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By: Bart Gary and Tim Holdsworth
Earlier this month, in Altman Contractors, Inc. v. Crum & Forster Specialty Insurance Co., the Eleventh Circuit certified to the Florida Supreme Court the question of whether Florida’s statutory notice and repair process constitutes a suit under a commercial general liability (“CGL”) policy, triggering the insurer’s duty to defend. In this case, Altman Contractors, Inc. (“ACI”) served as the general contractor for the construction of a condominium. In 2012, the condominium served ACI with a notice of claim under Florida’s notice and repair statute, which establishes a process to resolve construction disputes between property owners and contractors, subcontractors, suppliers, or design professionals.
ACI then sent a demand letter to Crum & Forster Specialty Insurance Co. (“C&F”) notifying it of the notice of claim and demanding that C&F defend and indemnify ACI. C&F denied that it had a duty to defend ACI because the matter was “not in suit” as that term was defined in the insurance policies. The CGL policy defined “suit” as:
“Suit” means a civil proceeding in which damages because of “bodily injury”, “property damage” or “personal and advertising injury” to which this insurance applies are alleged. “Suit” includes:
a. An arbitration proceeding in which such damages are claimed and to which the insured must submit or does submit with our consent; or
b. Any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent.
The policy did not define “civil proceeding.” ACI then filed a lawsuit against C&F seeking a declaration that C&F owed it a duty to indemnify and defend. The district court found that the policy language was unambiguous and the notice and repair process was not a “suit” because it did not meet Black’s Law Dictionary’s definition of “civil proceeding” (“[a] judicial hearing, session, or lawsuit in which the purpose is to decide or delineate private rights and remedies, as in a dispute between litigants in a matter relating to torts, contracts, property, or family law”).
The Eleventh Circuit found that the outcome of the case may have significant practical and policy implications for Florida. For example, C&F argued that imposing a duty to defend on insurers during the notice and repair process would fuel an insurance crisis in the state by increasing the cost of insurance and limiting its availability. Because of these possible implications and the lack of guidance from Florida courts on the issue, the Eleventh Circuit found it appropriate to certify the question to the Florida Supreme Court.
We will keep you updated on this matter once the Florida Supreme Court issues a decision. In the meantime, feel free to contact counsel at Freeman Mathis & Gary if you have any questions or would like guidance on these issues.