{"id":898010,"date":"2020-09-29T16:16:12","date_gmt":"2020-09-29T22:16:12","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=898010"},"modified":"2020-09-29T16:16:16","modified_gmt":"2020-09-29T22:16:16","slug":"construction-defects-2","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/construction-defects-2\/","title":{"rendered":"Heads I win, Tails You Lose: Southern Owners Insurance Company v. MAC Contractors"},"content":{"rendered":"\n

Julius Parker | Butler Weihmuller Katz Craig<\/a><\/p>\n\n\n\n

On July 29, 2020, the Eleventh Circuit Court of Appeals issued its opinion in\u00a0Southern Owners Ins. Co. v. MAC Contractors, of Fla., LLC,<\/em>\u00a0— Fed. Appx. —, 2020 WL 4345199 (11th<\/sup>\u00a0Cir. July 29, 2020).\u00a0 While claiming to follow its own precedent, which narrowly interpreted the Florida Supreme Court\u2019s decisions in\u00a0United States Fire Ins. Co. v. J.S.U.B., Inc.<\/em>, 979 So. 2d 871 (Fla. 2007) and\u00a0Auto-Owners Ins. Co. v. Pozzi Window Co.<\/em>, 984 So. 2d 1241 (Fla. 2008), the Court reached the conclusion that a complaint which alleged that a newly-constructed home was \u201creplete with construction defects<\/a>\u201d sufficiently pled \u201cproperty damage<\/a>\u201d within the meaning of a general liability policy<\/a>.\u00a0 As such, it concluded that the insurer owed a duty to defend its insured home builder against a construction defect claim. This constitutes a departure from the court\u2019s previous position on this issue.<\/p>\n\n\n\n

In Amerisure Mut. Ins. Co. v. Auchter Co.<\/em>, 673 F.3d 1294 (11th<\/sup> Cir. 2012), the Eleventh Circuit interpreted the J.S.U.B.<\/em> and Pozzi Window<\/em> cases to reach the conclusion that a general liability policy did not cover a claim made against the insured general contractor for a roof which was defectively installed by a subcontractor.  The roof was composed of ceramic S-shaped tiles which required fastening at a precise torque in order to function as designed.  The roofing contractor failed to apply the correct torque, leading to the tiles becoming dislodged and falling off the building during heavy winds.  <\/p>\n\n\n\n

The Court explained its reasoning:<\/p>\n\n\n\n

The only damages Amelia alleges are those to correct the faulty roof supplied by Auchter\u2019s subcontractor.  In so claiming, Amelia is effectively seeking to secure the roof that Auchter should have installed in the first instance: one that conformed with the contract specifications.  Amelia\u2019s claim is thus simply a \u201cclaim for the cost of repairing the subcontractor\u2019s defective work.\u201d  U.S. Fire Ins. Co. v. J.S.U.B., Inc.,<\/em> 979 So. 2d 871, 890 (Fla. 2007).  As such, Amelia\u2019s claim alleges no \u201cproperty damage.\u201d  See id<\/em>.<\/p>\n\n\n\n

Auchter<\/em>, 673 F.3d at 1307.<\/p>\n\n\n\n

Following Auchter<\/em>, the Eleventh Circuit held that where the work of one subcontractor damages the work of another subcontractor, the complaint alleges \u201cproperty damage\u201d requiring the insurer to defend.  See Carithers v. Mid-Continent Cas. Co.<\/em>, 782 F.3d 1240 (11th<\/sup> Cir. 2015).  There, a brick mason installed brick veneer on a house and a different subcontractor defectively applied a coating over the bricks.  The Court thus held that the complaint alleged property damage to property other than the coating subcontractor\u2019s work (i.e., the bricks).<\/p>\n\n\n\n

Relying on Carithers<\/em>, the Eleventh Circuit in MAC Contractors<\/em> held that the District Court erred in granting summary judgment in favor of the insurer:<\/p>\n\n\n\n

Here, the language of the underlying complaint, \u201cat least marginally and by reasonable implication, could be construed\u201d to create potential coverage under the policy. \u2026  The operative amended complaint alleged that KJIMS used subcontractors for work on the residence and that the residence was \u201creplete with construction defects\u201d and various damage. It did not further allege which subcontractors performed which work or how the damage occurred. Given these ambiguities, the complaint\u2019s allegations are broad enough to allow KJIMS to prove that one subcontractor negligently damaged nondefective work performed by another subcontractor.<\/p>\n\n\n\n

MAC Contractors<\/em>, 2020 WL 4345199 at *4, citing Trizec Props., Inc. v. Biltmore Constr. Co., Inc.<\/em>, 767 F.2d 810, 813 (11th Cir. 1985).<\/p>\n\n\n\n

The problem with MAC Contractors<\/em> is that it departs from the firmly-established rule that the plaintiff must plead concrete facts which show that coverage is implicated.  Nat\u2019l Union Fire Ins. Co. v. Lenox Liquors, Inc.<\/em>, 358 So. 2d 533 (Fla. 1977).  The complaint in MAC Contractors<\/em> did not allege that any one subcontractor damaged the work of any other subcontractor, only that the house was \u201creplete with construction defects.\u201d  Rather, the Eleventh Circuit found the duty to defend based upon the possibility that the complaint could be interpreted to allege that one subcontractor damaged the work of another subcontractor.  Basing the duty to defend on the ambiguity of a complaint turns the duty to defend on its head.<\/p>\n\n\n\n

Following MAC Contractors<\/em>, plaintiffs\u2019 counsel in construction defects will be encouraged to plead vague allegations of property damage, because the more vague the complaint, the more it could be read to allege that which it does not.  Fortunately for insurers, the Court elected not to publish its decision in the Federal Reporter.  Therefore, under Rule 36-2 of the Eleventh Circuit\u2019s Rules, the case may not be cited as binding precedent.  That of course begs the question, \u201cWhy issue an opinion which runs roughshod over prior established law and then banish it to the ethereal realm of unpublished decisions?\u201d  The decision is pending a Motion for Reconsideration by the three-judge panel only, so perhaps there is hope for a sounder outcome upon reconsideration. <\/p>\n","protected":false},"excerpt":{"rendered":"

Julius Parker | Butler Weihmuller Katz Craig On July 29, 2020, the Eleventh Circuit Court of Appeals issued its opinion in\u00a0Southern Owners Ins. Co. v. MAC Contractors, of Fla., LLC,\u00a0— Fed. Appx. —, 2020 WL 4345199 (11th\u00a0Cir. July 29, 2020).\u00a0 While claiming to follow its own precedent, which narrowly interpreted the Florida Supreme Court\u2019s decisions… Continue reading Heads I win, Tails You Lose: Southern Owners Insurance Company v. MAC Contractors<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[4,30,9721],"tags":[9895,19,64,56],"class_list":["post-898010","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-general-liability-policy","category-property-damage","tag-advise-consult","tag-construction-defects-2","tag-general-liability-policy-2","tag-property-damage","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nHeads I win, Tails You Lose: Southern Owners Insurance Company v. 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