Failing to plead damage to other property, even in the face of record evidence supporting damage to other property, can result in a ruling that there is no duty to defend.
In Florida, a commercial general liability (“CGL”) insurer’s duty to defend its insured is determined by examining whether the allegations in the complaint against the insured allege conduct and resulting damage contemplated in the subject policy. This is so even if the allegations in the complaint against the insured are factually incorrect or without merit. Generally, post-1986 CGL policies do not provide coverage to insureds in construction defect matters unless the complaint states: 1) the insured neither intended, nor expected, the damage; and 2) the contractor’s faulty work caused damage to completed, otherwise non-defective work. Recently, in Core Construction Services, Inc. v. Crum & Forster Specialty Insurance Company, the United States District Court for the Middle District of Florida addressed the issue of whether an insurer has a duty to defend its insured when there is record evidence of damage to other property, but when the operative pleading failed to set forth an allegation of such damages.
Core Construction was the general contractor for the Lakeview at Carlton Lakes Condominium project (“Lakeview”). In 1996, Core Construction hired Patnode to install roofs at Lakeview. Pursuant to the subcontract between Core Construction and Patnode, Patnode was required to obtain certain types of insurance and to have Core Construction named as an additional insured under Patnode’s policy.
In 2005, a number of roofs at Lakeview were damaged as a result of Hurricane Wilma. Lakeview at Carlton Lakes Condominium Association (the “Association”) made a claim for indemnity to its property insurer, Empire Indemnity Insurance Co., for damages to roofs as a result of the storm. Empire Indemnity paid a portion of the Association’s claims and as part of the settlement was assigned the Association’s claims against the contractors on the project. Empire Indemnity, as assignee and subrogee of the Association, brought an action against Core Construction, Patnode, and others seeking to recover damages for repairs to or replacements of the roofs.
Core Construction tendered a demand for defense and indemnity as an additional insured to Patnode’s CGL carrier, Crum & Forster. Crum & Forster refused to defend or indemnify Core Construction because the complaint failed to allege that Patnode’s work caused damage to other property and Core Construction was not listed on the operative policy as an additional insured. This led Core Construction to file suit against Crum & Forster alleging breach of one or more of the CGL policies it issued to Patnode.
Crum & Forster argued it had no duty to defend Core Construction because the underlying complaint did not raise allegations that Patnode’s work resulted in “property damage,” as defined in the operative policy, rather, the complaint only alleged that the roofs themselves had been damaged. Core Construction argued that damages could not have been limited to just the roofs because during the hurricane the roofs had been ripped off exposing the interiors of units. Deposition testimony concerning additional damages was offered in support of Core Construction’s argument. Specifically, Core Construction’s defense counsel and Core Construction’s corporate representative testified in deposition that there was water damage to drywall and flooring (presumably as a result of the failure of the roofs).
Despite Core Construction’s argument and record evidence in support of same, the Court granted Crum & Forster’s Motion for Summary Judgment. The Court held that the underlying complaint failed to assert a claim for property damage (i.e. damage to other property) and thereby failed to establish a duty to defend or indemnify under the policy. The Court did not address the issue of Core Construction as an additional insured because “even assuming arguendo that Core Construction was an additional insured under the CGL policies, Crum & Forster was not obligated to defend or indemnify it in the underlying action.”
If you have any questions, please do not hesitate to contact Ryan Charlson, Esq., at 954-343-3919 or email@example.com.
 Nat’l Union Fire Ins. Co. v. Lenox Liquors, Inc., 358 So. 2d 533, 536 (Fla. 1977).
 Amerisure Ins. Co. v. Gold Coast Marine Distributors, Inc., 771 So. 2d 579 (Fla. 4th DCA 2000).
 U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871 (Fla. 2007).
 Core Constr. Servs. Se., Inc. v. Crum & Forster Specialty Ins. Co., No. 6:14-cv-1789-Orl-31KRS, 2015 WL 8043940 (M.D. Fla. Dec. 7, 2015).