Bartram, LLC v. Landmark American Insurance
864 F. Supp. 2d 1229
N.D. Fla.2012Background
- Plaintiff owns the Bartram Apartments in Gainesville, Florida and sues insurers over coverage disputes for damage from faulty workmanship.
- Policies provide primary and three excess layers with standard builder’s all risk forms, each containing a faulty workmanship exclusion and an ensuing loss exception.
- The parties agree the faulty workmanship exclusion applies; dispute centers on whether the ensuing loss exception creates coverage for ensuing losses like water intrusion damages.
- Florida law governs interpretation of the insurance contracts; the burden to prove coverage via the ensuing loss exception lies with Plaintiff.
- Defendants rely on wear and tear, rain, water seepage, cracking, mold, rents/so-called soft costs, and post-loss requirements as exclusions or defenses to coverage.
- The court resolves the cross-motions for summary judgment, determining which exclusions apply to ensuing losses and which do not.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the ensuing loss exception apply to water intrusion losses after faulty workmanship? | Plaintiff argues water intrusion is an ensuing loss caused by the covered fault and thus is covered. | Defendants contend no ensuing loss exists because the loss is directly related to the excluded fault. | Yes; ensuing losses from water intrusion are covered when caused by a covered peril after the fault. |
| Do wear-and-tear, rain, water seepage, cracking, mold, rents, and soft-cost exclusions bar coverage for the ensuing losses? | Plaintiff asserts some exclusions do not apply to the specific ensuing losses, particularly expert-retention costs. | Defendants argue these exclusions bar recovery for most ensuing losses, including rents, loan expenses, and diminished value. | Wear-and-tear and rain exclusions do not conclusively bar; water seepage and cracking are unresolved; consequential losses (rents, loan expenses, diminished value) are barred; mold exclusion moot. |
| Are post-loss notice, examination under oath, and other post-loss requirements a basis to deny coverage? | Plaintiff disputes material facts on post-loss compliance that preclude summary judgment. | Defendants contend Plaintiff failed to satisfy policy post-loss conditions. | Questions of material fact preclude summary judgment on post-loss requirements. |
Key Cases Cited
- Swire Pacific Holdings, Inc. v. Zurich Ins. Co., 845 So.2d 161 (Fla. 2003) (ensuing loss exception covers losses after a covered cause; design defect loss)
- TMW Enterprises, Inc. v. Fed. Ins. Co., 619 F.3d 574 (6th Cir. 2010) (proximate cause and ensuing loss interpretations in exclusions)
- Chabad Lubavitch of Greater Ft. Lauderdale, Inc. v. Nat’l Ins. Co. of Hartford, 65 So.3d 67 (Fla.3d Dist.Ct.App. 2011) (efficient proximate cause and ensuing loss language guidance)
- Nova/Swire Pac. Holdings, Inc. v. Zurich Ins. Co. (Swire) — cited as Swire Pacific Holdings, Inc. v. Zurich Ins. Co., 845 So.2d 161 (Fla. 2003) (design defect exclusion with ensuing loss exception; no loss separate from defect required)
- National Union Fire Ins. Co. v. Texpak Group N.V., 906 So.2d 300 (Fla.3d Dist.Ct.App. 2005) (discussion of proximate cause in ensuing loss context)
- Kron v. Fla. Residential Prop. & Cas. Joint Underwriting Ass’n, 721 So.2d 825 (Fla.3d Dist.Ct.App. 1998) (ambiguity in cracking exclusion and external forces reasoning)
- Texpak Group N.V. v. National Union Fire Ins. Co., 906 So.2d 300 (Fla.3d Dist.Ct.App. 2005) (distinguishable facts on excluded peril vs. minimal concomitant failure)
- LaFarge Corp. v. Travelers Indem. Co., 118 F.3d 1511 (11th Cir. 1997) (choice of law and interpretation in insurance contracts in diversity actions)