Florida Supreme Court Withdraws Opinion On CD Issues
Has there ever been a court that certifies more insurance issues to state courts than today’s Eleventh Circuit? (well, yes, there’s the Fifth Circuit too). Now a state court, after initially answering a question concerning insurance coverage for construction defect claims, has changed its mind and tossed the file back to the federal courts due to a lack of clarity with respect to a key factual question.
Back in December, the Florida Supreme Court had answered a certified question from the Eleventh Circuit in Auto-Owners Ins. Co. v. Pozzi Window Co., No. SC06-779 (Fla. December 20, 2007) that a lawsuit brought against a contractor for water damage caused by the defective installation of windows at a multi-million dollar house in Coconut Grove was not covered since CGL policies do not cover the cost of repair and replacement of defective work.
In Pozzi Window Co. v. Auto-Owners Ins. Co., 446 F.3d 1178 (11th Cir. 2006), the Eleventh Circuit certified to the Supreme Court the issue of whether the defective windows were completed works such that the cost of repairing or replacing the defective windows fell within the scope of the policy’s coverage for claims within the “products/completed operations hazard.” In light of recent Florida appellate decisions that have split on the issue of whether repair or replacement costs are covered under a CGL policy, the Eleventh Circuit asked the Florida Supreme Court to answer whether a standard CGL policy that included coverage for claims within the products/completed operations hazard would cover a general contractor’s liability to a third party for the cost of repairing or replacing defective work by its subcontractor. Unlike its opinion J.S.U.B., the Florida Supreme Court observed that in this case, while the defective installation of the windows was an “occurrence,” the cost of repairing and removing defective work was not a claim for “property damage.”
Last week, however, the Florida Supreme Court withdrew its December 20, 2007 opinion and declared in Auto Owners Ins. Co. v. Pozzi Window Co., No. SCO6-779 (Fla. June 12, 2008) that it was unable to answer the Eleventh Circuit’s certified question owing to the fact that the court had failed to clarify whether the water damage resulted from defective installation, for which there would not be coverage, or defects in the installed windows themselves. In keeping with its opinion in U.S. Fire Ins. Co. v. JSUB, the Supreme Curt noted that if the windows were not defective prior to their installation, coverage would exist for the cost of repair or replacement of the windows because there was physical injury to tangible property (the windows) caused by their defective installation by a subcontractor. However, a different result would follow if the windows were in a defective condition before being installed and the damage to the completed project was therefore caused by defective windows rather than faulty installation alone.
