Presented by the Architectural, Engineering & Construction Defect Litigation Practice Group

Legal Updates for Construction Litigation

December 14, 2017

Florida Supreme Court Rules Ch. 558 Is a "Suit"

On December 14, 2017, the Florida Supreme Court issued its long-awaited opinion in the case of Altman Contractors, Inc. v. Crum & Forster Specialty Insurance Company, Case No.: SC16-1420 (Fla. 2017). For years there has been great debate among insurers as to whether the service of a pre-suit notice of construction defect, pursuant to Chapter 558, Florida Statutes, constituted a "suit" under a CGL Policy. The Florida Supreme Court has now answered that question – Yes.

The Altman case was the result of a declaratory judgment action in the Southern District of Florida, which was later appealed to the Eleventh Circuit Court of Appeals. The Eleventh Circuit certified the following question:

Is the notice and repair process set forth in chapter 558, Florida Statutes, a "suit" within the meaning of the commercial general liability policy issued by C&F to Altman?

Altman, 832 F. 3d 1318 (11^th Cir. 2016). The Florida Supreme Court's ruling now clarifies this question in the affirmative.

The C&F policy provided:

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. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result.

"Suit" was further defined 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 Supreme Court analyzed the issues in Altman and determined that although the Chapter 558 process did qualify as a "civil proceeding" under the policy, it did qualify as a form of "alternative dispute resolution" and therefore met the definition of a "suit" under the policy.

The Supreme Court did not go so far as to rule a Chapter 558 notice triggers the duty to defend, as the issue of whether Altman "submitted" to the Chapter 558 process with C&F's "consent" was not a part of the certified question. But, it is clear from the Supreme Court's ruling insured's will use the Altman ruling as a basis for triggering the duty to defend when faced with a notice of construction defect pursuant to Ch. 558, Florida Statutes.

_{The material in this law alert has been prepared for our readers by Marshall Dennehey Warner Coleman & Goggin. It is solely intended to provide information on recent legal developments, and is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We welcome the opportunity to provide such legal assistance as you require on this and other subjects. To be removed from our list of subscribers who receive these complimentary Construction Litigation Law Alerts, please contact ebferguson@mdwcg.com. If however you continue to receive the alerts in error, please send a note to ebferguson@mdwcg.com.}