Court Opinion

ID: 221036
Source: CourtListenerOpinion
Date Created: 2011-07-15 00:02:26+00
Date Added: 2024-06-11T17:28:48.524785
License: Public Domain

[DO NOT PUBLISH]

                        IN THE UNITED STATES COURT OF APPEALS

                               FOR THE ELEVENTH CIRCUIT           FILED
                                ________________________ U.S. COURT OF APPEALS
                                                                     ELEVENTH CIRCUIT
                                       No. 10-12821                     JULY 14, 2011
                                 ________________________                JOHN LEY
                                                                           CLERK
                             D.C. Docket No. 0:09-cv-61119-WPD

PALM BEACH GRADING, INC.,

lllllllllllllllllllll                                                  Plaintiff - Appellant,

                                           versus

NAUTILUS INSURANCE COMPANY,

lllllllllllllllllllll                                                 Defendant - Appellee.

                                ________________________

                          Appeal from the United States District Court
                              for the Southern District of Florida
                                ________________________

                                        (July 14, 2011)

Before BARKETT and WILSON, Circuit Judges, and WALTER,* District Judge.

PER CURIAM:

         *
        Honorable Donald E. Walter, United States District Judge for the Western District of
Louisiana, sitting by designation.
      This case involves interpretation of a standard commercial general liability

insurance policy (“CGL”). Palm Beach Grading (“PBG”) appeals the district

court’s grant of summary judgment in favor of Nautilus Insurance Company

(“Nautilus”). PBG seeks reimbursement under the CGL policy provided by

Nautilus for $256,208.01 stemming from the repair of a defective sewer system

pipe. The district court granted summary judgment after concluding that the claim

was not covered by the policy. After thorough review and with the benefit of oral

argument, we affirm.

                                         I.

      This case arises from an insurance policy between Nautilus and a non-party,

A-1 Underground Services, Inc. (“A-1”). PBG served as the general contractor for

the Moody River Project and subcontracted with A-1 for A-1 to construct water

utilities, sanitary sewer utilities, and storm drainage; and to complete other work

on the project. A-1 worked from February 2006 until November 2006, but never

completed the project. Instead, A-1 abandoned the project, and PBG hired another

subcontractor, RDMC, Inc., to complete it.

      The work that A-1 had completed proved defective. As a result, RDMC,

Inc. dug up, repaired, and reburied certain sections of the sewer line. Repairing

the defective sewer line required damaging other components of the Moody River

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Project, including, for example, digging through and breaking apart the

surrounding subgrade, road, curbing, sidewalk, and asphalt. PBG alleges that, as a

result, it incurred repair costs of $256,208.01.

      To recover those repair costs, PBG first sued A-1, and ultimately obtained a

final judgment of $954,833.62. PBG then sued Nautilus to recover a portion of

the final judgment under the terms of A-1’s CGL policy with Nautilus. The

district court granted summary judgment in favor of Nautilus. The court reasoned

that both Florida law and exclusions contained in the parties’ policy prohibited

recovery of the repair costs. This is PBG’s appeal.

                                          II.

      Our review is de novo. Fireman’s Fund Ins. Co. v. Tropical Shipping &

Constr. Co., 254 F.3d 987, 1003 (11th Cir. 2001) (“The question of the extent of

coverage under an insurance policy is a question of law to be decided by the court

and is therefore subject to plenary review by this Court.”); Huff v. Dekalb Cnty.,

Ga., 516 F.3d 1273, 1277 (11th Cir. 2008) (“This Court reviews de novo a district

court’s grant or denial of summary judgment.”). “Because federal jurisdiction

over this matter is based on diversity, Florida law governs the determination of the

issues on this appeal.” State Farm Fire & Cas. Co. v. Steinberg, 393 F.3d 1226,

1230 (11th Cir. 2004). We are also mindful that we may affirm on any ground

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supported by the record. Trotter v. Sec’y, Dep’t of Corr., 535 F.3d 1286, 1291

(11th Cir. 2008).

      We conclude that the repair costs PBG incurred as a result of A-1’s

negligence are not covered under the CGL policy between Nautilus and A-1,

because the damage did not constitute “property damage” within the meaning of

the policy. While faulty workmanship may constitute an “occurrence” under the

policy, “the fact that damages may result from an ‘occurrence’ under a CGL policy

is only the first step in determining whether the damages are covered.” U.S. Fire

Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871, 888 (Fla. 2007). In this case, we

determine that the “occurrence”—A-1’s defective work—did not cause “property

damage” within the meaning of the policy.

      The policy provides that Nautilus will insure A-1 for certain “property

damage,” which the policy defines as, inter alia, physical injury to tangible

property. The Florida Supreme Court has explained that “there is a difference

between a claim for the costs of repairing or removing defective work, which is

not a claim for ‘property damage,’ and a claim for the costs of repairing damage

caused by the defective work, which is a claim for ‘property damage.’” Id. at 889

(explaining that “[i]f there is no damage beyond the faulty workmanship or

defective work, then there may be no resulting ‘property damage’”); see also

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Auto-Owners Ins. Co. v. Pozzi Window Co., 984 So. 2d 1241, 1248 (Fla. 2008)

(“[T]he mere inclusion of a defective component, such as a defective window or

the defective installation of a window, does not constitute property damage unless

that defective component results in physical injury to some other tangible

property.”).

      The problem with PBG’s claim is that the defective pipe did not cause

damage independent of the repair and replacement of the pipe. For example, the

pipes never burst, caused sinkholes, or caused back-ups. Rather, PBG’s claim is

solely for the costs of repairing and removing the defective pipe, which is not a

claim for “property damage.” See J.S.U.B., 979 So. 2d at 890; Pozzi Window Co.,
984 So. 2d at 1248. As a result, we hold that the district court correctly concluded

that Nautilus’s policy does not cover PBG’s repair costs.

      AFFIRMED.

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