Disciplined in Sophisticated Defense and Insurance Litigation

August 09, 2017 | Blog Post| TO FEE OR NOT TO FEE, THAT IS THE QUESTION: THE FLORIDA SUPREME COURT FINDS COVERAGE FOR PROPOSAL FOR SETTLEMENT SANCTIONS IN FAVOR OF THE PLAINTIFF UNDER AN AUTOMOBILE LIABILITY POLICY IN MACEDO II

To understand the implications of Macedo II, it is important to understand what brought us here. It’s a long and bumpy road, but understanding what brought us here will be critical in order to understanding how to go forward.

Prior to the recent Florida Supreme Court’s decision in Government Employees Insurance Company v. Macedo, 2017 WL 2981812 (Fla. July 13, 2017) (Macedo II), a conflict existed between Florida’s District Courts of Appeal over whether an automobile liability insurance policy provided coverage for attorney’s fees and costs imposed against an insured defended by the insurance carrier.[1]  Due to the conflicting interpretations of what the court deemed substantially similar policy language, the Supreme Court accepted conflict jurisdiction in Government Employees Insurance Company v. Macedo, 2017 WL 2981812 (Fla. July 13, 2017), and held that coverage for such sanctions existed.  To fully understand the impact of Macedo II, we must examine typical policy language governing this issue, the language of the GEICO policy in Macedo II, and the conflicting appellate decisions that gave rise to the Supreme Court’s decision. 

The Supplementary Payments section in a typical personal or commercial automobile insurance policy usually includes language similar to, “We [the insurance carrier] will pay for the insured all costs taxed against the insured in any suit against the insured we defend.”  Further, this section usually includes a provision that the insurance carrier will pay “all reasonable expenses incurred by the insured at our request….”  However, the policy language in the GEICO policy at issue in Macedo II was a little different because it did not specifically provide coverage for the taxable costs of the plaintiff following an adverse result and only agreed to pay “all reasonable costs incurred by an insured at our request.”

In one of the cases addressed by the Florida Supreme Court, Steele v. Kinsey, 801 So. 2d 297 (Fla. 2d DCA 2001), Ms. Kinsey held an automobile liability insurance policy with United Automobile Insurance Company (United).  Ms. Kinsey was involved in an automobile accident with Mr. Steele that caused him injuries, and Mr. Steele subsequently sued Ms. Kinsey.  As with most other insurance policies, Ms. Kinsey’s policy gave United exclusive control over settling or litigating any claim against her covered under the policy.  During the course of the litigation, Mr. Steele served a proposal for settlement for the policy limits of $10,000, but United rejected the proposal for settlement.  Mr. Steele, United, and Ms. Kinsey then entered into a Cunningham agreement (an agreement to try bad faith allegations first) and also agreed to allow the court to decide whether United’s policy provided coverage to Ms. Kinsey for any attorney’s fees and costs she may owe due to the failure to accept the proposal for settlement.  The trial court ruled there was no coverage, and Mr. Steele appealed the decision.

The Second District Court of Appeal agreed with the trial court’s decision and held that the supplementary payments provision in the policy stating that United would pay “expenses incurred at our request” did not include attorney’s fees and costs under the proposal for settlement statute.  Based on the definition of “request” found in the dictionary, the court held that the “insurer intended to pay for expenses that it had authorized and over which it had control, such as the selection of a service or product of known value or cost.”  Therefore, these subsequent fees and costs were not “incurred at [the insurer’s] request.” 

Relying on another case directly in conflict, Florida Insurance Guaranty Association v. Johnson, 654 So. 2d 239 (Fla. 4th DCA 1995), Mr. Steele argued that United’s decision not to settle the case pursuant to the proposal for settlement caused the litigation to continue and increased expenses and attorney’s fees.  However, while the Kinsey court recognized that public policy might dictate that the insurer who had the sole right to accept or reject the proposal for settlement should be ultimately responsible for paying extra expenses as a result of the rejection, the court held the supplemental payment provisions in United’s policy were unambiguous and no coverage was owed for the attorney’s fees awarded to Mr. Steele against United’s insured.   

