22 Fla. L. Weekly Supp. 813a
Online Reference: FLWSUPP 2207CENTInsurance — Commercial general liability insurer of subcontractor responsible for window installation on construction project owed duty to defend general contractor against action for property damage caused by defects in window installation where general contractor is additional insured under policy — Insurer who did not agree to defend general contractor is jointly and severally liable for all attorney’s fees and costs incurred by contractor, including pre-tender fees
CENTEX HOMES, a Nevada general Partnership, and CENTEX REAL ESTATE CORPORATION, Defendants/Third Party Plaintiffs, v. BUILDERS FIRSTSOURCE-FLORIDA, LLC and LIBERTY MUTUAL FIRE INSURANCE COMPANY, Third Party Defendants. Circuit Court, 4th Judicial Circuit in and for Duval County. Case No. 16-2009-CA-000193, Division CV-G. February 4, 2015. Honorable Lawrence P. Haddock, Judge. Counsel: Mark A. Boyle, Fort Myers; and John H. Dannecker and Kathleen M. Krak, Shutts & Bowen LLP, Orlando, for Plaintiffs. Stephen B. Gallagher and Meagan L. Logan, Marks Gray, P.A., Jacksonville, for Builders FirstSource. Gary Khutorsky, Litchfield Cavo, LLP, Fort Lauderdale, for Liberty Mutual.
ORDER GRANTING DEFENDANT/THIRD PARTY PLAINTIFFS, CENTEX’S, AMENDED MOTION FOR SUMMARY DECLARATORY JUDGMENT OR ALTERNATIVELY, PARTIAL SUMMARY JUDGMENTAS TO THE DUTY TO DEFEND AGAINST LIBERTY MUTUAL INSURANCE COMPANY
THIS CAUSE having come before the Court on Defendants/Third Party Plaintiffs, CENTEX HOMES’ and CENTEX REAL ESTATE CORPORATION’s (collectively “CENTEX”), Amended Motion for Summary Declaratory Judgment or Alternatively, Partial Summary Judgment as to the Duty to Defend Against Third Party Defendant, LIBERTY MUTUAL INSURANCE COMPANY (“LIBERTY MUTUAL”), and the Court having heard the arguments of counsel, and being otherwise duly advised in the premises, the Court hereby finds the following:
I. UNDISPUTED MATERIAL FACTS
1. Between 2003 and 2006, CENTEX developed and constructed a residential condominium community in Duval County, Florida known as Hammock Grove Condominiums (the “Project”). The Project consisted of twenty-nine residential buildings, with eight units in each building. CENTEX HOMES was the Developer of the Project. CENTEX REAL ESTATE CORPORATION was the General Contractor for the Project. Builders FirstSource-Florida, LLC (“BFS”) was the subcontractor hired by CENTEX HOMES and CENTEX REAL ESTATE CORPORATION (collectively “CENTEX”) to provide certain materials and services relative to windows and the installation thereof in connection with CENTEX’s development and construction of the Project.
2. On or about December 5, 2010, Hammock Grove Condominium Association (the “Association”), on behalf of the unit owners, filed suit against CENTEX for construction defects in Duval County, Florida (the “Underlying Action”). The Complaint contains the following relevant allegations related to BFS’ scope of work as the window subcontractor responsible for installation:
a. The Buildings were constructed commencing in 2003 and continuing through 2006;
b. The windows installed on the first story of each Building were not installed in accordance with the Plans and were installed in violation of the Building Code requirements that there be a separation between plaster and dissimilar construction and that there be a sufficient slope to prevent water accumulation or standing at openings;
c. The windows on the second story of Building 12 and 24 were improperly installed and violate the Building Code in that there was no casing bead or other suitable separation between the windows and the exterior stucco veneer; and
d. As a direct consequence of the violations, water is leaking into some Buildings exposing the interior and its occupants to moisture damage and to mold and mildew.
3. In response to the Construction Action, on or about February 15, 2011, CENTEX filed Third Party Complaints against various subcontractors, including BFS alleging breach of contract, contractual indemnity and/or common law indemnity.
