Court rules that insurers must treat notice of claim for construction defects as a “suit”

The Florida Supreme Court ruled that filing notice of a claim for a construction defect is equivalent to a filing a “suit” that a general liability insurer may have to defend.

The ruling came in response to a question about the state’s procedural requirements before filing a court claim for a construction defect.

The case centered on the Sapphire Condominium, a high-rise condo in Fort Lauderdale on North Ocean Boulevard.

In 2012, Altman Contractors Inc., the general contractor for the construction of Sapphire, got several notices of claim in 2012 from Sapphire owners, who alleged more than 800 construction defects.

Altman notified its commercial liability insurer of the Sapphire notices of claim and demanded that the insurer defend and indemnify the general contractor against the allegations of defective construction.

But the insurer, Crum & Forster Specialty Insurance Company (C&F), denied Altman’s demand, asserting the notices of claim didn’t amount to a “suit,” which would invoke the insurer’s duty to defend and indemnify the general contractor.

Altman ultimately settled all the Sapphire claims out of court without the involvement of C&F.

Altman also asked the U.S. District Court for the Southern District of Florida to rule that C&F had a duty to provide defense and indemnity against the Sapphire claims. The district court ruled in favor of the insurer, and Altman appealed to the U.S. Court of Appeals for the 11^th Circuit.

The appellate court responded by certifying a question for the Florida Supreme Court about chapter 558, Florida Statutes, which lays out a notice-and-repair process that must happen before claimants can sue for construction defects.

The Florida Supreme Court ruled that the notice-and-repair process that Sapphire initiated was a “suit” within the meaning of the general liability insurance policy that Altman bought from C&F. [Daily Business Review] – Mike Seemuth