On the other hand, the First District Court of Appeal in Government Employees Insurance Company v. Macedo, 190 So. 3d 1155 (Fla. 1st DCA 2016) (Macedo I), held that the policy provision providing coverage for “other reasonable expenses incurred at our request” in an automobile policy provided coverage to the insured for attorney’s fees and costs awarded against the insured, if triggered by the rejection of a proposal for settlement.  In that case, the jury returned a verdict several times greater than the plaintiff’s proposal for settlement and the trial court awarded her fees and costs.  The First District Court of Appeal explained that GEICO’s policy provided it with the sole responsibility and right to litigate or settle a claim or lawsuit. 

The terms of the policy specifically required GEICO to pay “all investigative and legal costs incurred by us” and “all reasonable costs incurred by an insured at our request.”  The court reiterated its ruling in New Hampshire Indemnity Company v. Gray, 177 So. 3d 56 (Fla. 1st DCA 2015), which held that an insurer has the sole ability to determine whether to litigate or settle a claim.  Thus, the insurance policy provided coverage to the insured for attorney’s fees and costs awarded against the insured triggered by a rejected proposal for settlement.

Based on these differing opinions, GEICO sought review in Macedo II. The Supreme Court analyzed the same two provisions contained in GEICO’s policy, “[a]ll investigative and legal costs incurred by us” and “[a]ll reasonable costs incurred by an insured at our request.”  GEICO initially argued that the policy did not provide coverage for attorney’s fees awarded against the insured because the policy only referenced costs, which do not include attorney’s fees.  Critically, however, the index to the policy listed “Legal Expenses and Court Costs” as costs and expenses covered under the policy.  Therefore, the Florida Supreme Court found the provisions to be ambiguous. 

Specifically, the Court held that the other policy provisions providing coverage for costs, along with the index citing legal expenses, created an ambiguity regarding whether coverage for attorney’s fees was included.  Because ambiguities in an insurance policy are most always interpreted against the drafter of the insurance policy, i.e. the insurance carrier, and interpreted in favor of insurance coverage, the court held that coverage for such damages existed.

GEICO also argued that the Additional Payments section of the policy stating, “[a]ll reasonable costs incurred by an insured at our request” did not cover attorney’s fees or costs awarded against an insured following the rejection of a proposal for settlement because such fees and costs were not incurred “at [GEICO’s] request.”  Nevertheless, the Florida Supreme Court agreed with the reasoning in Gray and Johnson and held that because GEICO had control over settling and litigating the case, including rejecting the plaintiff’s proposal for settlement within policy limits, it was ultimately responsible to pay and provide coverage for any attorney’s fees and costs awarded against the insured triggered by the rejection of a plaintiff’s proposal for settlement.

Now What? Ideas For Going Forward

So what do the above decisions mean to an automobile insurance carrier? Is it a foregone conclusion under all policies that coverage exists for attorney’s fees and expenses awarded against an insured following an adverse verdict triggering the penalties under a proposal for settlement?  As previously stated, most, if not all, automobile insurance policies include provisions stating that the policy will provide coverage for costs taxed against an insured and for all reasonable expenses incurred by an insured at the insurer’s request.

These policies also provide that insurance carriers have the ultimate decision-making authority regarding the defense of an insured in a lawsuit.  Therefore, if the policy language remains unchanged, most automobile insurance policies likely provide coverage to the insured for any attorney’s fees and costs awarded against the insured when the insurance carrier declines a proposal for settlement within policy limits and the jury awards a verdict greater than 125% of the amount offered.  And more importantly, as in Macedo II, such amounts are owed as supplementary payments on top of, or in excess to, the policy limit.

An insurance carrier may be able to argue that its automobile policy does not include “Legal Expenses and Court Costs” in the index to its policy, so there should be no coverage for attorney’s fees imposed against the insured.  However, the Florida Supreme Court also based its decision on the fact that GEICO had control of the litigation against its insured and had the ultimate decision-making authority regarding whether to accept or reject the proposal for settlement within policy limits served by the plaintiff.  As the courts’ reasoning went, why should the insured be financially penalized if he or she did not have the ultimate authority to decide whether to accept or reject the proposal for settlement?

