MAB/eac
IN THE SUPREME COURT OF FLORIDA
UNITED STATES FIRE
INSURANCE COMPANY, a
corporation,
Petitioner,
Case No.: SC05-1295
vs. 2d DCA Case No.: 2D-03-0134
Lee Co. Case No.: 01-5533CA
J.S.U.B., INC. as partner of FIRST
HOME BUILDERS OF FLORIDA, a
joint venture and LOGUE ENTERPRISES,
INC., as partner of FIRST HOME BUILDERS
OF FLORIDA, a joint venture,
Respondents.
_____________________________________//
________________________________________________________________
RESPONDENTS’, J.S.U.B., INC. as partner of FIRST HOME BUILDERS
OF FLORIDA, a joint venture and LOGUE ENTERPRISES, INC., as
partner of FIRST HOME BUILDERS OF FLORIDA, a joint venture,
AMENDED ANSWER BRIEF ON THE MERITS
________________________________________________________________
Mark A. Boyle, Sr., Esquire
Michael G. Fink, Esquire
Geoffrey H. Gentile, Sr., Esquire
FINK & BOYLE, P.A.
2050 McGregor Boulevard
Fort Myers, Florida 33901
Phone: (239) 337-1303
Facsimile: (239) 337-7674
ii
TABLE OF CONTENTS
TABLE OF CONTENTS ………………………………………………………….ii
CITATION OF AUTHORITIES ………………………………………………….iv
PREFACE.......................................................................................................xiii
STATEMENT OF THE CASE AND FACTS......................................................1
SUMMARY OF ARGUMENT ...........................................................................2
STANDARD OF REVIEW.................................................................................5
ARGUMENT .....................................................................................................6
I. Many of INSURER’S issues were not preserved for review. .......................6
II. The District Court Opinion correctly concluded coverage exists for
the subject loss, applying this Court’s precedents and rules of insurance
policy construction....................................................................................6
A. Interpretation of insurance policies. ………………………………….6
B. LaMarche’s adoption of the reasoning of Weedo establishes
that unintended construction defects constitute an “occurrence”
under the CGL. ……………………………………………………….7
C. The undisputed facts of this case satisfy the “occurrence,” “property
damage,” and “legally obligated” requirements of the CGL
insuring agreement. …………………………………………………13
1. The insuring agreement. ……………………………………..13
2. This Court broadly interprets the terms “occurrence” and
“accident” in CGL policies. ………………………………….15
3. The losses in the instant case constitute “property damage” as
that term is defined under the policy. ………………………..21
iii
4. CGLs cover contractual liability where the insured is legally
obligated to pay for unintended and unexpected physical
damage. ………………………………………………………25
D. Because of the existence of an “occurrence” and “property damage,”
coverage is available to BUILDER pursuant to an exception to
Exclusion l. ………………………………………………………….30
1. The “damage to your work” exclusion. ………..…………….30
2. The history and intent of the history and intent of the
"damage to your work" exclusion make clear that coverage
is available to BUILDER under the 1986 CGL form. ……….30
3. Recognizing the subcontractor exception to exclusion l. creates
a harmonious and sensible coverage scheme. ….……………36
E. The existence of divergent case law across the country establishes
ambiguity in the CGL insuring agreement. ………………………...38
F. BUILDER’S proposed construction of the CGL does not implicate
any public policy concerns. …………………………………………45
G. The Economic Loss Doctrine has absolutely no applicability to the
interpretation of the insurance policies involved in this case. …...…49
CONCLUSION …………………………………………………………………..50
CERTIFICATE OF SERVICE …………………………………………………...xii
CERTIFICATE OF COMPLIANCE …………………………………………....xiii
iv
CITATION OF AUTHORITIES
Cases
Action Ads, Inc. v. Great Am. Ins. Co., 685 P.2d 42 (Wyo. 1984).......................41
Adair Group v. St. Paul Fire & Marine Ins. Co., 2005 U.S. Dist. LEXIS
32102 (D. Colo. 2005) ....................................................................................21
AE-Newark Assoc., LP v. CNA Ins. Cos., 2001 Del. Super. LEXIS 370
(Del. Super. Ct. October 2, 2001) ....................................................................39
Aetna Cas. & Sur. Co. of Am. v. Deluxe Sys., 711 So. 2d 1293 (Fla.
4
th
DCA 1998).......................................................................................9, 12, 35
American Family Mut. Ins. Co. v. American Girl, Inc., 673 N.W.2d 65
(Wis. 2004) ....................................................................................30-31, 39, 50
Amerisure Mut. Ins. Co. v. Paric Corp., 2005 U.S. Dist. LEXIS 30383
(D. Mo. 2005).................................................................................................39
Atlantic C. L. R. Co. v. Beazley, 45 So. 761 (Fla. 1907).....................................45
Assurance Co. of Am. v. Dusel Builders, 78 F. Supp. 2d 607 (W.D. Ky. 1999) ...40
Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29 (Fla. 2000)..............................7
Auto-Owners Ins. v. Home Pride Cos., Inc., 684 N.W.2d 571 (Neb. 2004)..........39
Auto-Owners v. Marvin Dev. Corp., 805 So. 2d 888 (Fla. 2
nd
DCA 2001)...........41
Auto Owners Ins. Co. v. Travelers Cas. & Sur. Co., 227 F. Supp. 2d 1248
(M.D. Fla. 2002)...............................................................................................9
Broadmoor Anderson v. Nat’l. Union Fire Ins. Co., 912 So. 2d 400 (La.
App. 2 Cir. Sept. 28, 2005)..............................................................................39
Bundy Tubing Co. v. Royal Indem. Co., 298 F.2d 151 (6
th
Cir. Mich. 1962) .......40
v
Casa Clara Condominium Ass'n, v. Charley Toppino & Sons, Inc., 620 So. 2d
1244 (Fla. 1993) .............................................................................................49
Centex Homes Corp. v. Prestressed Systems, Inc., 444 So. 2d 66 (Fla.
3
rd
DCA 1984)..................................................................................................9
CGU/Hawkeye Sec. Ins. v. Oasis Las Vegas Motor Coach Park, 65 Fed. Appx.
182 (9
th
Cir. 2003)...........................................................................................39
C. O. Falter, Inc. v. Crum & Forster Ins. Cos., 361 N.Y.S.2d 968 (N.Y.
Sup. Ct. 1974) ..................................................................................................40
Commerce Ins. Co. v. Betty Caplette Builders, 647 N.E.2d 1211 (Mass. 1995) ...41
Comptech Int'l, Inc. v. Milam Commerce Park, Ltd., 753 So. 2d 1219
(Fla. 1999)......................................................................................................50
Custom Planning & Dev. Inc. v. Am. Nat. Fire Ins. Co., 606 S.E.2d 39
(Ga. Ct. App. 2004) ........................................................................................41
Diamaco, Inc. v. Aetna Cas. & Sur., 983 P.2d 707 (Wash. Ct. App. 1999) ……...22
Dimmitt Chevrolet v. Southeastern Fidelity Ins. Corp., 636 So. 2d 700
(Fla. 1994) …………………………………………………………………...….17
Dober v. Worrell, 401 So. 2d 1322 (Fla. 1981) ………………………………...…6
Erie Ins. Exch. V. Colony Dev. Corp., 2003 Ohio App. LEXIS 6518
(Ohio Ct. App. 2003) …………………………………………………………...40
Essex Builders v. Amerisure Ins. Co., 429 F. Supp. 2d 1274 (M.D.
Fla. 2005) …………………………………………………………………...27, 35
Excelsior Ins. Co. v. Pomona Park Bar & Package Store, 369 So. 2d 938
(Fla. 1979) ………………………………………………………………………..7
Federal Ins. Co. v. Southwest Fla. Retirement Ctr., 707 So. 2d 1119
(Fla. 1998) ……………………………………………………………………....16
vi
Fejes v. Alaska Ins. Co., Inc., 984 P.2d 519 (Alaska 1999) ……………….……..39
Fireguard Sprinkler Systems, Inc. v. Scottsdale Ins. Co., 864 F.2d 648 (9
th
Cir. Or. 1998) ……………………………………………………………………39
Florida Bd. of Regents v. Fidelity & Deposit Co., 416 So. 2d 30
(Fla. 5
th
DCA 1982) ……………………………………………………………..16
Fontainebleau Hotel Corp. v. United Filigree Corp., 298 So. 2d 455
(Fla. 3
rd
DCA 1974) ……………………………………………………………..11
France v. Liberty Mut. Ins. Co., 380 So. 2d 1155 (Fla. 3
rd
DCA 1980) ………….45
French v. Assurance Co. of Am., 448 F.3d 693 (4th Cir. 2006) …………20, 39, 44
Garamendi v. Golden Eagle Ins. Co., 2006 Cal. App. Unpub. LEXIS
1375 (2006) ……………………………………………………………………..39
General Acci. Fire & Life Assurance Corp. v. Liberty Mut. Ins. Co., 260 So. 2d
249 (Fla. 4
th
DCA 1972) …………………………………………………….…6-7
Gordon v. Microsoft Corp., 645 N.W.2d 393 (Minn. 2002) …………………34-35
Great Am. Ins. Co. v. Woodside Homes Corp., 2006 U.S. Dist. LEXIS
61453 (N.D. Utah August 28, 2006) ……………………………………………40
Harbor Ins. Co. v. Tishman Constr. Co., 578 N.E.2d 1197 (Ill. App. Ct.
1
st
Dist. 1991) …………………………………………………………………...40
Hardaway Co. ex rel. Wright Contr. Co. v. United States Fire Ins. Co.,
724 So. 2d 588 (Fla. 2
nd
DCA 1998) …………………………………………..…8
Hardware Mut. Cas. Co. v. Gerrits, 65 So. 2d 69 (Fla. 1953) ………………...….15
High Country Assoc. v. New Hampshire Ins. Co., 648 A.2d 474 (N.H. 1994) ….39
Home Owners Warranty Corp. v. Hanover Ins. Co., 683 So. 2d 527
(Fla. 3
rd
DCA 1996) …………………………………………………...…8, 12, 35
vii
Hotel des Artistes, Inc. v. General Accident Ins. Co. of Am., 9 A.D.3d 181
(N.Y. App. Div. 2004) ………………………………………………………….40
Iberia Parish Sch. Bd. v. Sandifer & Son Constr. Co., 721 So. 2d 1021
(La.App. 3
rd
Cir. 1998) …………………………………………………..…20, 39
Iowa Mut. Ins. Co. v. Fred M. Simmons, Inc., 128 S.E. 2d 19 (N.C. 1962) ….…40
J.S.U.B., Inc. v. United States Fire Ins. Co., 906 So. 2d 303 (Fla.
2
nd
DCA 2005) ………...…………………………………………..x, 8, 35, 36, 40
James Graham Brown Foundation, Inc. v. St. Paul Fire & Marine Ins. Co.,
814 S.W.2d 273 (Ky. 1991) ……………………………………………………40
Jones v. Utica Mut. Ins. Co., 463 So. 2d 1153 (Fla. 1985) …………………..……5
Kalchthaler v. Keller Constr. Co., 591 N.W.2d 169 (Wis. Ct. App. 1999) …...….35
King v. Dallas Fire Ins. Co., 85 S.W.3d 185 (Tex. 2002) ………………………..19
Koikos v. Travelers Ins. Co., 849 So. 2d 263 (Fla. 2003) ………..…………..18, 20
LaMarche v. Shelby Mut. Ins. Co., 390 So. 2d 325 (Fla. 1980) .7-13, 30, 35, 46, 49
Landis v. Allstate Ins. Co., 546 So. 2d 1051 (Fla. 1989) ………………………...47
Lassiter Constr. Co. v. American States Ins. Co., 699 So. 2d 768
(Fla. 4
th
DCA 1997) …………………………………………………..9, 12, 35, 41
Lee Builders, Inc. v. Farm Bureau Mut. Ins. Co., 137 P.3d 486 (Kan.
June 9, 2006) …………………………………………………………………....39
Lennar Corp. v. Great Am. Ins. Co., 200 S.W.3d 651 (Tex. App. 2006)..............40
Lerner Corp. v. Assurance Co. of Am., 707 A.2d 906 (Md. Ct.
Spec. App. 1998) ............................................................................................20
Limbach Co., LLC v. Zurich Am. Ins. Co., 396 F.3d 358 (4th Cir. 2005)............44
viii
Lindheimer v. St. Paul Fire & Marine Ins. Co., 643 So. 2d 636
(Fla. 3
rd
DCA 1994) ........................................................................................48
Lindsay Drilling & Contracting v. U.S.F. and G., 676 P.2d 203 (Mont. 1984) .....39
Maryland Casualty Co. v. Reeder, 221 Cal. App. 3d 961 (Cal. Ct.
App. 1990) ................................................................................................31, 39
Mason v. Florida Sheriffs' Self-Insurance Fund, 699 So. 2d 268
(Fla. 5
th
DCA 1997) ........................................................................................47
McKellar Dev. v. Northern Ins., 837 P.2d 858 (Nev. 1992).................................39
Monticello Ins. Co. v. Wil-Freds Constr., 661 N.E.2d 451 (Ill. App. Ct.
