On December 14, 2017, the Florida Supreme Court held in Altman Contractors, Inc. v. Crum & Forster Specialty Insurance Company, No. SC16-1420 that a CGL insurer may have a duty to defend its insured/general contractor which had been served with several Chapter 558 notices in Florida (but which had not yet been named a party to any lawsuit).
Altman was the general contractor for a condominium project in Florida. Crum & Forster provided CGL coverage to Altman. Pursuant to its policies, C&F had a duty to defend a “suit,” defined in the policies as “a civil proceeding … includ[ing] … any … alternative dispute resolution proceeding … to which the insured submits with [C&F’s] consent.”
The Condominium sent Altman several notices under Chapter 558 of the Florida Statutes, complaining about construction defects at the project. Chapter 558 sets forth a settlement process and procedural requirements (i.e., written notice to the contractor etc.) before a claimant may file a construction defect action in Florida.
Altman notified C&F of the Chapter 558 notices and demanded defense and indemnity. C&F rejected Altman’s demand on the grounds that the Chapter 558 notices were not “suits” as defined in the CGL policies. Altman disagreed, settled all of the Condominium’s claims, and filed coverage litigation in federal court. Eventually, the Eleventh Circuit Court of Appeals certified the following question to the Florida Supreme Court:
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?
In deciding that issue, the Florida Supreme Court first concluded that a Chapter 558 process does not constitute a “civil proceeding” because the notice recipient’s (i.e., Altman’s) participation in the Chapter 558 settlement process is not mandatory or adjudicative. But, the Court also ruled that Chapter 558 notices fall within the definition of an “alternative dispute resolution,” like a mediation, and thus held that the Chapter 558 notices would constitute a “suit” that C&F was obligated to defend IF C&F consented to Altman’s submission to the “alternative dispute resolution proceeding.” Whether C&F consented was not before the Florida Supreme Court, so the Court did not further address that issue.
Video of the Florida Supreme Court argument is available here.