Hugh A. Carithers v. Mid-Continent Casualty Company
2015 U.S. App. LEXIS 5540
11th Cir.2015Background
- Homeowners Hugh and Katherine Carithers sued their builder Cronk Duch for construction defects; Cronk Duch assigned its insurance rights to the Carithers after a consent judgment (~$90,000).
- Mid-Continent Casualty issued consecutive CGL policies to Cronk Duch covering 2005–2008; dispute centers on whether covered "property damage" occurred during a policy period.
- Underlying state complaint alleged latent defects not discoverable until 2010; Mid-Continent refused to defend Cronk Duch and was sued by the Carithers for indemnity/coverage.
- District court found the damaging events occurred in 2005 (so the 2005–2006 policy applies), held Mid-Continent had a duty to defend, and awarded damages for appliance, brick, tile/mud base, and garage damage (including balcony replacement as part of garage repair).
- Mid-Continent sought to amend to assert a fungus/mold exclusion after the Carithers’ expert testified; the district court denied amendment for unreasonable delay. On appeal, the Eleventh Circuit affirmed duty to defend and denial of the amendment, reversed awards for brick, tile, and mud base, and affirmed the balcony repair award as part of repair costs for covered damage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend (trigger for "occurrence") | Injury-in-fact: property damage occurs when the damage actually happened. | Manifestation: damage occurs when discovered or reasonably discoverable; thus no coverage because discovery post-dates policies. | Duty to defend exists; insurer must defend where coverage is not clearly excluded, and uncertainty resolved for insured. Court applied injury-in-fact for this case. |
| Which trigger governs coverage | Injury-in-fact trigger applies (damage date controls). | Manifestation trigger should apply (discovery/discoverability). | Adopted injury-in-fact for this case (property damage occurs when it happens); limited to facts here where district court found 2005 damage. |
| Late assertion of fungus/mold exclusion | Plaintiffs: amendment should be denied due to insurer's undue delay and prior notice of wood rot/fungal causation. | Mid-Continent: exclusion is an express policy defense and statute cited by district court may not apply. | Denial affirmed: district court did not abuse discretion in refusing amendment because insurer unreasonably delayed in asserting the exclusion. |
| Whether awards for brick, tile, mud base, balcony are "property damage" | Brick/tile/mud base: these were damaged by subcontractor work and thus constitute covered property damage; balcony repair is recoverable if necessary to repair covered garage damage. | Brick/tile/mud base: if they were part of a single subcontractor’s defective work, then replacement is non-covered defective work; balcony: cannot recover for defective work even if needed to repair covered damage. | Reversed awards for brick, tile, mud base due to plaintiffs’ failure to prove different subcontractors performed installation vs. finishing (insufficient proof to show damage distinct from defective work). Affirmed recovery for balcony repair as part of costs to repair covered garage damage. |
Key Cases Cited
- Trizec Properties, Inc. v. Biltmore Constr. Co., Inc., 767 F.2d 810 (11th Cir. 1985) (policy language supports injury-in-fact trigger for "occurrence")
- United States Fire Ins. Co. v. J.S.U.B., Inc., 979 So.2d 871 (Fla. 2007) (distinguishes defective work removal costs from covered property damage caused by subcontractors' defective work)
- Auto-Owners Ins. Co. v. Pozzi Window Co., 984 So.2d 1241 (Fla. 2008) (damage to separately purchased tangible components installed by subcontractor can be "property damage")
- Amerisure Mut. Ins. Co. v. Auchter Co., 673 F.3d 1294 (11th Cir. 2012) (applies J.S.U.B./Pozzi; holds no coverage where a single subcontractor’s defective work is the entire damaged component)