2
nd
Dist. 1996) ................................................................................................40
Nabholz Constr. Corp. v. St. Paul Fire & Marine Ins. Co., 354 F. Supp. 2d 917
(D. Ark. 2005) ...........................................................................................21, 41
Nicholson v. American Fire & Casualty Ins. Co., 177 So. 2d 52
(Fla. 2
nd
DCA 1965)........................................................................................47
O'Shaughnessy v. Smuckler Corp., 543 N.W.2d 99 (Minn. Ct. App. 1996)..........34
Oak Crest v. Austin Mut. Ins. Co., 998 P.2d 1254 (Ore. 2000)............................41
Okatie Hotel Group v. Amerisure Ins. Co., 2006 U.S. Dist. LEXIS 2980
(D.S.C. 2006) .................................................................................................40
Padilla v. Levitt Homes Puerto Rico, Inc., 2006 PR App. LEXIS 151
(P.R. Ct. App. June 21, 2006)..........................................................................39
Panzica Constr. Co. v. Ohio Cas. Ins. Co., 1996 Ohio App. LEXIS 1975
(Ohio Ct. App. 1996) ......................................................................................40
Portal Pipe Line Co. v. Stonewal Ins. Co., et al., 845 P.2d 746 (Mont. 1993).......39
Pozzi Window Co. v. Auto-Owners Ins., 446 F.3d 1178 (11th Cir. 2006)........ 9, 35
ix
Prudential Property & Casualty Ins. Co. v. Swindal, 622 So. 2d 467
(Fla. 1993)......................................................................................................47
Radenbaugh v. Farm Bureau Gen. Ins. Co., 610 N.W.2d 272 (Mich.
Ct. App. 2000)................................................................................................40
Ranger Ins. Co. v. Bal Harbour Club, Inc., 549 So. 2d 1005 (Fla.
1989)....................................................................................................45-47, 49
Ray v. Valley Forge Ins. Co., 77 Cal. App. 4
th
1039 (Cal. App.
2
nd
Dist. 1999) ................................................................................................41
Security Ins. Co. v. Investors Diversified, Ltd., 407 So. 2d 314 (Fla.
4
th
DCA 1981)............................................................................................ 7, 44
Sekura v. Granada Ins. Co., 896 So. 2d 861 (Fla. 3
rd
DCA 2005) ..........................9
Shelby Mut. Ins. Co. v. La Marche, 371 So. 2d 198 (Fla. 2
nd
DCA 1979)..............0
Southwest Metalsmiths, Inc. v. Lumbermens Mut. Cas. Co., 85 Fed. Appx. 552
(9
th
Cir. Ariz. 2004).........................................................................................39
Stack v. State Farm Mut. Auto. Ins. Co., 507 So. 2d 617 (Fla.
3
rd
DCA 1987)................................................................................................45
State Farm Fire & Cas. Co. v. CTC Dev. Corp., 720 So. 2d 1072
(Fla. 1998)................................................................15-18, 20, 24-25, 27, 35, 43
Stratton & Co. v. Argonaut Ins. Co., 469 S.E.2d 545 (Ga. Ct. App. 1996)......40-41
Sunset Harbour Condo. Ass'n v. Robbins, 914 So. 2d 925 (Fla. 2005).....................6
Swire Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So. 2d 161 (Fla. 2003)...............6
Taylor-Morley-Simon, Inc. v. Michigan Mut. Ins. Co., 645 F. Supp. 596
(D. Mo. 1986).................................................................................................39
Thommes v. Milwaukee Ins. Co., 641 N.W.2d 877 (Minn. 2002)........................39
x
Transportes Ferreos De. Venez. II Ca v. NKK Corp., 239 F.2d 555 (3d Cir.
N.J. 2001).......................................................................................................40
Travelers Indem. Co. v. PCR Inc., 889 So. 2d 779 (Fla.
2004).............................................................................6-7, 18, 20, 45-46, 48-49
Travelers Indem. Co. of Am. v. Miller Bldg. Corp., 142 Fed. Appx. 147
(4th Cir. 2005) (unpublished opinion).........................................................40, 44
Travelers Indem. Co. of Am. v. Moore & Assoc., 2005 Tenn. App. LEXIS
596 (Tenn. Ct. App. 2005), appeal granted Travelers v. Moore, 2006 Tenn.
LEXIS 206 (Tenn. March 20, 2006) ................................................................40
Tucker Constr. Co. v. Mich. Mut. Ins. Co., 423 So. 2d 525 (Fla.
5
th
DCA 1982)..................................................................................................9
U.S. Concrete Pipe Co. v. Bould, 437 So. 2d 1061 (Fla. 1983).......................47-48
U.S.F. & G. v. Warwick Dev., 446 So. 2d 1021 (Ala. 1984) ...............................41
Vandenberg v. Superior Court, 982 P.2d 229 (Cal. 1999) ..............................28, 50
Vill. Homes of Colo., Inc. v. Travelers Cas. Co. of Conn., 2005 Colo. LEXIS
1021 (Colo. Nov. 15, 2005).............................................................................39
Wanzek Constr., Inc v. Employers Ins. of Wausau, 679 N.W.2d 322
(Minn. 2004) .............................................................................................39, 41
Waste Corp. of Am., Inc. v. Genesis Ins. Co., 382 F. Supp. 2d 1349
(D. Fla. 2005) ............................................................................................27, 28
Weedo v. Stone-E-Brick, Inc., 405 A.2d 788 (N.J. 1979)...7-8, 11-12, 14-15, 30, 49
West Orange Lumber Co. v. Ind. Lumbermens Mut. Ins. Co., 898 So. 2d 1147
(Fla. 5
th
DCA 2005) ...................................................................................41-42
Whitt v. Silverman, 788 So. 2d 210 (Fla. 2001)..................................................29
Zurich Am. Ins. Co. v. Cutrale, 15 Fla. L. Weekly Fed. D152 (M.D. Fla. 2002) ..27
xi
Statutes
§ 627.419 of Florida Statutes (2006)......................................................................7
§ 553.84 of Florida Statutes (2005)....................................................................50
Rules
Fla.R.App.P. Rule 9.100(1)..............................................................................xiii
Other Authorities
Edward J. Zulkey, 3 CGL Reporter, 310 (1983) .................................................28
Phillip L. Bruner & Patrick J. O’Connor, 4 Bruner & O’Connor on Construction
Law, Ch. 11 (1
st
ed. 2002) (updated 2005)...................................................22, 43
Jotham D. Pierce, Jr., Allocating Risk Through Insurance and Surety Bonds,
WL 425 PLI/Real 193 (1998) ..........................................................................34
Donald S. Malecki & Arthur L. Flitner, Commercial General Liability 8
(7
th
ed. 2001) .............................................................................................23, 28
Commercial Liability Annotated CGL Policy, International Risk Management
Institute (7
th
Reprint, January 2001).................................................................34
George H. Tinker, Comprehensive General Liability Insurance – Perspective
and Overview, 25 Fed’n Ins. Coun. Q. 217 (1975)............................................28
Comprehensive General Liability Policy Handbook, (Nelson, P., Ed.)................34
9 Lee R. Russ & Thomas F. Segalla eds., Couch on Insurance § 129:14 and
129:18 (3d ed. 2004)................................................................................... 3, 31
Thomas J. Casamassima and Jeanette E. Jerles, Defining Insurable Risk in
the Commercial General Liability Insurance Policy: Guidelines for Interpreting
the Work Product Exclusion, WL 12-JAN CONSLAW 3 (Jan. 1992)................34
xii
Fire, Casualty and Surety Bulletins, Public Liability, (The National
Underwriter Co. (1993))..................................................................................32
Eric M. Holmes, Holmes’ Appleman on Insurance 2d, § 132.9...........................31
Allan D. Windt, Insurance Claims & Disputes, Representation Of
Insurance Companies and Insureds § 11:1 (4
th
ed. 2001 & Supp. 2005)........23, 34
Scott C. Turner, Insurance Coverage of Construction Disputes, §6.8
(2d ed. 1999) ..................................................................................................28
Patrick J. Wielinski, Insurance for Defective Construction, Ch. 5
(2d ed. International Risk Management Institute 2005).......... 22-23, 28-29, 31, 34
Patrick J. Wielinski, Full Circle Regression: The New ISO “Your Work”
Endorsements, www.irmi.com/Expert/Articles/2002/Wielinski01.aspx
(International Risk Management Institute 2002)..........................................37-38
James D. Hendrick and James P. Wiezel, The New Commercial General
Liability Forms – An Introduction and Critique, 36 Fed’n Ins. Corp.
Couns. Q. 317 (1986)......................................................................................32
James Duffy O’Connor, What Every Construction Lawyer Should Know
About CGL Coverage for Defective Construction, 21 WTR Construction
Law, 15 (2001) ...............................................................................................22
xiii
PREFACE
This Answer Brief is filed on behalf of FIRST HOME BUILDERS OF FLORIDA
and its partners, J.S.U.B., INC. and LOGUE ENTERPRISES, INC.
“AMICI” – Refers to Petitioner, UNITED STATES FIRE INSURANCE
COMPANY’S, Amicus counsel.
“BFPDE” – Refers to Broad Form Property Damage Endorsement.
“BUILDER” – Refers to the Respondent, FIRST HOME BUILDERS OF
FLORIDA and its partners J.S.U.B., INC. and LOGUE ENTERPRISES, INC.
“CGL” – Refers to Commercial General Liability Policy.
“DISTRICT COURT OPINION” – Refers to the Opinion of the Second District
Court of Appeals in this matter, J.S.U.B., Inc. v. United States Fire Ins. Co., 906
So. 2d 303 (Fla. 2
nd
DCA 2005), review granted, (Fla. April 5, 2006).
“DISTRICT COURT” – Refers to the Second District Court of Appeals.
“INSURER” – Refers to Petitioner, UNITED STATES FIRE INSURANCE
COMPANY.
“IRMI” – Refers to International Risk Management Institute.
“ISO” – Refers to Insurance Services Organization.
“PCOH” – Refers to products completed operations hazard.
“R” – refers to the Record on Appeal.
“T” - refers to the Transcript of Proceedings dated May 21, 2002 for the non-jury
trial which was held in this matter.
“Trial Court” – Refers to the Honorable William C. McIver, Circuit Judge.
STATEMENT OF THE CASE AND FACTS
BUILDER accepts, for appellate purposes, the Statement of the Case and
Facts set forth by INSURER, but wishes to add the following additional facts.
Prior to trial, the parties stipulated that BUILDER did not intend the damage
which gave rise to the litigation. [T 8.] With respect to the homes in question,
BUILDER acted as the general contractor, but did not perform any soil
compaction or engineering testing of the soil prior to the placement of the
foundation on the compacted soil. [R. 268-70.] BUILDER subcontracted out each
of these tasks. BUILDER also did not produce, manufacture, or deliver the soil in
question which was purchased by the soil subcontractors who were charged with
compacting the soil. [R. 268-70, 424-26]. Following the completion of operations,
the soil beneath the subject homes subsided, triggered by rain, resulting in damage
to the foundation, drywall, and other interior portions of the homes. [T. 29.]
The subject CGLs are standard form ISO policies. BUILDER had a per
occurrence limit of $1,000,000.00, a general aggregate limit of $2,000,000.00, and
a separate PCOH aggregate limit of $2,000,000.00 for which separate and
additional premiums were charged. The “PCOH” is defined as:
a. Includes all “bodily injury” and “property damage” occurring
away from premises you own or rent and arising out of “your
product” or “your work” except:
(1) Products that are still in your physical possession; or
(2) Work that has not yet been completed or
abandoned. However, “your work” will be
2
deemed completed at the earliest of the following
times:
(a) When all of the work called for in your
contract has been completed.
(b) When all of the work to be done at the job
site has been completed if your contract
calls for work at more than one job site.
(c) When that part of the work done at a job site
has been put to its intended use by any
person or organization other than another
contractor or subcontractor working on the
same project.
Work that may need service, maintenance, correction,
repair or replacement, but which is otherwise
complete, will be treated as completed.
“Your work” is defined as:
a. Work or operations performed by you or on your behalf;
and
b. Materials, parts or equipment furnished in connection
with such work or operations.
“Your work” includes:
a. Warranties or representations made at any time with
respect to the fitness, quality, durability, performance or
use of “your work”; and
b. The providing of or failure to provide warnings or
instructions.
[emphasis added].
SUMMARY OF ARGUMENT
Unintended and unexpected physical damage to a general contractor’s work,
which occurs after completed operations and which work was performed by the
3
general contractor’s subcontractor, constitutes a covered loss under the post-1986
standard form CGL sold to BUILDER in this case. Unintended and unexpected
physical damage to the general contractor’s work product constitutes a covered
“occurrence,” “accident,” and “property damage” as those terms are used in the
CGL. Prior to 1986, it was common for CGLs to exclude coverage for all damage
to the insured’s work. However, CGLs have substantially changed. It is now
common for such policies to include PCOH coverage. 9 Lee R. Russ & Thomas F.