4. On or about April 1, 2011, LIBERTY was made aware of the Underlying Action and Third Party Complaint when BFS sent a Notice of Occurrence to LIBERTY with a copy of the pleadings.
5. On or about June 24, 2013, CENTEX then filed a Supplemental Third Party Complaint against various commercial general liability and umbrella/excess carriers, including LIBERTY MUTUAL FIRE INSURANCE COMPANY (“LIBERTY”), as the commercial general liability carrier for BFS, for defense and indemnity as an additional insured for the claims asserted by the Association.
6. LIBERTY MUTUAL issued to Builders FS, as the named insured, the following Commercial General Liability policies:
a. Policy number RG2-651-004212-031, with policy period of June 1, 2002 through June 1, 2003 (“01-02 Policy”). A copy of said policy is attached to Centex’s First Amended Supplemental Third Party Complaint as Exhibit C, and incorporated herein by reference;
b. Policy number RG2-651-004212-032, with policy period of June 1, 2002 through June 1, 2003 (“02-03 Policy”). A copy of said policy is attached to Centex’s First Amended Supplemental Third Party Complaint as Exhibit D, and incorporated herein by reference;
c. Policy number RG2-651-004212-033, with policy period of June 1, 2003 through June 1, 2004 (“03-04 Policy”). A copy of said policy is attached to Centex’s First Amended Supplemental Third Party Complaint as Exhibit E, and incorporated herein by reference;
d. Policy Number RG2-651-004212-034 with policy period of June 1, 2004 through June 1, 2005 (“04-05 Policy”). A copy of said policy is attached to Centex’s First Amended Supplemental Third Party Complaint as Exhibit F, and incorporated herein by reference; and
e. Policy Number RG2-651-004212-035 with policy period of June 1, 2005 through June 1, 2006 (“05-06 Policy”). A copy of said policy is attached to Centex’s First Amended Supplemental Third Party Complaint as Exhibit G, and incorporated herein by reference;
(collectively the “Policies”).
7. BFS is a national corporation with its headquarters in Dallas, Texas. BFS procured its insurance policies with Liberty through its agent and broker, Marsh USA, Inc., located in Dallas, Texas. BFS is a national corporation which has numerous subsidiaries, which are all listed as named insureds per an endorsement, and BFS conducts business across the country, including Florida. Liberty’s sales representative/account executive for the BFS policies was located at Liberty’s Irving, Texas office. The initial application and subsequent renewal applications were sent to Liberty from Marsh in Texas. The policy binders were issued by Liberty (in Irving, Texas) to Marsh (in Dallas, Texas) and the policies were issued and delivered to BFS in Dallas, Texas. In addition, the premium invoices for the policies were issued to BFS in Texas and paid from BFS in Texas.
8. All of the Policies name Centex Homes and Centex Real Estate Corporation as additional insureds via Scheduled Additional Insured Endorsements. The Additioanl Insured Endorsements are not dependent on the existence of a written subcontract between CENTEX and BFS.
9. Section I – Coverages of the Policies provide in pertinent part as follows:
SECTION I- COVERAGES
COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply. We may, at our discretion, investigate any “occurrence” and settle any claim or “suit” that may result.
b. This insurance applies to “bodily injury” and “property damage” only if:
(1) The “bodily injury” and “property damage” is caused by an “occurrence” that takes place in the “coverage territory”; and
(2) The “bodily injury” or “property damage” occurs during the policy period;
10. The relevant definitions in the Policies state as follows:
SECTION V — DEFINITIONS
9. “Occurrence” means an accident, including continuous or repeated exposure to substantially the same general harmful condition.
12. “Property damage” means:
a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or
c. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the “occurrence” that caused it.
11. On October 1, 2012, CENTEX sent its first demand for defense and indemnity directly to LIBERTY MUTUAL. To date, LIBERTY MUTUAL has not responded to said correspondence other than by way of its position in this lawsuit.
12. CENTEX and LIBERTY agree that CENTEX is an additional insured under the Liberty Policies and that LIBERTY owed a duty to defend CENTEX in connection with the Underlying Action.
