124 F. Supp. 3d 1272
S.D. Fla.2015Background
- ACI was the general contractor for the Sapphire Condominium project in Broward County, Florida, with Crum & Forster as the applicable insurer.
- The Condominium served presuit Chapter 558 notices of claim (April 10, 2012; May 8, 2012; November 15, 2012; May 28, 2013) asserting construction defects.
- Crum & Forster initially refused to defend, contending no suit existed; later participated in the response to the 558 notices but did not fully defend or reimburse costs.
- ACI filed a two-count complaint seeking a defense/indemnity duty and breach of contract, including fees incurred in responding to the 558 notices.
- The parties cross-moved for summary judgment on whether Crum & Forster’s duty to defend was triggered by the 558 notices and related issues about counsel appointment; the court held a decision was appropriate on these questions as a matter of law.
- The court applied Florida law, concluded Chapter 558 is not a civil proceeding or a suit under the policy, and granted summary judgment for Crum & Forster on the duty to defend/indemnify.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 558.004(13) preclude coverage for 558 notices? | ACI argues statute does not bar coverage; notices may trigger duties under the policy. | Crum & Forster argues § 558.004(13) precludes treating notices as a claim for insurance purposes. | Not barred; statute does not preclude coverage. |
| Is a Chapter 558 notice a 'suit' under the Crum & Forster policy? | 558 notice should be considered a claim triggering defense/indemnity. | 558 notices are not 'suits' under the policy terms. | 558 notices are not 'suits' under the policy. |
| Is the Chapter 558 mechanism a 'civil proceeding' or 'proceeding' under the policy? | Meets Black’s definitions of proceeding and is an ADR mechanism. | Not a civil proceeding or ADR proceeding as defined by the policy. | Not a civil proceeding or ADR proceeding; not a 'proceeding' under the policy. |
| Does the Florida amendment CS/HB 87 affect the interpretation of 558 notices regarding insurance coverage? | Amendment clarifies that notice may constitute a claim where policy permits. | Amendment does not render 558 notices equivalent to claims absent policy terms. | Amendment confirms limitations; does not create coverage absent policy terms. |
| What is the net result on Crum & Forster's duty to defend/indemnify given the above? | Crum & Forster had a duty to defend/indemnify ACI for 558-related claims. | No duty to defend/indemnify because 558 process is not a suit or proceeding. | Crum & Forster had no duty to defend or indemnify because Chapter 558 is not a 'suit' or 'civil proceeding' under the policy. |
Key Cases Cited
- Raymond James Financial Services, Inc. v. Phillips, 126 So.3d 186 (Fla.2013) (defines 'proceeding' for statutory purposes; uses Black’s dictionary)
- Auto-Owners Ins. Co. v. Anderson, 756 So.2d 29 (Fla.2000) (construction of ambiguous policy provisions; favors insured when ambiguous)
- Trailer Bridge, Inc. v. Illinois Nat’l Ins. Co., 657 F.3d 1135 (11th Cir.2011) (ambiguous policy provisions interpreted in insured's favor; ADR context)
- Hebden v. Roy A. Kunnemann Const., Inc., 3 So.3d 417 (Fla.App.4 Dist.2009) (statutory framework; Chapter 558 is a mechanism to encourage settlement)