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Florida Contractors Win Big Appeal in 11th Circuit

As our Ft. Lauderdale appellate attorneys will attest, sometimes a case requires a second (or third) judicial analysis before the correct conclusion is reached. In one recent case – which involved insurance coverage, indemnification rights and the construction industry – a general contractor finally won its case against the insurance company refusing to indemnify it for its losses following a botched roof installation job.

Notwithstanding the construction company’s loss at trial, the U.S. Court of Appeals for the Eleventh Circuit (which covers Florida) reversed the lower court’s ruling, citing several reasons why the contractor was entitled to indemnification for the over $300,000 verdict entered against it at trial.

Details of the Appellate Case

As a bit of background, the case began when the plaintiff – an Alabama-based construction outfit – engaged in arguably shoddy work while replacing roof shingles for a local church parish, resulting in significant leakage and damage to the structure’s interior. Seven years later, the parish hired an inspector to analyze the roof and determine the extent of the damage.

After confirming what it already knew, the parish opted to sue the roofing contractor for breach of implied warranty – a cause of action that alleges a product or service, as rendered, is not fit for its ordinary and typical purpose. In this example, the parish alleged that the roof it purchased did not comport with the ordinary purpose of a roof, which is to provide leak-free shelter.

After a lengthy trial in U.S. District Court, in which the contractor’s insurance company stepped up to its defense, the plaintiff secured a $350,000 verdict. Shortly thereafter, the insurance company asserted that it did not, in fact, owe it to the contractor to ante up the $350,000 – and it would not cover the loss.

Issues Covered on Appeal

There were two major concerns at issue in this appellate case. First, the insurance company pointed to the language of the policy that required the happening of an “occurrence” prior to covered damage. Under the law, an “occurrence” is considered ‘an accident, including continuous or repeated exposure to substantially the same general harmful conditions.’ Further, the court highlighted the general definition of an “accident” as something sudden, unforeseen, or unusual.

After analyzing several relevant cases, the court concluded that poor workmanship is considered within the purview of an “occurrence,” and is in fact something unforeseen or unusual.

Secondly, the insurance company raised a “contractual liability exclusion” claim, which bars coverage for “bodily injury or property damage for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement.”

The court quickly overruled this argument by holding that the expectation of the parish that the contractor would use reasonable skill to complete the roofing project did not – in and of itself – establish or create an assumption that the contractor would assume all risk if the project did not meet the implied warranty standards described above. By contrast, the court held that only an express assumption of risk would invoke the exclusion, which was not the case here.

In sum, the result of the appellate case was that the insurance company was ordered to pay $350,000 to the general contractor, as there were no applicable exclusions to prevent recovery.

Contact an Appellate Attorney Today!

If you are in search of an attorney to handle your case from beginning to end, do not hesitate to contact the Law Office of Michael L. Feinstein in Ft. Lauderdale today!