Segalla eds., Couch on Insurance § 129:14 (3d ed. 2004). In 1986, carriers added
an exception to the standard “business risk” exclusion for “your work” which
allows coverage for types of incidents which are the subject of this lawsuit. Under
the 1986 amendments to the CGL, an exception to otherwise excluded losses exists
“if the damaged work, or work out of which the damage arises, was performed on
your behalf by a Subcontractor.” Thus, coverage is available to BUILDER in the
instant matter.
Under this Court’s rules of insurance policy construction, the definitions of
“occurrence” and “property damage” clearly support the conclusion that
allegations of defective construction against a general contractor that result in
unintended physical damage to his work easily fall within the grant of coverage of
the CGL. The presence of carefully crafted building industry specific exclusions
and the exceptions to those exclusions, as well as endorsements eliminating the
4
exceptions to the exclusions, establish that the CGL was, in fact, intended to insure
claims which fall within the undisputed fact pattern of the instant action. Thus,
coverage is available to BUILDER in this case and other contractors with CGLs
where the following insurance policy conditions are met:
1. The insured purchased a CGL which includes PCOH coverage;
2. There is an “occurrence” which constitutes an accident under
the policy of insurance;
3. There is physical damage to property;
4. The insured is “legally obligated” to pay damages because of
(2) and (3);
5. The “property damage” and “occurrence” were the result of the
errors or omissions of a subcontractor;
6. The errors or omissions of a subcontractor gave rise to damage
which first manifested after operations were complete.
INSURER and its AMICI urge this Court to rewrite the CGL by having the
judiciary create an ex post facto “endorsement” which disallows coverage in
contravention of the policy language. INSURER’S arguments focus on
INSURER’S presumed purpose of the CGL, ignoring the actual language used to
define coverage and disregarding this Court’s broad pronouncements that
unintentional construction errors constitute an “occurrence” under Florida law.
The arguments on which INSURER and its AMICI focus exclusively are the
insuring agreement (i.e. the “occurrence,” “property damage,” and “legally
obligated” requirements) and extraneous legal doctrines (i.e. the “business risk,”
“economic loss,” “fortuity,” “fundamental intent” and “public policy”),
5
supplanting the actual CGL language which includes specific exclusions designed
to delineate the scope of the coverage afforded to an insured for construction
related damages. Effectively, INSURER attempts to import these extra-contractual
doctrines and other limitations on coverage found in the exclusions into the
definitions of “occurrence,” “property damage,” and “legally obligated.”
INSURER’S construction of the CGL improperly renders construction industry
oriented exclusions b., j., k., l., and m. surplusage, giving them the status of mere
ink blots in the policy of insurance. INSURER’S theory of the case requests, and
in fact requires, that this Court ignore the very language of the CGL sold by
INSURER and paid for by BUILDER. There is simply no view of contract law or
public policy of the State of Florida which warrants saving INSURER from the
very adhesion contract it carefully drafted, marketed and sold, and for which
INSURER received premiums.
The District Court correctly determined that the subject policies, when read
in their entirety, afforded coverage. The decision should be affirmed.
STANDARD OF REVIEW
BUILDER agrees that interpretation of the subject CGLs is a question of law
subject to de novo review. Jones v. Utica Mut. Ins. Co., 463 So. 2d 1153, 1157
(Fla. 1985).
6
ARGUMENT
I. Many of INSURER’S issues were not preserved for review.
Several of the issues raised by INSURER in its Brief were never raised at
the Trial Court or District Court of Appeals level and are therefore waived. The
following issues were not preserved:
1. That the CGL does not cover breaches of contract.
2. Public policy prohibits coverage for breaches of contract under
the CGL.
3. The CGL does not cover “economic losses.”
4. The losses in dispute do not constitute “property damage.”
These claims are demonstrably incorrect, as will be shown infra, were waived, and
cannot be considered by this Court. Dober, et al. v. Worrell, 401 So. 2d 1322 (Fla.
1981) and Sunset Harbour Condo. Ass’n v. Robbins, 914 So. 2d 925 (Fla. 2005).
II. The District Court Opinion correctly concluded coverage exists for the
subject loss, applying this Court’s precedents and rules of insurance
policy construction.
A. Interpretation of insurance policies.
Construction of an insurance policy is controlled by contract principles and
not tort law principles. Travelers Indem. Co. v. PCR Inc., 889 So. 2d 779, 793
n.15 (Fla. 2004). The Court must give effect to the plain language of an insurance
policy. Swire Pac. Holdings v. Zurich Ins. Co., 845 So.2d 161, 165 (Fla. 2003). A
court cannot and should not, under the guise of construction, rewrite the insurance
contract. General Accident Fire and Life Assurance Corporation v. Liberty Mutual
7
Insurance Company, 260 So. 2d 249 (Fla. 4
th
DCA 1972). Florida law requires
that a policy of insurance be read as a whole, endeavoring to give every provision
its full meaning and operative effect. Id. and § 627.419 of Florida Statutes (2006).
Each provision of an insuring contract should be given meaning and effect, and
apparent inconsistencies reconciled, if possible. Excelsior Insurance Company v.
Pomona Park Bar & Package Store, 369 So. 2d 938, 941 (Fla. 1979).
If the relevant policy language is susceptible to more than one reasonable
interpretation, one providing coverage and the other limiting coverage, the policy
is ambiguous and must be construed against the carrier. Auto-Owners Insurance
Company v. Anderson, 756 So. 2d 29, 34 (Fla. 2000). “Proof of the pudding” of
ambiguity is appropriately found where the reasoned judgment of numerous courts
come to opposite or differing conclusions from a study of essentially the same
policy language. Security Insurance Company of Hartford v. Investors Diversified
Limited, 407 So. 2d 314, 316 (Fla. 4
th
DCA 1981). While the intent of the parties
is not dispositive in policyholder disputes, the reason which motivated the parties
to make the contract is a relevant consideration. Travelers, 889 So. 2d at 788 n.9.
B. LaMarche’s adoption of the reasoning of Weedo establishes that
unintended construction defects constitute an “occurrence” under
the CGL.
For INSURER to prevail, this Court must overrule LaMarche and its’
adoption of Weedo. BUILDER readily admits that until the decision below in
8
J.S.U.B. v. United States Fire Ins. Co., 906 So. 2d 303, 307-09 (Fla. 2
nd
DCA
2005), review granted, (Fla. 2006), Florida courts have historically disallowed a
contractor from obtaining CGL coverage for property damage to its own work.
The cases disallowing coverage purport to follow this Court’s decision in
LaMarche v. The Shelby Mutual Insurance Company, 390 So. 2d 325 (Fla. 1980).
As it will be seen, LaMarche, and the decision which served as its basis, Weedo v.
Stone-E-Brick, Inc., 405 A.2d 788 (N.J. 1979), have been misapprehended and
misapplied by most of the courts which have interpreted them. LaMarche merely
held, under the then existing CGL, that coverage for faulty workmanship was taken
away via exclusion. In the post-1986 CGL form at issue here, the exclusions have
changed and do not eliminate coverage under the undisputed facts in this case.
A review of the Florida cases which disallow coverage for “faulty
workmanship” demonstrate that our courts have not been analytically consistent in
describing why construction defect claims were not covered. Some cases have
held that “business risks” fall within an exclusion. See LaMarche, 390 So. 2d 325,
citing Weedo, 405 A.2d 788, and Hardaway Co. ex rel. Wright Contr. Co. v.
United States Fire Ins. Co., 724 So. 2d 588 (Fla. 2
nd
DCA 1998). Others have
suggested that “business risks” fall outside the grant of coverage. Home Owners
Warranty Corp. v. Hanover Ins. Co., 683 So. 2d 527, 528-9 (Fla. 3
rd
DCA 1996).
Other cases have over-generalized their analyses by merely referring to these
9
claims as “business risk,” without analyzing the actual policy language. See
Lassiter Constr. Co. v. American States Ins. Co., 699 So. 2d 768, 769-70 (Fla. 4
th
DCA 1997). At least three (3) courts have held that the CGL does not cover
damage to an insured’s work as a matter of public policy. Aetna Cas. & Sur. Co.
of Am. v. Deluxe Sys., 711 So. 2d 1293 (Fla. 4
th
DCA 1998); Sekura v. Granada
Ins. Co., 896 So. 2d 861 (Fla. 3
rd
DCA 2005); and Centex Homes Corp. v.
Prestressed Systems, Inc., 444 So. 2d 66 (Fla. 3
rd
DCA 1984). The cases denying
coverage have even extended the rule to the errors of subcontactors. Tucker
Constr. Co. v. Mich. Mut. Ins. Co., 423 So. 2d 525 (Fla. 5
th
DCA 1982). The
Middle District, applying Florida law, recognized that “property damage” from
faulty workmanship constitutes an “occurrence” and “accident” under a CGL, but
still held that coverage was unavailable for such a loss without further analysis of
the exclusions or policy language, instead merely citing to LaMarche. See Auto
Owners Ins. Co. v. Travelers Cas. & Sur. Co., 227 F. Supp. 2d 1248 (M.D. Fla.
2002). The U.S. 11
th
Circuit Court of Appeals recently noted, “viewing the
language of the Policies in isolation, the … conclusion that coverage exists
arguably would seem proper.” Pozzi Window Co. v. Auto-Owners, Inc., 446 F.3d
1178 (11
th
Cir. 2006). These cases all claim LaMarche as their polestar, and as
such, the launch point for any treatment of this issue is LaMarche.
10
This Court’s decision in LaMarche barely fills two (2) pages of the Southern
Second Reporter, and the facts receive little treatment. The facts are discussed in
slightly more detail in the Second District Court of Appeal’s decision which led to
Supreme Court review. See Shelby Mut. Ins. Co. v. LaMarche, 371 So. 2d 198
(Fla. 2
nd
DCA 1979). Neither opinion addressed the nature of the accident or
incident giving rise to the lawsuit by the homeowner against the home builder.
Obviously, the LaMarche court was dealing with a predecessor form. LaMarche
undeniably holds, as to the prior policy form:
... that the purpose of this comprehensive liability insurance coverage
is to provide protection for personal injury or for property damage
caused by the completed product, but not for the replacement and
repair of that product.
LaMarche, 390 So. 2d at 326 [emphasis added]. This holding, or portions of it,
have repeatedly been taken, in isolation, divorced from the policy terms, and
without analysis, by numerous Florida courts resulting in the confusion which no
doubt led this Court to accept jurisdiction. The true holding of LaMarche was:
We find this interpretation was not the intent of the contractor and the
insurance company when they entered into the subject contract of
insurance, and the language of the policy clearly excludes this type of
coverage.
Id. [emphasis added]. Based upon the above language, LaMarche clearly
substantiates BUILDER’S position that faulty workmanship constituted a covered
occurrence. LaMarche merely held that under the then-existing CGL, coverage for
11
such property damage was taken away via exclusion. In the post-1986 CGL at
issue here, the exclusions have changed and do not eliminate coverage. This view
is consistent with the reason for this Court having accepted jurisdiction over the
LaMarche decision. In deciding LaMarche, this Court rejected the determination
of the court in Fontainebleau Hotel Corp. v. United Filigree Corp., 298 So. 2d 455
(Fla. 3
rd
DCA 1974). In Fontainebleau, the court held that the business risk
exclusions in the 1973 CGL were ambiguous. This contrasted with the LaMarche
district court decision where the court held that the exclusions unambiguously
excluded construction related losses. Accordingly, it is clear that the LaMarche
court was making determinations regarding the exclusions, not deciding the case
based on a lack of coverage under the CGL.
The fact that LaMarche held that coverage would be provided but for the
pre-1986 exclusion is further evidenced by reviewing the only case cited in this
Court’s LaMarche decision, the Weedo decision from the Supreme Court of New
Jersey. The Weedo court distinguished between what it considered to be uninsured
“business risks” and “occurrences” giving rise to insurable liability. The court held
that faulty workmanship that must be replaced or repaired was an excluded risk,
but faulty workmanship that caused consequential damage to other persons or
property is a covered “occurrence.” Weedo, 405 A.2d 788, 791-92. Immediately
after this portion of the Weedo decision, the New Jersey Supreme Court noted:
12
The standardized provisions in the CGL intended to convey this
concept include, inter alia, the very exclusion clauses at issue herein.
Id. at 792 [emphasis added]. The New Jersey Supreme Court then held that the
“insured products” and “work performed” exclusions functioned “to restrict and
shape the coverage otherwise afforded.” Id. at 790. Weedo finally noted:
Pennsylvania National conceded at oral argument before us, as
apparently it did before the Appellate Division, see 155 N.J. Super. At
479, that but for the exclusions in the policy, coverage would
obtain. Hence we need not address the validity of one of the carrier’s
initially-offered grounds of non-coverage, namely, that the policy did
not extend coverage for the claims made even absent the exclusions.
