given (fact issue) |
| Whether chapter 558’s presuit nature produces adjudicative or binding results making it a “civil proceeding” | Chapter 558’s mandatory-presuit mechanics and consequences make it part of a civil proceeding series | Chapter 558 is voluntary/nonadjudicative and produces no binding adjudication — not a civil proceeding | Court: chapter 558 is not a “civil proceeding” as commonly understood (no adjudicative forum or mandatory participation by insured) |
| Whether any ambiguity in policy language should be construed for coverage | Ambiguities should be resolved in favor of coverage, so chapter 558 should be treated as a “civil proceeding” or at least trigger duty to defend | Policy language is unambiguous in limiting covered “suits” to proceedings seeking covered damages and requiring consent for ADR | Court construed the policy terms according to plain meaning: ADR is included; ambiguity about consent/coverage left for factual resolution in lower courts |
Key Cases Cited
- Penzer v. Transp. Ins. Co., 29 So. 3d 1000 (Fla. 2010) (insurance policy interpretation is a question of law reviewed de novo)
- Fayad v. Clarendon Nat’l Ins. Co., 899 So. 2d 1082 (Fla. 2005) (interpret contracts by plain language)
- Raymond James Financial Servs., Inc. v. Phillips, 126 So. 3d 186 (Fla. 2013) (definition and scope of “proceeding” and “civil proceeding” considered)
- LaMarche v. Shelby Mut. Ins. Co., 390 So. 2d 325 (Fla. 1980) (CGL policies generally do not cover pure workmanship defects)
- State Farm Mut. Auto. Ins. Co. v. Menendez, 70 So. 3d 566 (Fla. 2011) (ambiguities in insurance policies construed in favor of coverage)
- Travelers Indem. Co. v. PCR, Inc., 889 So. 2d 779 (Fla. 2004) (duty-to-defend principles)
- State Farm Fire & Cas. Co. v. CTC Dev. Corp., 720 So. 2d 1072 (Fla. 1998) (coverage/duty-to-defend rules)
- Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29 (Fla. 2000) (contract language construed as bargained-for plain terms)
- Weedo v. Stone-E-Brick, Inc., 405 A.2d 788 (N.J. 1979) (classic statement distinguishing insured business risk from insurable liability)