Due to the decision in Macedo II, an insurance company should analyze a proposal for settlement in light of this holding.  No longer will it require a finding of bad faith in order to create exposure to the insurer to satisfy the fee and cost awards, even if the total damages’ award exceeds the liability policy limits.  This means that an insurance company may be exposed to paying hundreds of thousands of dollars in attorney’s fees and costs depending upon the nature and complexity of the case. 

In other sanction scenarios under other policy types, courts have also found coverage for attorneys’ fees, unless specifically excluded.  Although statutory attorneys fees were not considered covered “damages” under a generally liability policy, Scottsdale Insurance Company v. Haynes, 793 So. 2d 1006 (Fla. 5th DCA 2001), another court found coverage for a court imposed discovery sanction award against the insured.  Tri-State Insurance Company of Minnesota v. Fitzgerald, 593 So. 2d 1118 (Fla. 3d DCA 1992).  The Fitzgerald court held that coverage for the attorney’s fees and costs awarded against the insured existed because the policy provided coverage for “all costs taxed against the insured, in any suit defended by the insurer(s)….” 

Further, in Mid-Continent Casualty Company v. Treace, 186 So. 3d 11 (Fla. 5th DCA 2015), the court found coverage for attorney’s fees and costs awarded in a faulty construction action.  The court agreed that a policy which provided coverage for “all costs taxed against the insured [it] defend[s]” owed coverage for the attorney’s fees and costs awarded to the prevailing party.  See also, Geico General Insurance Co. v. Hollingsworth, 157 So. 3d 365 (Fla. 5th DCA 2015); Geico General Insurance Co. v. Rodriquez, 155 So. 3d 1163 (Fla. 3d DCA 2014) (court costs could include attorney’s fees).  Because there was no definition of court costs in the policies that did not specifically exclude attorney’s fees, the court concluded that MCC’s policy provided coverage for the attorney’s fees and costs awarded to the Treaces. 

Of note, the court in Hollingsworth, which analyzed an automobile insurance policy, found coverage for attorney’s fees imposed on an insured triggered by plaintiff’s proposal for settlement which was rejected.  See also, Assurance Company of America v. Lucas Waterproofing Company, Inc., 581 F.Supp. 2d 1201 (S.D. Fla. 2008) (attorney’s fees and costs imposed on an insured by a contract or statute because the plaintiff prevailed, which are related to claims that are covered under the general liability policy, constitute property damage and are covered under the policy).

Critically, the most recent commercial general liability coverage forms (CA 00 01 12 07 and CA 00 01 04 13) contain Supplementary Payments language as follows:

We will pay, with respect to any claim we investigate or settle, or any “suit” against an insured we defend:

*  *  *

e. All court costs taxed against the insured in the “suit.”  However, these payments do not include attorneys’ fees or attorneys’ expenses taxed against the insured.

*  *  *

No mention was made in the above cited cases that the policies involved included the same or similar language specifically excluding coverage for attorney’s fees and expenses as costs taxed against an insured now included in most, if not all, general liability policies. 

Similarly, the proposal for settlement cases discussed above in which coverage was challenged were not decided under general liability policies.  Similar to an automobile liability policy, a general liability insurer has the ultimate decision-making authority regarding whether to reject a proposal for settlement within policy limits.  As such, the same rationale in Macedo II finding coverage for an insured for attorney’s fees and costs imposed against the insured can easily be applied in a general liability policy context.

Nevertheless, based upon the policy language quoted above, a commercial general liability policy should not be forced to provide coverage for attorney’s fees taxed against an insured, even if triggered due to a declined proposal for settlement.  However, if the insurance industry wants to be certain to exclude such awards, regardless of the policy type, consideration should be given to amending the policy language to specifically attorney fees. More litigation regarding this issue is sure to arise in the not so distant future.


[1]  As background, pursuant to section 768.79, Florida Statutes, if a plaintiff serves a proposal for settlement that is rejected by the defendant and the plaintiff recovers a judgment in excess of 25% of the offer, the plaintiff is entitled to recover her reasonable costs and attorney’s fees incurred from the date of the filing of the proposal (assuming the plaintiff complies with strict requirements in the statute and Rule 1.442, Florida Rules of Civil Procedure).

Kathy J. Maus

A Partner at Butler Weihmuller Katz Craig LLP in Tallahassee, FL. Kathy practices in our Casualty Defense Litigation, Construction, Employment Law, Extra-Contractual, First-Party Coverage, Product Liability, Specialty Trial Team, and Third-Party Coverage departments.