Id. at 790 n.2. Because LaMarche fully adopted the “logic and reasoning” of
Weedo, it is irrefutable that unintended “construction defects” do constitute a
covered “occurrence” under Florida law. LaMarche, 390 So. 2d at 327. Cases
such as Home Owners Warranty, Lassiter, and Deluxe Systems interpreting
LaMarche to the contrary are simply in error. These cases are almost entirely
based on over-generalizations which result from plucking limited portions of
LaMarche out of context, with no reference to specific policy language in dispute.
It is indisputable that LaMarche and Weedo were decided based on the exclusions
in the 1973 CGL form. Nothing in the LaMarche decision prohibits an insurer
from changing the policy and insuring additional risk. Moreover, while INSURER
and its AMICI imagine that LaMarche hinges on “public policy,” this phrase, or
any species of it, is nowhere to be found in the opinion. The only “policy”
13
discussed in LaMarche is the insurance policy. INSURER’S tortured view of the
law of insurance would have this Court believe that LaMarche forever “froze” the
coverage available under future CGLs based on a phantom consideration of
“fundamental intent.” INSURER and its AMICI are trying to divorce the result in
LaMarche from the foundation and rationale upon which the result was derived,
the then-existing exclusions. Florida builders did not purchase the CGLs with a
“LaMarche endorsement;” they bought CGLs with policy language different from
that in LaMarche. Since LaMarche, the policy form has changed, and the
result must change along with the amendment to the policy form.
This Court reached the correct result under the 1973 policy form at issue in
LaMarche. However, the policy was substantially amended in 1986. While the
1986 changes to the policy form left the “occurrence” and “property damage”
definitions essentially the same, it brought two (2) significant changes to the
policy: 1) the advent of PCOH and, 2) an exception to Exclusion l. regarding
damages to “your work.” See Section D, infra. It is these changes, when applied
to the facts of this case, which compel coverage herein.
C. The undisputed facts of this case satisfy the “occurrence,”
“property damage,” and “legally obligated” requirements of the
CGL insuring agreement.
1. The insuring agreement.
The relevant grants of coverage provide:
14
SECTION I - COVERAGES
COVERAGE A BODILY INJURY AND PROPERTY DAMAGE
LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally
obligated to pay as damages because of “bodily injury”
or “property damage” to which this insurance applies.
b. This insurance applies to “bodily injury” and “property
damage” only if:
(1) The “bodily injury” or “property damage” is
caused by an “occurrence” that takes place in the
“coverage territory”; and
(2) The “bodily injury” or “property damage” occurs
during the policy period.
The policies define “occurrence” as:
An accident, including continuous or repeated exposure to
substantially the same general harmful conditions.
The policies define “property damage” as:
a. Physical injury to tangible property, including all resulting loss
of use of that property. All such loss of use shall be deemed to
occur at the time of the physical injury that caused it; or
b. Loss of use of tangible property that is not physically injured.
All such loss of use shall be deemed to occur at the time of the
“occurrence” that caused it.
The CGL form is designed with an intentionally broad coverage grant which
addresses all of the insured’s potential liability for property damage or bodily
injury. Coverage is then narrowed by operation of exclusions whose function is
“to restrict and shape coverage that would otherwise be afforded.” Weedo, 405
15
A.2d at 790. Under the broad insuring agreement, there are three (3) requirements
to trigger coverage. First, there must be an “occurrence,” meaning accident.
Second, there must be “property damage.” Finally, there must be a legal obligation
to pay damages as a result of the first two (2) requirements. Once these three (3)
elements are present, coverage is required unless otherwise excluded. Each of
these elements will be discussed separately below.
2. This Court broadly interprets the terms “occurrence” and
“accident” in CGL policies.
In State Farm Fire & Cas. Co. v. CTC Dev. Corp., 720 So. 2d 1072 (Fla.
1998), this Court held that unintentional construction errors were a covered
occurrence under a 1986 CGL with substantially identical policy language to the
policies in the instant case. In so holding, this Court receded from its longstanding
opinion in Hardware Mut. Cas. Co. v. Gerrits, 65 So. 2d 69 (Fla. 1953). In Gerrits,
the insured, a contractor, constructed a home which encroached on the neighbor’s
property line. This Court held that such activities did not constitute an “accident”
within the scope of insurance coverage. Id. at 71. In its 1998 decision in CTC, this
Court receded from Gerrits and held that Gerrits improperly incorporated tort law
foreseeability principles into the interpretation of the term “accident” within
insurance policies. See CTC, 720 So. 2d at 1074, 1076. This Court in CTC
explained that the concept of “accident” in a liability policy, when not defined,
16
encompassed not only accidental events, but also injuries or damages neither
expected nor intended from the standpoint of the insured. This Court held that
coverage was available to the insured contractor who mistakenly constructed a
home beyond the setback lines of a lot. Id.
The focus of INSURER’S Brief and that of its AMICI appears to be the
question of whether “faulty workmanship” constitutes an “occurrence” under the
CGL. This question exaggerates the argument being made by BUILDER.
BUILDER is not arguing that all faulty workmanship constitutes a covered
occurrence.
1
Instead, BUILDER argues that faulty workmanship which leads to
unintended physical damage or loss of use of the subject homes which BUILDER
1
This argument has the added convenience of creating the carriers’ Frankenstein-
like strawman – that BUILDER is converting the CGL policy into a performance
bond. INSURER and its AMICI spend much time beating the stuffing out of this
strawman, however, BUILDER is not coming to its rescue. The CGL insuring
agreement covers damages because of “property damage” caused by an
“occurrence.” Therefore, although defective construction may constitute an
“occurrence,” the INSURER indemnifies the insured only for the resulting
“property damage” arising after the project is completed. In contrast, a
performance bond is much broader than a CGL in that it guarantees “the
completion of the construction contract upon the default of the general contractor.”
See Florida Bd. of Regents v. Fidelity & Deposit Co., 416 So. 2d 30, 32 (Fla. 5
th
DCA 1992), rejected on other grounds by Federal Ins. Co. v. Southwest Fla.
Retirement Ctr., 707 So. 2d 1119 (Fla. 1998). Therefore, a variety of deficiencies
that do not constitute “property damage” may be covered by a performance bond,
as not all deficiencies cause “property damage” as defined in the CGL.
Consequently, allowing coverage for some “property damage” resulting from
defective construction does not transform the CGL into a performance bond and
require the CGL carrier to pay anytime the insured fails to complete its work or
otherwise comply with its contract.
17
is legally obligated to correct, constitutes a covered loss under the CGL insuring
agreement. Simplistically, it is not the faulty workmanship which makes the loss
covered, but the effect of the faulty workmanship, that being the unexpected and
unintended damage to the homes. In the instant case, it is not the improper soil
compaction and testing, nor the settling of the soil itself which represents a covered
loss. Rather, it is the resulting unintended physical damage to the foundation,
drywall, cabinetry, and floor tiling that constitutes the covered loss under the CGL
insuring agreement. In interpreting the term “occurrence” in CTC, this Court
recognized that the crucial word in the definition of “occurrence” was the term
“accident.” This Court quoted favorably from its prior decision in Dimmitt
Chevrolet v. Southeastern Fidelity Ins. Corp., 636 So. 2d 700, 702-3 (Fla. 1994),
which interpreted the term “accident” to include not only:
… an accidental event, but also for the unexpected injury or damage
resulting from the insured’s intentional acts.
CTC, 720 So. 2d at 1075-6 [citations omitted]. This Court further noted that the
term “accident” within a liability policy is, when not defined, “susceptible to
varying interpretations and should be construed in favor of the insured.” Id.
Here, it is undisputed and, in fact, was stipulated to by the parties at trial, that the
resulting damage to the homes was not intended by BUILDER when the homes
were built. [T 39.]
18
INSURER tries to escape the precedential application of CTC by creating a
false distinction that CTC’s analysis requires damage to third-party property. The
opinion contains no reference to either physical damage or loss of use of any third-
party’s property. The property damage issue does not appear to be a topic worthy
of discussion, much less the dispositive factor of the Court’s analysis.
Accordingly, CTC cannot be interpreted as a case limiting CGL coverage to cases
involving third party damage, but should be considered as this Court’s clear and
unanimous expression about the breadth of the term “occurrence” and “accident,”
and how those terms should be interpreted under Florida law. Accordingly,
BUILDER’S view of the term “occurrence” has already been embraced by this
Court in CTC and the subsequent cases relying on that decision, Koikos v.
Travelers Ins. Co., 849 So. 2d 263 (Fla. 2003) and Travelers, 889 So. 2d 779.
A hypothetical makes clear the fallacy of INSURER’S position. Assume a
building collapses after its completion due to construction errors. The collapse
injures persons within the building, furniture, and the building itself. INSURER
and its AMICI would have this Court believe that the collapse constitutes an
“occurrence” and “accident” for the purpose of damage to the persons and
furniture within the structure, but not an “occurrence” or “accident” for the damage
to the building itself. Obviously, the entire event is an “accident” and
“occurrence” as those terms are understood within the coverage grant, which make
19
no distinction between different types of property. The question of which aspects
of damage are covered are determined by an analysis of the remaining insurance
policy provisions, primarily the exclusions and the exceptions thereto.
Florida’s broad view of coverage of “occurrences” and “accidents” is in
keeping with the majority rule throughout the United States which holds that
construction related damage to the insured’s own work constitutes a covered
“occurrence” under the standard form CGL when there is physical damage or loss
of use. It is clear that the 1986 amendments were not merely intended to modify
the exclusions. In King v. Dallas Fire Ins. Co., 85 S.W.3d 185 (Tex. 2002), the
court recognized that the changes to the CGL form were designed to broaden the
terms “occurrence” and “accident,” leaving to the exclusions any limitations on
coverage which would apply. Id. at 192-193. These changes were designed to
shift all the inquiry about “intent” and expectation to the exclusionary language of
the policy. Id. As another court noted:
One other distinction between the 1973 ISO CGL policy and the 1986
ISO CGL Policies is the definition of “occurrence.” Rather than
containing a separate exclusion from coverage for property damages
“expected or intended from the standpoint of the insured,” as does the
1986 version of the ISO CGL policy, i.e., exclusion (a), the 1973
version includes the same language within its definition of occurrence.
“‘Occurrence’ is defined by the 1973 [ISO CGL] policy as ‘an
accident, including continuous or repeated exposure to conditions,
which results in bodily injury or property damage neither expected or
intended from the standpoint of the Insured.’”
20
French v. Assurance Co. of Am., 448 F.3d 693, 698 (4
th
Cir. 2006), citing to Lerner
Corp. v. Assurance Co. of Am., 707 A.2d 906 (Md. Ct. Spec. App. 1998). Another
court has correctly noted:
Whether there has been an occurrence, however, depends upon
whether there has been an accident, not upon the legal cause or
consequence of that accident. Defective workmanship or the
incorporation of defective materials is an “accident” … With
construction defects, the real issue usually is not whether there
has been an “occurrence,” but whether there has been property
damage during the policy period and, if so, whether the “work”
exclusion is applicable. If the roof leaks or the wall collapses, the
resulting property damage triggers coverage under an “occurrence”
basis policy, even if the sole cause is improper construction and the
only damage is to the work performed by the contractor. Whether
coverage for such an “occurrence” is excluded by the work, product or
other exclusion is a separate, very important inquiry. ... On the other
hand, the mere existence of a construction defect does not trigger
coverage under an “occurrence” basis policy; coverage is
triggered only if the defect causes property damage during the
policy term.
Iberia Parish Sch. Bd. v. Sandifer & Son Constr. Co., 721 So. 2d 1021, 1023
(La.App. 3
rd
Cir. 1998) [emphasis added]. These cases all follow the CTC analysis
of the term “occurrence.” Specifically, these cases all understand, and hinge
upon, the idea that the resulting property damage was unintended and
unexpected from the standpoint of the insured. This is the lynchpin of this
Court’s decisions in CTC, Koikos, and Travelers v. PCR.
21
3. The losses in the instant case constitute “property damage”
as that term is defined under the policy.
BUILDER’S CGLs cover “property damage” caused by an “occurrence,”
and defines “property damage,” in part, as “physical injury to tangible property.”
INSURER now argues that BUILDER’S claims do not constitute “property
damage,” contending that damage to the homes themselves cannot constitute
“property damage.” That contention, however, does not comport with the
definition of “property damage” in the policy. More specifically, the definition of
“property damage” in this case does not state “physical injury to tangible property
of others” or “physical injury to tangible property of third parties,” or “physical
injury to work not performed by the insured or its subcontractors.” Carriers
can, and have, included such definitions of property damage in their policy. See
Adair Group v. St. Paul Fire & Marine, 2005 U.S. Dist. LEXIS 32102 (D. Colo.
2005) (no coverage where “property damage” was defined as damage to property
of others) and Nabholz Constr. Corp. v. St. Paul Fire & Marine, 354 F. Supp. 2d
917 (E.D. Ark. 2005) (same). Rather, by its explicit terms, the “property damage”
definition only requires that there be physical injury to tangible property.
