The Florida Supreme Court recently held that the pre-suit process for construction defect claims under Florida Statutes Chapter 558 constitutes a “suit” under the standard ISO CGL definition as an “alternative dispute resolution proceeding” that may trigger the duty to defend. Altman Contractors, Inc. v. Crum & Forster Specialty Ins. Co., 2017 WL 6379535 (Fla. Dec. 14, 2017).
The insured general contractor was served with statutorily required Chapter 558 pre-suit notices, claiming construction defects in a high-rise residential condominium project. The insured notified its insurer and demanded defense and indemnity. The insurer refused to defend on the ground that the notices did not constitute a “suit.” The insured settled the claims without the insurer’s involvement and sought a declaration that the insurer owed a duty to defend and indemnify it. The insured and the insurer cross-moved for summary judgment on whether the insurer’s duty to defend was triggered by the Chapter 558 notices of claim. Under the policy, the term “suit” was defined as “a civil proceeding in which damages because of ‘bodily injury,’ ‘property damage’ or ‘personal and advertising injury’ to which this insurance applies are alleged.” The definition included “an arbitration proceeding” or “any other alternative dispute resolution proceeding” in which covered damages are claimed and to which the insurer consents. The court granted summary judgment in favor of the insurer, concluding that the Chapter 558 process did not satisfy the definition of “civil proceeding” under the policy. The insured appealed, and the Eleventh Circuit certified the question to the Florida Supreme Court.
The Florida Supreme Court found that although the Chapter 558 process does not qualify as a “civil proceeding,” it constitutes a “suit” as an “alternative dispute resolution proceeding” included in the policy’s definition. The Supreme Court noted, however, that an insurer’s consent is required to trigger the insurer’s duty to defend an “alternative dispute resolution proceeding,” and the Supreme Court did not address whether the insurer consented to the insured’s participation in the Chapter 558 process as it was outside the scope of the certified question.