J. Blake Hunter

A Senior Associate at Butler Weihmuller Katz Craig LLP in Tallahassee, FL. Blake practices in our Casualty Defense Litigation, Extra-Contractual, and Third-Party Coverage departments.

November 06, 2017 Blog PostContingency Fee Multipliers: Florida Supreme Court Rejects Rare and Exceptional Circumstances Requirement

The United States Supreme Court analyzed the availability of contingency fee enhancements under fee-shifting statutes in Burlington v. Dague, 505 U.S. 557 (1992). There, the Court held that a contingency enhancement was not permitted under fee-shifting provisions of the Solid Waste Disposal Act and Clean Water Act. It reversed a 25% lodestar enhancement. Justice Scalia wrote the majority decision. He emphasized that fees are “certain” or “contingent.” Id. at 560. A fee is certain if it is payable without regard to the outcome of the suit; it is contingent if the obligation to pay depends on a particular result obtained. Id. at 560-61.

Read More »
September 01, 2017 Blog PostHurricane Hindsight is 20/20

It took years of depositions and other discovery to realize that that most of my 2004-2005 hurricane condominium association claims were much simpler to defend than I thought.   The center of gravity of these claims was the proper calculation of Actual Cash Value (ACV).

Read More »
September 01, 2017 Blog PostHurricane Hindsight is 20/20

It took years of depositions and other discovery to realize that that most of my 2004-2005 hurricane condominium association claims were much simpler to defend than I thought.   The center of gravity of these claims was the proper calculation of Actual Cash Value (ACV).

Read More »
August 08, 2017 Blog PostHoly Harleysville! – The Rules Governing RORs, Intervention, and More in South Carolina Have Just Changed

For insurers, litigating third party coverage disputes in South Carolina has always proved formidable.  Insurers can be liable for “bad faith” even if there is no coverage; they may be required to pay an insured’s attorney’s fees if the insurer commences a coverage action against its insured and loses ; and extra-contractual claims may proceed simultaneously with a breach of contract claim.

Read More »
July 26, 2017 Blog PostThe Continuing Saga of Sebo v. American Home Assurance Company: The Second District Court of Appeal Rules on Remand

On July 20, 2017, the Second District Court of Appeal issued an order that closed its books on the Sebo appeal.  Mr. Sebo made a homeowner’s claim to American Home contending construction deficiencies had allowed water to enter the residence at multiple points, causing, eventually, a complete destruction of the residence.  The trial court ruled the concurrent cause doctrine applied, and so that the combination of covered water damage and excluded faulty, inadequate and defective construction had resulted in coverage for the loss. 

Read More »
July 17, 2017 Blog PostThe Innocent Co-Insured: Underestimating Definite and Indefinite Articles

Four little words—a, an, any, and the—can mean a world of a difference with respect to coverage for an innocent co-insured.  A federal judge (applying Florida law) recently ruled that “that the phrase ‘any insured’ unambiguously expresses a contractual intent to create joint obligations.” Stettin v. National Union Fire Insurance Company of Pittsburg, PA, 2017 WL 2858768 (11th Cir., July 5, 2017) (emphasis added).  The Settin Court solidified a prior U.S District Court for the Southern District of Florida case, which held that an intentional loss provision precluded coverage for even innocent co-insureds when the intentional loss provision contained language prohibiting coverage for intentional acts by any insured.

Read More »
July 05, 2017 Blog PostEarth Movement: "Any" Means Any; Home-Owners Insurance Company v. Dominic F. Andriacchi (Michigan Court of Appeals)

For years, courts across the country have considered whether an earth movement exclusion in a policy applies only when the earth movement losses are caused by or stem from natural causes or phenomena, or whether it applies to earth movement losses from both natural and man-made causes.

Read More »
June 22, 2017 Blog PostBottini v. GEICO: Parties to Bad Faith Action Not Bound by $30.8 million-dollar Verdict Without Appellate Review

For years, when a bad faith action was brought pursuant to a jury verdict in excess of policy limits in the underlying UM claim, everyone assumed the jury verdict was binding in the bad faith action. Then, Bottini v. GEICO resulted in a $30.8 million-dollar verdict – over 600 times the policy’s UM limit of $50,000! GEICO appealed, and the Second DCA concluded that even if GEICO were correct that errors affected the jury’s computation of damages, any such errors were harmless in the context of this case.