Most courts have rejected the myth that “property damage” must be to
property owned by a third party. As one court has noted:
Travelers claims that the trial court erred by concluding that Diamaco
met its threshold burden of establishing that the “property damage”
22
here was within the insuring clause of the policies. ... Travelers argues
that Diamaco’s claim was not eligible for coverage as “property
damage” because there was no damage to the property of others, only
to the property of the insured. We reject this argument. ... Had
Travelers intended to exclude from its insuring clause the
property of the insured in this case, it could easily have done so.
Diamaco, Inc. v. Aetna Cas. & Sur., 983 P.2d 707, 709-11 (Wash. Ct. App. 1999)
[emphasis added]. At present, no state’s highest court holds that there is a “third
party” requirement in INSURER’S definition of “property damage.” The majority
of commentators and courts that have considered this issue have refused to
judicially import the third-party damage concept into the definition of “property
damage” where the policy itself did not include it. Phillip L. Bruner & Patrick J.
O’Connor, 4 Bruner & O’Connor on Construction Law, Ch. 11 (1
st
ed. 2002)
(updated 2005) at 114; Patrick J. Wielinski, Insurance for Defective Construction,
Ch. 5 at 117-18 (2d ed. IRMI 2005); and James Duffy O’Connor, What Every
Construction Lawyer Should Know About CGL Coverage for Defective
Construction, 21 WTR Construction Law, 15, 17 (2001).
INSURER, in an effort to avoid the actual policy language, simply seeks to
recast “property damage” as “economic loss.” While it is true that purely
economic losses are not covered (i.e., economic losses not tied to any “property
damage”), the same is not true for consequential economic losses that arise from or
relate to “property damage” (i.e., physical injury to tangible property and/or loss of
23
use). CGLs unambiguously cover such damages. The policy’s insuring agreement
states: “We will pay those sums that the insured becomes legally obligated to pay
as damages because of ... ‘property damage’.” The words “because of” indicate
that the legal liability must have as its source, or arise from, physical injury to or
loss of use of tangible property. Once “property damage” has been established, the
CGL then covers economic losses that flow from the “property damage.” See
Donald S. Malecki & Arthur L. Flitner, Commercial General Liability 8-9 (7
th
ed.
2001) (“In light of the “because of” wording, all damages flowing as a
consequence of bodily injury or property damage would be encompassed by the
insurer’s promise, subject to any applicable exclusion or condition. This includes
purely economic damages, as long as they result from otherwise covered bodily
injury or property damage.”); Wielinski supra at Ch. 3; Allan D. Windt, and
Insurance Claims & Disputes, Representation Of Insurance Companies and
Insureds § 11:1, at 285 (4
th
ed. 2001 & Supp. 2005).
INSURER’S claim that CGLs do not provide coverage for “property
damage” to the insured’s own work, is a gross overgeneralization, which although
sometimes true, is useless and confusing unless tied to specific provisions of the
CGL and analyzed on a case by case basis. The generalization turns out to be true
in many cases because acts of faulty workmanship often do not fall within the
grant of coverage, as they are not an “occurrence,” “accident,” or “property
24
damage,” or they are excluded from coverage by operation of the construction
industry’s specific exclusions, j.(5), j.(6), l., and m., all of which are inapplicable in
this case.
In the instant case, there was unintended and unexpected physical damage to
the homes in question, bringing the loss within the insuring agreement. It is also
clear that exclusion j. does not apply as the loss occurred after operations were
complete. Exclusion l. would have barred coverage for the subject loss but for the
exception which causes the exclusion to be inapplicable. Crucially, nothing in the
definition of either “occurrence” or “property damage” allows a distinction
between whether the property damaged is the insured’s work or the property of
another. This concept is communicated in the insurance policy via the
exclusions. If INSURER wished to make such a distinction, they could and should
have done so in the definitions of “occurrence,” “property damage,” or by the use
of other exclusions. This is not a case where the insurer merely failed to draft its
exclusions tightly, instead, this is a case where the insurer, by specific exception to
the “your work” exclusion, intentionally afforded additional coverage to its
insureds, starting with the BFPDE and continuing to the 1986 policy form. See
Section D, infra.
Given the above analyses, the claim by BUILDER for coverage in the
instant case is even stronger than the claim for coverage by the insured in CTC. In
25
CTC, the insured builder intentionally, volitionally and purposefully built the
subject home over the setback line, albeit believing he was authorized to do so.
CTC, 720 So. 2d at 1073. Notwithstanding this intentional act, the court found
coverage due to the unintended result. In the instant case, it is undisputed and
stipulated that the damage to the homes was unintended and unexpected, and
triggered by rain. In CTC, there was no claim for physical damage. Id. The
instant case involves stipulated, actual, physical damage including damage to the
foundation, drywall, floor tiling, and cabinetry, which was caused by soil
subcontractors’ errors and an Act of God, but which did not manifest themselves
until after the work had been completed. Here, there is no claim to repair the
improperly compacted soil, but instead the damage which resulted from the
improperly compacted soil. Neither the act nor the consequences were intended or
expected by the insured. Thus, BUILDER’S claims herein clearly constitute
fortuitive covered damages which were not expected or intended from the
standpoint of BUILDER.
4. CGLs cover contractual liability where the insured is legally
obligated to pay for unintended and unexpected physical
damage.
As noted previously, INSURER did not preserve its claim that the subject
policy does not cover breaches of contract as this issue was not raised in the Trial
Court. INSURER contends that the CGL, even with a PCOH endorsement, does
26
not cover breaches of contract. The only courts considering Florida law on this
discrete issue, as well as a majority of courts and commentators throughout the
country, have found that the nature of the claim (i.e. contract-based theory, tort-
based theory, or statutory-based theory) against the insured is irrelevant, and the
true question is whether an accident has occurred and whether the accident caused
“property damage” or “bodily injury” as those terms are defined in the CGL.
The relevant portion of the coverage grant provided:
a. We will pay those sums that the insured becomes legally
obligated to pay as damages because of “bodily injury”
or “property damage” to which this insurance applies.
Crucially, the terms “legally” and “obligated” are not defined individually or
collectively. While INSURER would have this Court believe that the claims
covered under the CGL are limited to claims in tort, no such reference is made in
the policy terms. In fact, the terms “tort,” “negligence,” “contract,” or “warranty”
do not appear in the coverage grant or the definitions of the terms “property
damage” or “occurrence.” There are specific references to contractual obligations
throughout the policy that also make clear that the policy was intended to cover
contract related claims assuming no exclusions applied. The definitions of both
“your work” and “your product” include warranties and representations made at
any time with respect to the fitness, quality, durability, performance, or use of the
products and work. These terms are incorporated directly into the definition of the
27
PCOH for which BUILDER purchased specific coverage. The CGL also
specifically excludes, in exclusion 2.b., certain aspects of contractual liability
wherein the insured assumed liability for the fault of another. This obviously begs
the question of why these references to contractual breaches are in the CGL. The
reason is self-evident. The CGL was always intended to cover “accidents,” even
where the theory against the insured was based on a breach of contract. Since all
contractors and subcontractors necessarily orient their business around contracts, it
is unlikely that the industry would have excluded all contractual breaches. This
would render the policy a virtual nullity.
Only two (2) cases have interpreted Florida law as to the discrete issue of
whether the CGL covers claims couched as contractual breaches which result in
“property damage,” and both cases have found coverage. In Essex Builders v.
Amerisure Ins. Co., 429 F. Supp. 2d 1274 (M.D. Fla. 2005) and Zurich Am. Ins.
Co. v. Cutrale, 15 Fla. L. Weekly Fed. D152 (M.D. Fla. 2002), the courts applied
Florida’s standard rules of construction and recognized that the CGL was not
limited to those claims sounding in tort. This view is also consistent with CTC,
where the builder was sued for breaching his contractual duties. The only Florida
case cited by INSURER for its proposition is the case of Waste Corp. of Am., Inc.
v. Genesis Ins. Co., 382 F. Supp. 2d 1349 (S.D. Fla. 2005). Waste Corp. involved
claims for breach of contract and fraud arising out of intentional financial
28
improprieties and did not involve “property damage” or an “accident.” Id.
Accordingly, the result is the correct one.
Nationally, the lead case dealing with the meaning of the term “legally
obligated” is the case of Vandenberg v. Superior Court, 982 P.2d 229 (Cal. 1999).
In Vandenberg, the Supreme Court of California held that “legally obligated” in
the CGL was intentionally broad enough to provide coverage for losses arising out
of contract breaches. Id. The court also noted that the distinction between contract
and tort in the context of evaluating the availability of coverage was arbitrary. Id.
The Vandenberg court noted that its position was consistent with the handling of
such matters by the insurance industry and industry commentators, and cited to
Couch on Insurance, noting:
[W]hether a particular claim falls within the coverage afforded by a
liability policy is not affected by the form of the legal proceeding.
Accordingly, the legal theory asserted by the claimant is immaterial to
the determination of whether the risk is covered. (9 Couch, Insurance
(3d ed. 1997) § 126:3, p. 126-8.)
Id. at 243 [emphasis added]. See also Wielinski, supra; Malecki & Flitner, supra;
Scott C. Turner, Insurance Coverage of Construction Disputes, §6.8 (2d ed. 1999);
Edward J. Zulkey, 3 CGL Reporter, 310-8, 9 (1983); and George H. Tinker,
Comprehensive General Liability Insurance – Perspective and Overview, 25 Fed’n
Ins. Coun. Q. 217, 265 (1975). In addition to the Vandenberg court, the vast
majority of courts that have analyzed the issue have held that coverage exists.
29
These authorities illustrate the problems that result when courts rely on
general conclusions and abstract arguments unsupported by the language of the
CGL, rather than applying the terms of the CGL. Application of ironclad rules
based on vague principles cause cases to be decided without regard to the
particular facts of the defective work claimed or the particular provisions of the
CGL issued to and purchased by the insured. Such a superficial analysis may
cause a court to improvidently and improperly deny coverage out of hand when it
should instead analyze the policy provisions and the facts of a particular case.
Wielinski, supra at 30.
INSURER’S position that the CGL only covers “tort” liability has one final
fatal flaw in that it renders the CGL moot. INSURER takes the position that the
CGL covers only torts as all breaches of contract are “foreseeable” and “expected.”
One then has to wonder what torts would be covered as tort liability is
axiomatically premised on foreseeability. Whitt v. Silverman, 788 So. 2d 210 (Fla.
2001). Presumably, insurers would argue that an automobile insured should expect
that if he runs a yellow or red light he will be involved in an accident. However,
Florida law is clear such acts and omissions, even if quite likely to cause damage
or injury, are insurable in Florida as long as the harm was not intended. This
Court should reject INSURER’S attempt to transform its CGL into an illusory
contract which covers only unforeseeable torts which do not exist in Florida.
30
D. Because of the existence of an “occurrence” and “property
damage”, coverage is available to BUILDER pursuant to an
exception to Exclusion l.
1. The “damage to your work” exclusion.
The exclusion and its exception reads as follows:
2. Exclusion - This insurance does not apply to:
l. Damage To Your Work
“Property damage” to “your work” arising out of it or any part
of it and included in the “products-completed operations
hazard.”
This exclusion does not apply if the damaged work or the work
out of which the damage arises was performed on your behalf
by a subcontractor.
BUILDER does not claim that exclusion l. creates coverage. Coverage exists
because of an “occurrence” and “property damage,” and the absence of any
applicable exclusion. The above exclusion would be applicable and bar coverage
but for the subcontractor exception which restores coverage.
2. The history and intent of the “damage to your work”
exclusion make clear that coverage is available to
BUILDER under the 1986 CGL form.
In response to LaMarche, Weedo, and similar decisions interpreting the
1973 policy form throughout the country, “Many contractors were unhappy with
this state of affairs, since more and more projects were being completed with the
help of subcontractors.” American Family Mut. Ins. Co. v. American Girl, Inc.,
31
673 N.W.2d 65 (Wis. 2004). See also Russ & Segalla, supra § 129: 18 (“Due to
the increasing use of subcontractors on construction projects, many general
contractors were not satisfied with the lack of coverage provided under [the 1973
ISO CGL] commercial general liability policies where the general contractor was
not directly responsible for the defective work.”). In response to this unhappiness,
beginning in 1976, an insured, under the 1973 ISO CGL form, could pay a higher
premium to obtain a BFPDE which excluded coverage only for property damage to
work actually performed by the general contractor. Maryland Casualty Co. v.
Reeder, 221 Ca. App. 3d 961 (Cal. Ct. App. 1990); Russ & Segalla, supra § 129:
18; and Eric M. Holmes, Holmes’ Appleman on Insurance 2d, § 132.9 at 153.
Thus, liability coverage was intended to extend to the insured’s completed work
when the damage arose out of work performed by a subcontractor. Reeder, 221
Cal. App. 3d at 972; Russ & Segalla, supra, § 129:18; and Holmes, supra at 153.
