HCBA Lawyer Magazine Vol. 28, No. 4 | Page 24

suPreMe Court addresses insurer’s duty to defend during ChaPter 558 ProCess
Construction law Section
Chairs: Ryan Baya - Mills Paskert Divers & Derek Kantaskas - Carlton Fields
the reasoning and analysis
the Court employed (in
this case) is likely to have
wide-ranging impacts upon
T
he Florida Supreme
Court recently
answered a question
that will affect
construction defect claims and
insurers called upon to defend
them. In Altman Contractors, Inc. v.
Crum & Forster Specialty Insurance
Company, 232 So. 3a 273, the
Florida Supreme Court ruled that
the pre-suit notice-and-repair
process, Chapter 558, Florida
Statutes, is a “suit” within the
meaning of a commercial general
liability policy that Crum & Forster
(C&F) issued to Altman Contractors.
Altman was the general
contractor on a condominium
project. After construction, the
condominium association served
Altman with several pre-suit
Chapter 558 notices of claim
that alleged construction defects.
Altman demanded that its insurer,
C&F, defend and indemnify
Altman against the Association’s
claims. C&F denied Altman’s
demands. Without C&F’s
involvement, and before a lawsuit
was filed, Altman settled the
Association’s claims. Altman then
sued C&F for a declaration that
C&F had a duty to defend and
indemnify Altman against the
Association’s notices and claims.
The Eleventh Circuit ultimately
certified to the Florida Supreme
Court whether the Chapter 558
process fell within the commercial
22
construction defect litigation.
© Can Stock Photo / alexskopje
general liability policy’s definition
of “suit.”
Based on the policy’s definition
of “suit,” as well as the language
and purpose of Chapter 558, the
Florida Supreme Court answered
this question in the affirmative.
The Court held that the Chapter
558 process is an “alternative
dispute resolution proceeding”
within the policy’s definition
of “suit.”
In analyzing the policy, the
Court first concluded that the
Chapter 558 process is not a “civil
proceeding” covered under the
policy’s primary definition of
“suit.” But the Court concluded
that the Chapter 558 process fell
within the alternative definition
applicable to any “alternative
dispute resolution proceeding.”
Therefore, the Court reasoned,
the Chapter 558 process was a
“suit” under C&F’s policy.
The Florida Supreme Court did
not go so far as to find that C&F
had a duty to defend and indemnify
Altman against the Association’s
Chapter 558 notices. To establish
such a duty, Altman had to prove,
under the policy’s definition of
“alternative dispute resolution
proceeding,” that C&F consented to
Altman’s submission to the Chapter
558 process. That issue presented a
disputed question of fact that the
Court could not resolve.
While the Florida Supreme
Court’s ruling in Altman may be
limited to the specific terms of
the insurance policy involved, the
reasoning and analysis the Court
employed is likely to have wide-
ranging effects on construction
defect litigation. The Court’s
holding also raises a number of
questions that Florida courts likely
will address in the future:
• How much information must
a Chapter 558 notice contain
to trigger an insurer’s duty to
defend, and does the “eight
corners rule” now apply to
Chapter 558 notices?
• Must an insurer’s consent be
in writing or does participating
in or monitoring the process
establish the
consent required
to trigger a duty
to defend?
Stay tuned, as
these issues and
more are sure
to be litigated in
the coming years
in Altman’s wake.
Authors: Jeffrey
M. Paskert and
Dara L. Dawson
- Mills Paskert
Divers P.A.
MAR - APR 2018
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HCBA LAWYER