Opinion ID: 794236
Heading Depth: 3
Heading Rank: 4

Heading: Recent Split in Florida Courts

Text: 74 Although the majority of Florida interim appellate courts have concluded CGL policies do not cover repair or replacement of the defective construction itself, in J.S.U.B., Inc. v. United States Fire Insurance Co., 906 So.2d 303 (Fla.Dist.Ct.App. 2005), the Florida Court of Appeal, Second District, came to the opposite conclusion. In J.S.U.B., the claims at issue related to damage resulting from the subcontractor's faulty work in constructing houses, and the insurer argued that the damages were outside the scope of the CGL policies. The court acknowledged LaMarche and its progeny, but concluded that both the standard CGL provisions and the controlling law had changed since LaMarche. 3 75 The Florida court first noted that the policies contained broad insuring language covering property damage caused by an occurrence, defined as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. J.S.U.B., 906 So.2d at 308. Accident was undefined in the policies. Id At the time LaMarche was decided, Florida law defined accident, for insurance coverage purposes, to exclude the natural and probable consequences of the insured's deliberate actions. Id. (citing Hardware Mut. Cas. Co. v. Gerrits, 65 So.2d 69 (Fla.1953)). But in State Farm Fire & Casualty Co. v. CTC Development Corp., 720 So.2d 1072, 1076 (Fla.1998), the Florida Supreme Court broadened the scope of insurance coverage, concluding that an occurrence included not only an accidental event but also `the unexpected injury or damage resulting from the insured's intentional acts. Thus, if the resulting damages are unintended, the resulting damage is accidental even though the original acts were intentional.' J.S.U.B., 906 So.2d at 308 (quoting CTC, 720 So.2d at 1075) (other quotation marks and citation omitted). In CTC, the Florida Supreme Court concluded that a contractor's construction of a home in violation of setback requirements, where the contractor was under the mistaken belief that it had obtained a variance, was an occurrence under the policy. CTC, 720 So.2d at 1076. Based on this expanded definition of coverage events, the J.S.U.B. court concluded that LaMarche and its progeny no longer compelled the conclusion that CGL policies do not provide coverage for claims for repair or replacement of the subcontractor's faulty work. J.S.U.B., 906 So.2d at 309. 76 The Florida court in J.S.U.B. also looked to the policies' exclusions to determine that coverage existed. The court acknowledged that, under Florida law, an exclusion cannot create coverage. However, the Florida court also recognized that `[r]eading the coverage provision of the policy together with the exclusionary clause could support a conclusion that coverage is provided in the ... policy for occurrences where the insured did not intend or expect to cause harm to the third party.' Id. at 310 (quoting CTC, 720 So.2d at 1075). 77 In J.S.U.B., the Florida court also addressed the same exclusions relevant here and found that they supported coverage of claims for repair or replacement of a subcontractor's faulty work. Specifically, the Florida court reasoned as follows: 78 ... Subparagraph 6 excludes coverage for restoration, repair, or replacement that is required because of work that was incorrectly performed. However, an exception to the exclusion is for property damage included in the products-completed operations hazard. If we were to read the policies as suggested by the Insurer, without considering the import of the exclusions, it is arguable that this exclusion and exception to the exclusion would have no meaning or effect in this policy .... 79 Similarly, the Damage To Your Work exclusion contains an exception for work performed by a subcontractor on the Builder's behalf. The Insurer does not contend that the exclusion applies: instead, it simply reiterates its view that the policy simply provides no coverage for the Builder's claims. If the policies provide coverage, the exception to this exclusion would apply because the damage that occurred was the result of the subcontractors' use of poor soil and improper soil compaction and testing. Accordingly, based on our conclusion that the policies provide coverage, this exclusion does not apply because the exception to the exclusion applies. 80 Id. Thus, the Florida court concluded that LaMarche was inapplicable, that the policies provided coverage, and that none of the exclusions applied. Id. at 310-11. However, the Florida Supreme Court on April 5, 2006, accepted jurisdiction of the J.S.U.B. case and ordered briefing.