Later, the subcontractor exception to exclusion l. which was derived from the
BFPDE was incorporated into the 1986 version of the CGL, and has survived the
more recent amendments to the CGL. Wielinski, supra, at Ch. 11.
Because of these changes, cases interpreting CGLs which do not contain the
BFPDE or the 1986 changes are of limited value in analyzing the availability of
coverage for construction related losses. From the inception of the 1986 policy
32
changes, the insurance industry and commentators have agreed with and
recognized BUILDER’S position:
There is, however, an exception to exclusion “l” of substantial
importance to insured contractors, which provides that “[t]his
exclusion does not apply if the damaged work or the work out of
which the damage arises was performed on your behalf by a
subcontractor.” This exception should allow for coverage, for
example, if an insured general contractor is sued by an owner for
property damage to a completed residence, caused by faulty plumbing
or electrical work done by a subcontractor. The coverage in that
circumstance should extend to all “work” damaged, whether it was
done by the contractor or by any subcontractor, since the “work out of
which the damage arises was performed … by a subcontractor.” The
only property damage to completed work which is excluded by
exclusion “l” is damage to the insured contractor’s work, which arises
out of the insured contractor’s work.
J. D. Hendrick and J. P. Wiezel, The New Commercial General Liability Forms –
An Introduction and Critique, 36 Fed’n Ins. Corp. Couns. Q. 317, 360 (1986).
After the 1986 form had been in use, this issue was squarely addressed
within the insurance industry by Fire, Casualty and Surety Bulletins, Public
Liability, Aa 16-17 (The National Underwriter Co. (1993)), which notes:
Exclusion (l.), Damage to Your Work, while similar to the “your
products” exclusion, differs in two significant respects. First,
exclusion (l.) by definition applies only to work within the products-
completed operations hazard. Accordingly, exclusion (l.) is not
applicable to work in progress. Second, exclusion (l.) does not apply
if the damaged work or the work out of which the damage arises was
performed on the insured’s behalf by a subcontractor.
An example of how exclusion (l.) could apply is as follows. The
named insured is a general contractor who has built an apartment
33
house with the services of numerous subcontractors. After the
building is completed and put to its intended use, a defect in the
building’s wiring (put in by a subcontractor) causes the building,
including work of the general contractor and other subcontractors, to
sustain substantial fire damage. The named insured is sued by the
building’s owner. Although the named insured’s policy excludes
damage to “your work” arising out of it or any part of it, the second
part of the exclusion makes it clear that the exclusion does not apply
to the claim.
Even the industry’s more recent publications agree with BUILDER’S
position. The IRMI notes the following about Exclusion l.:
This exclusion precludes coverage to the named insured’s work after
it has been completed, arising out of the work or any part of it. By
specific exception, the exclusion does not apply if the work that is
damaged, or that causes the damage was done on behalf of the
named insured by a subcontractor … The cost of repairing or
replacing the named insured’s work other than completed operation
losses may still be excluded under the CGL policy - most probably
under the provisions of Exclusion j.(5) and j.(6) discussed above.
An example will help illustrate the application of this exclusion.
Assume a general contractor builds a warehouse subcontracting out 50
percent of the work. One year later, the building is destroyed in a fire
caused by faulty electrical work. The warehouse owner’s fire insurer
pays the claim and then subrogates against the general contractor to
recover the amount paid to the owner. If the electrical work was
performed by one of the general contractor’s subcontractors, the
exclusion will not apply; the general contractor’s policy will cover the
entire loss (subject, of course, to its limit of liability). If, on the other
hand, the electrical work was performed by the general contractor, the
policy will exclude coverage for the damage to the work done by the
general contractor (50 percent of the loss) but will cover the damage
to the work that was completed by subcontractors.
34
Commercial Liability Annotated CGL Policy, IRMI (7
th
Reprint, January 2001),
Section 5 at V.D. 47-8 [emphasis added]. See also Windt, supra, at § 11.3; T. J.
Casamassima and J. E. Jerles, Defining Insurable Risk in the Commercial General
Liability Insurance Policy: Guidelines for Interpreting the Work Product
Exclusion, WL 12-JAN CONSLAW 3 (Jan. 1992); J. D. Pierce, Jr., Allocating
Risk Through Insurance and Surety Bonds, WL 425 PLI/Real 193, 199 (1998); and
Comprehensive General Liability Policy Handbook, p. 106 (Nelson, P., Ed.).
By and large, courts throughout the United States have upheld the intent
behind the 1986 and subsequent CGL revisions. Wielinski, supra, at 219. The
lead case, O’Shaughnessy v. Smuckler Corp., 543 N.W.2d 99, 103 (Minn. Ct. App.
1996), petition for review denied (Minn. 1996), abrogated on other grounds,
Gordon v. Microsoft Corp. 645 N.W.2d 393 (Minn. 2002), notes:
Here, we are faced not with an omission, but an affirmative statement
on the part of those who drafted the policy language, asserting that the
exclusion does not apply to damages arising out of the work of a
subcontractor. It would be willful and perverse for this court
simply to ignore the exception that has now been added to the
exclusion.
We cannot conclude that the exception to exclusion (1) has no
meaning or effect. The CGL policy already covers damage to the
property of others. The exception to the exclusion, which addresses
“‘property damage’ to ‘your work,’” must therefore apply to damages
to the insured’s own work that arise out of the work of a
subcontractor. Thus, we conclude that the exception at issue was
intended to narrow the Business Risk Doctrine.
35
Id. A Wisconsin court similarly concluded:
For whatever reason, the industry chose to add the new exception to
the business risk exclusion in 1986. We may not ignore that language
when interpreting case law decided before and after the addition. To
do so would render the new language superfluous. [Citation omitted.]
We realize that under our holding a general contractor who contracts
out all the work to subcontractors, remaining on the job in a merely
supervisory capacity, can ensure complete coverage for faulty
workmanship. However, it is not our holding that creates this result: it
is the addition of the new language to the policy. We have not made
the policy closer to a performance bond for general contractors,
the insurance industry has.
Kalchthaler v. Keller Constr. Co., 591 N.W.2d 169, 173 (Wis. Ct. App. 1999)
[emphasis added].
Prior to J.S.U.B., only three (3) Florida cases had even referenced the
subcontractor exception to Exclusion l., which followed the 1986 amendment to
the CGL. These are the previously referenced cases of Home Owners Warranty,
Lassiter, and Deluxe Systems. These cases appear to hold, purportedly relying on
LaMarche, that faulty workmanship did not fall within the grant of coverage under
the CGL. Based on a perfunctory analysis, these courts did not address the
ramifications of the subcontractor exception. These holdings are clearly erroneous
under a proper view of LaMarche, as confirmed by CTC. Those Florida courts
which have considered both CTC and the subcontractor exception to exclusion l.
have invariably found coverage. J.S.U.B., 906 So. 2d 303; Essex, 429 F. Supp. 2d
1274; and Pozzi, 446 F.3d 1178.
36
3. Recognizing the subcontractor exception to exclusion l.
creates a harmonious and sensible coverage regime.
Before the Trial Court, INSURER claimed that BUILDER’S loss was
excluded by operation of Exclusion j. and several other exclusions. INSURER has
now jettisoned all arguments relating to the exclusions, quite rightly recognizing
that any inquiry in this area eviscerates their position. The CGL insuring
agreement terms “occurrence,” “accident,” and “property damage” work together
with exclusions j.5, j.6, and l. to create a harmonious and sensible coverage regime
for construction claims which, in keeping with the requirement of Florida law,
gives meaning to each and every portion of the CGL, interpreting the “policy as a
whole.” J.S.U.B., 906 So. 2d at 310. Where the “occurrence” manifests during
operations, exclusion j. will apply and exclude coverage for almost all defects
when the general contractor is still on the job. Thus, the general contractor and
subcontractor must remedy any errors before construction is complete. In contrast,
within the PCOH period, where exclusion l. applies, the builder will have coverage
for the errant work of his subcontractor which results in “property damage”
unexpected from the perspective of the insured. This construction of the policy
eliminates the “moral hazard” and “fortuity” concerns of INSURER.
The CGL was amended first by the BFPDE in 1976 and then by wholesale
changes in 1986 to cover the undisputed fact pattern of the loss in this case. The
37
new policy form, rather than eviscerating the business risk rule, merely creates a
narrow exception allowing coverage only when the following contractual
conditions are met:
1. The insured purchased a CGL which includes PCOH coverage;
2. There is an “occurrence” which constitutes an accident under
the policy of insurance;
3. There is physical damage to property;
4. The insured is “legally obligated” to pay damages because of
(2) and (3);
5. The “property damage” and “occurrence” were the result of the
errors or omissions of a subcontractor;
6. The errors or omissions of a subcontractor gave rise to damage
which first manifested after operations were complete.
The CGL then effectively shifts the risk to the carrier to pursue the party who
actually performed the improper construction, the subcontractor. Obviously, the
CGL carrier would remain subrogated to the rights of its insured, and would have
the full right to pursue such a claim against the subcontractor. Alternatively, it is
not uncommon in the insurance industry for the CGL carrier of the general
contractor to require, as a condition of coverage, that the general contractor be
listed as an additional insured under his subcontractor’s policies of insurance. This
allows the contractor’s CGL carrier to make its exposure excess to those damages
covered by the subcontractor’s policy.
The ISO has, since 2000, issued endorsements which would eliminate the
subcontractor exception to the “your work” exclusion. See, Patrick J. Wielinski,
38
Full Circle Regression: The New ISO “Your Work” Endorsements,
www.irmi.com/Expert/Articles/2002/Wielinski01.aspx (IRMI 2002), discussing
CG 22 94 (deleting entire subcontractor exception to exclusion l.) and CG 22 95
(deleting exception to exclusion l. as to specific listed projects). These new
endorsements were plainly unnecessary if INSURER’S position is correct and
there was no coverage for faulty workmanship in the first instance because there
was no “occurrence” or “property damage.” Carriers unhappy with their
adhesionary contracts may change them. With this in mind, it appears that the
marketplace may well be ahead of the courts on these issues.
E. The existence of divergent case law across the country establishes
ambiguity in the CGL insuring agreement.
INSURER falsely claims the majority of courts in the United States hold that
“faulty workmanship” does not constitute an “occurrence,” “property damage,” or
represents an uncovered breach of contract. While many cases have repeated the
unremarkable and simplistic verse - faulty workmanship, standing alone, is not
covered under a CGL - the key inquiry is whether there has been “property
damage,” as that term is defined in the CGL. Absent physical damage or loss of
use, there is no claim for coverage. The minority of cases which appear to hold, as
a blanket rule, that “faulty workmanship” is not covered under a CGL, would have
been better decided on other grounds found in the CGL. A review of case law
39
across the country establishes that most states and a vast majority of courts which
have evaluated the modern CGL or CGLs with BFPDE allow coverage where
property damage is present and the business risk exclusions are either inapplicable
on their face or subject to one of the exceptions to the business risk exclusions.
Eighteen (18) jurisdictions have case law favoring BUILDER’S position.
2
Twelve
(12) jurisdictions have conflicting case law, some of which supports BUILDER’S
2
Fejes v. Alaska Ins. Co., Inc., 984 P.2d 519 (Alaska 1999); Southwest
Metalsmiths, Inc. v. Lumbermens Mut. Cas. Co., 85 Fed. Appx. 552 (9
th
Cir. Ariz.
2004) (unpublished); Maryland Cas. Co. v. Reeder, 221 Cal. App. 3d 961 (Cal.
App. 4
th
Dist. 1990); Garamendi v. Golden Eagle Ins. Co., 2006 Cal. App. Unpub.
LEXIS 1375 (California Unpublished Opinions 2006); Vill. Homes of Colo., Inc.
v. Travelers Cas. Co. of Conn., 2005 Colo. LEXIS 1021 (Colo. Nov. 15, 2005);
AE-Newark Assoc., L.P. v. CNA Ins. Cos., 2001 Del. Super. LEXIS 370 (Del.
Super. Ct. 2001); Lee Builders, Inc. v. Farm Bureau Mut. Ins. Co., 137 P.3d 486
(Kan. June 9, 2006); Iberia Parish Sch. Bd. V. Sandifer & Son Constr. Co., 721 So.
2d 1021 (La. App. 3 Cir. Oct. 28, 1998); Broadmoor Anderson v. Nat’l. Union Fire
Ins. Co., 912 So. 2d 400 (La. App. 2 Cir. Sept. 28, 2005); French v. Assurance Co.
of Am., 448 F.3d 693 (4
th
Cir. Va. 2006) (interpreting Maryland law); Wanzek
Constr., Inc. v. Emplrs. Ins., 679 N.W.2d 322 (Minn. 2004); Thommes v.
Milwaukee Ins. Co., 641 N.W.2d 877 (Minn. 2002); Amerisure Mut. Ins. Co. v.