II. FINDINGS OF LAW
a. Choice of Law
The limited differences between Florida law and Texas law do not change the outcome. The court declines to make a determination as to which state’s law applies to the instant action. However, for the purposes of appellate review, the Court will analyzes the issues under both Florida and Texas law.
b. Joint and Several Liability for Attorneys’ Fees
Under both Florida and Texas law, LIBERTY MUTUAL is jointly and severally liable for the entire amount of attorneys’ fees incurred by CENTEX in defending the action filed against it by The Hammock Grove Condominium Association, Inc. See Miami Battery Mfg. Co. v. Boston Old Colony Ins. Co., 97-3410-CIV, 1999 WL 34583205 at *1 (S.D. Fla. April 28, 1999)(holding insurance carriers who breach the duty to defend are jointly and severally liable for all defense costs incurred on behalf of its insured party); Argonaut Ins. Co. v. Maryland Cas. Co., 372 So. 2d 960, 963 (Fla. 3d DCA 1979)(insurers owe their insureds a complete defense and cannot subrogate against other co-primary insurers for same); Continental Cas. Co. v. United Pacific Ins. Co., 637 So. 2d 270 (Fla. 5th DCA 1994)(holding the duty of each insurer to defend its insured is personal and does not inure to the benefit of another insurer); and Texas Prop. and Cas. Ins. Guar. Ass’n/Southwest Aggregates, Inc. v. Southwest Aggregates, Inc., 982 S.W.2d 600 (Tex. App. 1998)(holding the insurer’s duty is to provide the insured with a complete defense and that each insurer is fully liable to the insured for the defense costs). Additionally, the “other insurance” provisions the Policies do not alter LIBERTY MUTUAL’s joint and several liability for defense costs. Southwest Aggregates, Inc., 982 S.W.2d 600 (holding the other insurance clause does not apply to the duty to defend).
c. Pre-Tender Fees
Under both Florida and Texas law, because LIBERTY MUTUAL did not agree to defend upon presentation of the defense, LIBERTY MUTUAL is required to pay all pre-tender defense fees incurred by CENTEX because LIBERTY MUTUAL was not prejudiced as a matter of law. See Nationwide Mut. Fire Ins. Co. v. Beville, 825 So. 2d 999 (Fla. 4th DCA 2002) [27 Fla. L. Weekly D1808b](holding that an insurer who refused to defend its insured is not prejudiced as a matter of law and thus said insurer is liable for pre-tender defense costs); and PAJ, Inc. v. Hanover Ins. Co., 243 S.W.3d 630, 636-37 (Tex. 2008)(insurer must actually prove prejudice, and same is not presumed).
BASED ON THE FOREGOING FINDINGS, the Court holds, orders and adjudges as follows:
1. Third Party Plaintiff, CENTEX’s, Amended Motion for Summary Declaratory Judgment or Alternatively, Partial Summary Judgment as to the Duty to Defend Against Third Party Defendant, LIBERTY MUTUAL INSURANCE COMPANY and Incorporated Memorandum of Law, dated April 17, 2014 is GRANTED;
2. Third Party Defendant, LIBERTY MUTUAL INSURANCE COMPANY’s Cross-Motion for Summary Judgment is DENIED;
3. CENTEX is an additional insured under the subject policies of insurance issued by LIBERTY MUTUAL;
4. Under the subject policies of insurance, LIBERTY MUTUAL owed a duty to defend CENTEX from the suit against CENTEX relative to the construction of Hammock Grove Condominiums, in Duval County, Florida, filed under Case No. 16-2009-CA-000193-XXXX-MA, Division DV-G;
5. The limited differences between Florida law and Texas law do not change the outcome. The court declines to make a determination as to which state’s law applies to the instant action.
6. LIBERTY MUTUAL is jointly and severally liable for the defense fees and costs incurred by CENTEX.
7. LIBERTY MUTUAL owes the entire amount of the attorneys’ fees incurred by CENTEX, including any and all pre-tender fees.
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