Paric Corp., 2005 U.S. Dist. LEXIS 30383 (D. Mo. 2005); Taylor-Morley-Simon,
Inc. v. Michigan Mut. Ins. Co., 645 F. Supp. 596 (D. Mo. 1986); Lindsay Drilling
& Contracting v. U.S.F. and G., 676 P.2d 203 (Mont. 1984); Portal Pipe Line Co.
v. Stonewall Ins. Co., 845 P.2d 746 (Mont. 1993); Auto-Owners Ins. v. Home
Pride Cos., Inc., 684 N.W.2d 571 (Neb. 2004); McKellar Dev. v. Northern Ins.,
837 P.2d 858 (Nev. 1992); CGU/Hawkeye Sec. Ins. v. Oasis Las Vegas Motor
Coach Park, 65 Fed. Appx. 182 (9
th
Cir. 2003) (interpreting Nevada law); High
Country Assoc. v. New Hampshire Ins. Co., 648 A.2d 474 (N.H. 1994); Fireguard
Sprinkler Systems, Inc. v. Scottsdale Ins. Co., 864 F.2d 648 (9
th
Cir. Or. 1998);
Padilla v. Levitt Homes Puerto Rico, Inc., 2006 PR App. LEXIS 1514 (P.R. Ct.
App. June 21, 2006); Am. Family Mut. Ins. Co. v. American Girl, Inc., 673
N.W.2d 65 (Wis. 2004).
40
position.
3
Eleven (11) states and the District of Columbia have no case law
interpreting the modern CGL or CGLS with BFPDE.
4
Further, many of the cases cited by INSURER are plainly distinguishable,
actually support BUILDER’S position, and/or are decided on bases not asserted by
INSURER in this action. Many of these cases are distinguishable because they:
1. Fail to constitute an “occurrence” or “accident.” Assurance Co.
of Am. v. Dusel Builders, 78 F. Supp. 2d 607 (W.D. Ky. 1999);
3
J.S.U.B. v. U. S. Fire Ins. Co., 906 So. 2d 303 (Fla. 2
nd
DCA 2005); Stratton &
Co. v. Argonaut Ins. Co., 469 S.E.2d 545 (Ga. Ct. App. 1996); Harbor Ins. Co. v.
Tishman Constr. Co., 578 N.E.2d 1197 (Ill. App. Ct. 1
st
Dist. 1991); Monticello
Ins. Co. v. Wil-Freds Constr., 661 N.E.2d 451 (Ill. App. Ct. 2
nd
Dist. 1996); James
Graham Brown Foundation, Inc. v. St. Paul Fire & Marine Ins. Co., 814 S.W.2d
273 (Ky. 1991); Bundy Tubing Co. v. Royal Indem. Co., 298 F.2d 151 (6
th
Cir.
Mich. 1962); Radenbaugh v. Farm Bureau Gen. Ins. Co., 610 N.W.2d 272 (Mich.
Ct. App. 2000); Transportes Ferreos De. Venez. II Ca v. NKK Corp., 239 F.2d 555
(3d Cir. N.J. 2001); C. O. Falter, Inc. v. Crum & Forster Ins. Cos., 361 N.Y.S.2d
968 (N.Y. Sup. Ct. 1974); Hotel des Artistes, Inc. v. General Accident Ins. Co. of
Am., 9 A.D.3d 181 (N.Y. App. Div. 2004); Iowa Mut. Ins. Co. v. Fred M.
Simmons, Inc., 128 S.E. 2d 19 (N.C. 1962); Travelers Indem. Co. of Am. v. Miller
Bldg. Corp., 142 Fed. Appx. 147 (4
th
Cir. 2005) (unpublished opinion)
(interpreting North Carolina law); Erie Ins. Exch. V. Colony Dev. Corp., 2003
Ohio App. LEXIS 6518 (Ohio Ct. App. 2003); Panzica Constr. Co. v. Ohio Cas.
Ins. Co., 1996 Ohio App. LEXIS 1975 (Ohio Ct. App. 1996); Okatie Hotel Group
v. Amerisure Ins. Co., 2006 U.S. Dist. LEXIS 2980 (D.S.C. 2006); Travelers
Indem. Co. of Am. v. Moore & Assoc., 2005 Tenn. App. LEXIS 596 (Tenn. Ct.
App. 2005), appeal granted Travelers v. Moore, 2006 Tenn. LEXIS 206 (Tenn.
Mar. 20, 2006); Lennar Corp. v. Great Am. Ins. Co., 200 S.W.3d 651 (Tex. App.
2006); Great Am. Ins. Co. v. Woodside Homes Corp., 2006 &.S. Dist. LEXIS
61453 (N.D. Utah August 28, 2006).
4
Alabama, Connecticut, District of Columbia, Idaho, Mississippi, New Mexico,
North Carolina, Oklahoma, Rhode Island, Vermont, Washington and Wyoming.
41
2. Do not involve “property damage.” Oak Crest v. Austin Mut.
Ins. Co., 998 P.2d 1254 (Ore. 2000);
3. Do not involve subcontractors’ errors for which a general
contractor is liable. Ray v. Valley Forge Ins. Co., 77 Cal. App.
4
th
1039 (Cal. App. 2
nd
Dist. 1999);
4. Involve exclusion j. which applies only during operations;
Lassiter, 699 So. 2d 768;
5. Involve exclusion k., the “your product” exclusion. Commerce
Ins. Co. v. Betty Caplette Builders, 647 N.E.2d 1211 (Mass.
1995).
5
6. Do not have PCOH coverage. Auto-Owners v. Marvin Dev.
Corp., 805 So. 2d 888 (Fla. 2
nd
DCA 2001);
7. Involve policy forms with specialized language. Nabholz
Constr. v. St. Paul Fire and Marine, 354 F. Supp. 2d 917 (E.D.
Ark. 2005);
8. Involve pre-1986 CGL forms. U.S.F. & G. v. Warwick Dev.,
446 So. 2d 1021 (Ala. 1984);
9. Involve irreconcilably differing opinions in the same state.
Custom Planning & Dev. Inc. v. Am. Nat. Fire Ins. Co., 606
S.E.2d 39 (Ga. Ct. App. 2004), cf Stratton & Co. v. Argonaut
Ins. Co., 469 S.E.2d 545 (Ga. Ct. App. 1996);
10. Are not construction related. Action Ads, Inc. v. Great Am.
Ins. Co., 685 P.2d 42 (Wyo. 1984);
Examples of cases where there is no coverage because no “property
damage” is involved are repeatedly cited in INSURER and its AMICI’S briefs, as
exemplified by West Orange Lumber Company, Inc. v. Ind. Lumbermens Mut. Ins.
Co., 898 So. 2d 1147 (Fla. 5
th
DCA 2005). In West Orange, the lumber company
was alleged to have provided lower quality cedar siding than was required by the
5
BUILDER has, quite correctly, not asserted the “your product” exclusion. The
modern definition of “your product” specifically excepts real estate from its
definition, and as such, construction claims are analyzed under the j. and l.
exclusions under the modern CGL. Wanzek Constr., Inc. v. Employers Ins. of
Wausau, 679 N.W.2d 322, 327 (Minn. 2004).
42
contract. Id. The only damage alleged was the cost or expense of the vendor to
remove the product and supply an acceptable substitute. Id. Crucially, there is
nothing in the case which indicates that there was any physical damage to tangible
property or loss of use of the subject property. The opinion does not discuss
whether the builder intentionally or inadvertently used the improper siding.
Certainly, if the builder had purposefully and volitionally chosen the improper
siding, this would not constitute an “occurrence” or “accident.” Even assuming
that the use of the improper siding was sufficient to qualify as an “occurrence,”
there was simply no “property damage,” which would have also been required to
trigger coverage. Accordingly, the result of the West Orange case is correct even
if its reasoning is not. The West Orange facts stand in complete contrast to the
instant case where, as a result of the errors of BUILDER’S subcontractors, a rain
induced collapse of the soil took place, causing damage to the foundation, interior
walls, drywall, cabinets, and moldings to the homes. It is this distinction that
makes coverage available under the CGL. Where faulty workmanship exists but
does not lead to damage to property, no coverage exists Examples of faulty
workmanship which do not involve “property damage” include, but are not limited
to, use of incorrect or insufficient materials, wrong color or type of paint, failure to
complete job related tasks, and improper installation of doors that open in the
wrong direction. However, where the defective construction results in unintended
43
physical damage to tangible property, coverage is available unless otherwise
excluded by the CGL. These cases demonstrate that the terms “property damage”
and “occurrence” do have a role in the initial coverage evaluation, but are not
dispositive with respect to faulty workmanship which causes unintended physical
damage or loss of use of property.
Some of the cases cited by INSURER are factually indistinguishable and
still hold that faulty workmanship even where it results in “property damage” is not
an “occurrence.” These cases almost invariably suffer from two (2) errors. First,
they incorporate a parsimonious view of the term “occurrence” which improperly
incorporates tort related concepts of expectation and foreseeability into the contract
of insurance. Secondly, these cases almost without exception, fail to analyze the
evolution of the subcontractor exception to exclusion l. These cases suggest that
damage to the insured’s own work from failure to perform a construction contract
is presumed to be expected, while damage of the work or property of a third-party
is presumed to be unexpected. This Court quite rightly rejected this line of
reasoning in CTC and its progeny. This view is impossible to countenance and
causes one to wonder why the drafters of the CGL felt it necessary to include the
numerous “business risk” exclusions if coverage did not exist in the first instance.
Bruner & O’Connor, supra, Ch. 11. Certainly, this constrained view of the CGL is
not what the insurance industry promoted when it revised the CGL to include the
44
“subcontractor exception.” Moreover, one has to wonder how the “subcontractor
exception” to Exclusion l. would ever apply under this view of the CGL.
There is a massive nationwide dispute, with numerous state and federal
courts reaching different views as to coverage under the same policy forms, which
demonstrate ambiguity in the CGL relative to the terms “occurrence,” “property
damage,” and coverage for breach of contract. Investors Diversified, 407 So.2d
314. The more recent and better reasoned cases trend towards BUILDER’S
position. This Court is not faced with a few rogue courts interpreting policies
favorably to policyholders. One federal circuit court has been left in the
anomalous position of ruling three (3) different ways on the same issue before this
Court, predicting three (3) different outcomes. Limbach Co., LLC v. Zurich Am.
Ins. Co., 396 F.3d 358 (4
th
Cir. 2005) (applying Pennsylvania law to hold that a
CGL covers all damage caused by subcontractors’ error in the completed
operations), French, 448 F.3d 693 (applying Maryland law and holding that an
occurrence exists as to any damage one subcontractor’s work does to the work of
the general contractor or other subcontractors), Travelers v. Miller Bldg. Corp.,
142 Fed. Appx. 147 (applying North Carolina law and holding that defective
construction which allowed water to leak into hotel damaging walls and carpet
constituted an occurrence). If this divergence of holdings does not prove
ambiguity, nothing can.
45
F. BUILDER’S proposed construction of the CGL does not implicate
any public policy concerns.
INSURER erroneously claims that the subject loss would implicate “public
policy” concerns, disallowing coverage. INSURER’S resort to public policy is a
tacit admission that the loss in this case is covered, and a naked request this Court
save INSURER from its own creation. This Court has long recognized that the
courts should hold themselves bound to observance of extreme caution when called
upon to declare a transaction void on the grounds of public policy. Atlantic C. L.
R. Co. v. Beazley, 45 So. 761 (Fla. 1907). In the context of insurance policies, in
the absence of statutory provisions to the contrary, insurers have the right to limit
their liability and to impose such conditions as they wish upon their obligations.
France v. Liberty Mut. Ins., 380 So. 2d 1155 (Fla. 3
rd
DCA 1980). It is beyond the
privy of the courts of Florida to insulate carriers from insuring unusual risks in
their adhesionary contracts as a matter of public policy. Stack v. State Farm Mut.
Auto. Ins. Co., 507 So. 2d 617 (Fla. 3
rd
DCA 1987).
This Court has recently reaffirmed the narrow circumstances under which a
policy of liability insurance is deemed contrary to public policy. Travelers, 889
So. 2d 779. In that case, this Court reaffirmed the two-factor test stated in Ranger
Ins. Co. v. Bal Harbour Club, Inc., 549 So. 2d 1005 (Fla. 1989): 1) “whether the
existence of insurance will directly stimulate commission of the wrongful act”,
46
and 2) whether the purpose served is “to deter wrongdoers or compensate victims.”
It is telling that while INSURER and its AMICI seek refuge from their policy
language under the guise of “public policy,” they do not even endeavor to apply
the Bal Harbour test to the facts of this case. Applying the Bal Harbour test, public
policy does not prohibit coverage in this case. As to the first prong, “[w]here
liability is not predicated on intent, however, the rule is not implicated.” Travelers,
889 So. 2d at 794. In our case, the parties have stipulated that liability was not
predicated on intent and that the damage was clearly unintended and accidental.
As to the second prong, protecting Florida homeowners by repairing their homes
pursuant to the 1986 changes to the CGL insuring agreement furthers and indeed
serves public policy of the State of Florida. The damages sought by the
homeowners in this case have nothing whatsoever to do with deterring the actions
of builders, but instead represent compensation. Crucially, those cases in Florida
which have held that public policy prohibits coverage for faulty workmanship
claims, perform no analysis under the Bal Harbour test. Instead, these courts have
reflexively cited to LaMarche for propositions it clearly does not support.
INSURER and its AMICI argue that insuring construction defects represents
a moral hazard, more specifically, that the availability of insurance will encourage
builders to improperly discharge their contractual duties. The history of liability
insurance in Florida has proved otherwise. To be sure, all forms of liability
47
insurance represent a potential moral hazard. Even a standard malpractice policy
issued to an engineer, doctor, or attorney creates a “moral hazard” that the person
will not properly discharge his contractually agreed to duties. However, society
has long gotten past any concerns over these issues and we regularly accept first
and third party insurance as necessities of modern life. Lawyers, doctors and
builders have many other pressures which will keep them from acting
improvidently due to the existence of a liability policy. All of these parties face
regulatory control in the form of licensing, marketplace pressures related to their
ability to compete and obtain business, and the certainty that if claims are made,
insurance premiums will go up or policies will be cancelled or non-renewed. The
CGL sold by INSURER is no different from other common policies. INSURER’S
parade of horribles is a fantasy that ignores market and regulatory reality.
The only types of insurance coverage which the courts of Florida have held
void against public policy are those covering intentional acts which were intended
to cause harm and claims for punitive damages against the actual wrongdoer.
Prudential Property & Casualty Ins. Co. v. Swindal, 622 So. 2d 467 (Fla. 1993);
Landis v. Allstate Ins. Co., 546 So. 2d 1051 (Fla. 1989); Bal Harbour, 549 So. 2d
1005; Nicholson v. American Fire & Casualty Ins. Co., 177 So. 2d 52 (Fla. 2
nd
DCA 1965); U.S. Concrete Pipe Co. v. Bould, 437 So. 2d 1061 (Fla. 1983); Mason
v. Florida Sheriffs’ Self-Insurance Fund, 699 So. 2d 268 (Fla. 5
th
DCA 1997); and
48
Lindheimer v. St. Paul Fire & Marine Ins. Co., 643 So. 2d 636 (Fla. 3
rd
DCA
1994). Nothing about construction defect cases justifies adding them to this
limited list while other professional liability claims remain insurable. Further, this
Court has never limited the availability of coverage for damage to property as a
matter of public policy. Certainly, the type of insurance in question in this case is
less pernicious and socially dangerous than the coverage which was afforded in
Travelers, 889 So. 2d 779 (holding that coverage was available despite allegations
of activities that were substantially certain to cause injuries). BUILDER merely
seeks enforcement of the very narrow exception (intentionally placed in the policy)
to the business risk exclusions. This exception to the exclusion does not protect
the builder from any of his own negligence, but instead protects the builder
from the inadvertent construction errors of another party, the subcontractor,
and only when the loss occurs after operations are complete. This is syllogistically
indistinguishable from this Court’s holdings allowing insurance coverage for the
passive tortfeasor who becomes responsible for punitive damages as a result of the
conduct of the active tortfeasor. U.S. Concrete, 437 So. 2d 1061. This case
involves an additional level of fortuity in that an act of God, rain, gave rise to the
defects which are in dispute. The insurance industry has the ultimate power at
their disposal to avoid liability they do not wish to insure. They need only draft
clear, unambiguous contracts which delineate what is or what is not within the
49
scope of coverage. This Court should not rewrite the bargain. Those cases in
Florida purporting to do so fail to apply the Bal Harbour test, instead reflexively
following LaMarche for a proposition it does not support. Many cases around the
country recognize the “policy” behind the “business risk” exclusions, however, this
does not give the reasons for the exclusions life on their own apart from their
appearance as terms in the CGL. LaMarche and Weedo are examples of these
cases. This Court should reject INSURER’S invitation to be the first state supreme
court in the country to use public policy to trump the plain language and intended
result of the modern CGL.
G. The Economic Loss Doctrine has absolutely no applicability to the
interpretation of the insurance policies involved in this case.
INSURER is, for the first time in this appeal, attempting to weave the
Economic Loss Doctrine into their arguments of how to interpret the subject policy
of insurance. This issue was not raised or preserved below. The Economic Loss
Doctrine as defined by this Court in Casa Clara Condominium Ass’n, v. Charley
Toppino & Sons, Inc., 620 So. 2d 1244 (Fla. 1993) is a liability defense and
remedies doctrine which has no role in the evaluation of insurance coverage.
Importing Casa Clara’s Economic Loss Doctrine results in a confusing mish mash
of concepts borrowed from substantive law which do not aid in analyzing coverage
under the CGL. Travelers, 889 So. 2d 779, 793 n.15. The majority of courts that
50
have considered this issue have resoundingly held that the Economic Loss Doctrine
has no role in proper analysis of the policy language. See Vandenberg, 982 P.2d
229; American Girl, 673 N.W.2d 65.
The Economic Loss Doctrine would be of little value to the INSURER in the
instant case in any event. Every homeowner in Florida has remedies, pursuant to
Florida’s standard building code, via § 553.84 of Florida Statutes (2005). See
Comptech Int’l, Inc. v. Milam Commerce Park, Ltd., 753 So. 2d 1219 (Fla. 1999).
CONCLUSION
Applying Florida’s rules of insurance policy construction, the claim for
coverage in the instant case is absolutely clear. The District Court below followed
these rules and correctly granted coverage. INSURER should not be allowed to
avoid coverage which was granted and intended under its policy. BUILDER asks
this Court to join the vastly emerging majority of courts interpreting the modern
CGL to allow coverage under the undisputed fact pattern of this case. The
judgment of the District Court should be approved.
Respectfully submitted,
By:__________________________
Mark A. Boyle, Sr.
xii
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy hereof has been
furnished by U. S. Mail on this ____ day of November, 2006, to: See attached list.
FINK & BOYLE, P.A.
2050 McGregor Boulevard
Fort Myers, FL 33901
Telephone: (239) 337-1303
Facsimile: (239) 337-7674
E-mail: Mark@fink-boyle.com
By:___________________________ By:___________________________
Mark A. Boyle, Sr. Michael G. Fink
FBN: 0005886 FBN: 0825743
By:___________________________
Geoffrey H. Gentile, Sr.
FBN: 898562
SERVICE LIST - CASE NO. SC05-1295
Ronald L. Kammer, Esquire David K. Miller, Esquire
Valerie M. Jackson, Esquire Ginger L. Barry, Esquire
vj [email protected] Broad and Cassel
Sina Bahadoran, Esquire 215 S. Monroe Street, Suite 400
[email protected] Tallahassee, FL 32301
Hinshaw & Culbertson LLP Telephone: (850) 681-6810
9155 South Dadeland Blvd., Suite 1600 Facsimile: (850) 681-9792
Miami, FL 33156 Counsel for Florida Home Builders Association
Telephone: (305) 358-7747 and National Association of Home Builders
Facsimile: (305) 577-1063
Counsel for Petitioner R. Hugh Lumpkin, Esquire
hlumpkin@vpl-law.com
Joseph R. Miele, Esquire Michael F. Huber, Esquire
[email protected] mhuber@vpl-law.com
Adorno & Yoss Stephen A. Marino, Jr., Esquire
350 East Las Olas Blvd., Ste. 1700 smarino@vpl-law.com
Fort Lauderdale, FL 33301 Ver Ploeg & Lumpkin, P.A.
Telephone: (954) 763-1200 100 S.E. 2
nd
Street, Suite 2150
Facsimile: (954) 766-7800 Miami, FL 33131
Counsel for Petitioner Telephone: (305) 577-3996
Facsimile: (305) 577-3558
June Galkoski Hoffman, Esquire Counsel for Arvida/JMB Partners, L.P. Arvida/JMB
jhoffman@fowler-white.com Managers, Inc., Arvida Mgmt. Limited Partnership,
Helaine S. Goodner, Esquire and Mercedes Homes, Inc.
Fowler White Burnett, P.A.
Esperito Santo Plaza, 14
th
Floor Steven G. Schember, Esquire
1395 Brickell Avenue Duane A. Daiker, Esquire
Miami, FL 33131-3302 Shumaker, Loop & Kendrick, LLP
Telephone: (305) 789-9249 101 Kennedy Boulevard, Suite 2800
Facsimile: (305) 789-9201 Tampa, FL 33602-5151
Counsel for Petitioner Telephone: (813) 229-7600
Facsimile: (813) 229-1660
Donna M. Greenspan, Esquire Counsel for Amwest Surety Ins. Co.
Edwards Angell Palmer & Dodge LLP Patrick J. Wielinski, Esquire
One North Clematis Street, Suite 400 Cokinos, Bosien & Young, P.C.
West Palm Beach, FL 33401 2221 East Lamar Blvd., Suite 750
Telephone: (561) 820-0249 Arlington, TX 76006
Facsimile: (561) 655-8719 Telephone: (817) 608-9533
Counsel for Petitioner Facsimile: (817) 649-3300
Counsel forAssoc’d. General Contractors of
Denise V. Powers, Esquire America/FL A.G.C. Counsel, Inc./The Assoc’d.
2600 Douglas Road, Suite 501 General Contractors of Greater FL, Inc./South FL
Coral Gables, FL 33134 Chapter of the Assoc’d. General Contractors/FL
Telephone: (305) 444-5100 East Coast Chapter of Assoc’d. General
Facsimile: (305) 444-4455 Contractors of America/American Subcontractors
Counsel for National Assoc. Mut. Ins. Co. Assoc./American Subcontractors of FL
2
Pamela A. Chamberlain, Esquire John Bond Atkinson, Esquire
Mitrani, Rynor & Adamsky, P.A. Rebecca A. Brownell, Esquire
One S.E. Third Avenue Ellie A. Levy, Esquire
Miami, FL 33131 Atkinson & Brownell, P.A.
Telephone: (305) 358-0050 One Biscayne Tower, Suite 3750
Facsimile: (305) 358-0550 2 South Biscayne Boulevard
Counsel for Mid-Continent Casualty Co. Miami, FL 33131
Telephone: (305) 376-8840
William D. Horgan, Esquire Facsimile: (305) 376-8841
Fuller, Johnson & Farrell Counsel for Amerisure Mut. Ins. Co.
Post Office Box 1739
Tallahassee, FL 32302-1739 Warren H. Husband, Esquire
Telephone: (850) 224-4663 [email protected]
Counsel for Complex Ins. Claims Metz, Hauswer & Husband
Litigation Assoc. Post Office Box 10909
Tallahassee, FL 32302-2909
Perry N. Bass, Esquire Telephone: (850) 205-9000
Post Office Box 52163 Facsimile: (850) 205-9001
Houston, TX 77052 Counsel for Assoc’d. General Contractors of
Telephone: (281) 359-7440 America
Facsimile: (281) 359-7446
Counsel for Hartford Fire Ins. Co. Daniel J. Santaniello, Esquire
Paul S. Jones, Esquire
Christopher W. Martin, Esquire Luks & Santaniello, L.L.C.
Levon G. Hovnatanian, Esquire 515 East Las Olas Boulevard, Suite 1100
Martin, Disiere, Jefferson & Wisdom, LLP Fort Lauderdale, FL 33301-4203
808 Travis, Suite 1800 Telephone: (954) 761-9900
Houston, TX 77002 Facsimile: (954) 761-9940
Telephone: (713) 632-1700 Counsel for Poole & Kent Co.
Facsimile: (713) 222-0101
Counsel for Hartford Fire Ins. Co. Keith Hetrick, Esquire
201 E. Park Avenue
Joseph L. Oliva Tallahassee, FL 32301-1511
Oliva & Associates Telephone: (850) 224-4316
11838 Bernardo Plaza Court, Suite 101 Facsimile: (850) 224-7933
San Diego, CA 92128 Counsel for FL Home Builders Association
Telephone: (858) 385-0491
Interested Party James P. Waczewski, Esquire
Post Office Box 2185
Donald E. Elder, Esquire Orlando, FL 32802-2185
Tressler, Soderstrom, Maloney Telephone: (407) 461-8020
& Priess, LLP Facsimile: (407) 658-6629
233 S. Wacker Drive, 22
nd
FL
Chicago, IL 60606
Telephone: (312) 627-4000
Facsimile: (312-627-1717
xiii
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this Reply Brief complies with the font requirements of
Fla.R.App.P. Rule 9.100(1). The font utilized is Times New Roman, 14-Point.
FINK & BOYLE, P.A.
2050 McGregor Boulevard
Fort Myers, FL 33901
Telephone: (239) 337-1303
Facsimile: (239) 337-7674
E-mail: Mark@fink-boyle.com
By:___________________________
Mark A. Boyle
FBN: 0005886
Michael G. Fink
FBN: 0825743
Geoffrey H. Gentile, Sr.
FBN: 898562
z:\200100 fhb v soil\200100 fhb v soil\appeal\supreme court\answer brief.doc