Read More »
June 20, 2017 Blog PostFlorida's Third District Court of Appeals provides a warning: When insureds communicate about their policy needs, agents better listen and communicate back or insurance companies could be left holding the bag in a negligent procurement action.

In Kendall South Medical Center v. Consolidated Insurance Nation, No. 3D16-926, 2017 WL 1908376, *1 (Fla. 3d DCA May 10, 2017), the Third District Court of Appeals reversed the lower court’s fourth dismissal of Kendall South Medical Center’s complaint for negligent procurement, holding that there may be liability for negligent procurement where an agent fails to explain to an insured a coinsurance provision that could reduce coverage to less than the amount requested by that insured.

Read More »
May 19, 2017 Blog PostINSURANCE PROCEEDS PAYABLE TO TENANT DIVERTED TO PAY FOR PROPERTY OWNER'S BACK TAXES

The Third Circuit Court of Appeals sitting in Pennsylvania recently issued a precedential decision that interpreted the definition of a “named insured” under a tax delinquency statute to encompass tenants of a property even though the property owner, not the tenant, owed the delinquent taxes.

Read More »
March 23, 2017 Blog PostNebraska Supreme Court Rules that an Insurer Can Depreciate Labor in Determining Actual Cash Value

Property policies typically provide, if there is coverage, that the insured can recover for the costs to repair or replace the property damaged by loss.  But when an insured does not repair or replace the damaged property (or until such repairs are made), the insured is only entitled to the actual cash value of the property.  The calculation of actual cash value varies state to state, but generally courts either define it as replacement cost less depreciation or courts use the broad evidence rule. 

Read More »
March 21, 2017 Blog PostPennsylvania Superior Court adopts narrow interpretations of surface water exclusion and ensuing loss clause

In the Ridgewood Group LLC v Millers Capital Insurance Company, No. 1138 EDA 2016, February 27, 2017, the Superior Court of Pennsylvania analyzed two often troublesome policy provisions, the surface water exclusion and the ensuing loss cause .

Read More »
March 14, 2017 Blog Post2017 Florida State Legislature to Consider Bills Aimed at Assignments of Benefits, Water Losses, Appraisers, and Umpires

The 2017 Florida Legislative Session convened on March 7.  Of particular interest to property insurers are the following bills, which we are closely watching: SB 944, proposing licensing requirements upon appraisers and appraisal umpires; SB 1038 and HB 1218, proposing a statute concerning assignments of benefits; and SB 1218, proposing licensing requirements on those who perform water damage restoration and prohibiting policy provisions that preclude post-loss assignments of benefits.

Read More »
March 07, 2017 Blog PostFederal Diversity Jurisdiction: Proving Citizenship of Limited Liability Companies

Jurisdiction gives a federal court the power to hear a case. Jurisdiction matters at the outset of a lawsuit. It matters during discovery. It even matters after summary judgment. Jurisdiction matters because federal courts are courts of limited jurisdiction.

Read More »
March 07, 2017 Blog PostFederal Diversity Jurisdiction: Proving Citizenship of Limited Liability Companies

Jurisdiction gives a federal court the power to hear a case. Jurisdiction matters at the outset of a lawsuit. It matters during discovery. It even matters after summary judgment. Jurisdiction matters because federal courts are courts of limited jurisdiction.

Read More »
February 16, 2017 Blog PostSurplus Insurers, Too, Can Rely on the Application to Interpret Policy

Section 627.419 of the Florida Statutes provides that “[e]very insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy and as amplified, extended, or modified by any application therefor or any rider or endorsement thereto.”  This statute has not applied to surplus lines insurers since the “Zota-fix” legislation of 2009, which generally exempted surplus lines insurers from Chapter 627.

Read More »
January 11, 2017 Blog PostWhat Is An Offer of Judgment And Can It Really Lower the Cost of or Shorten Litigation?

Insurance coverage litigation today is often time consuming and expensive.  Many cases include claims for “bad faith” damages, and some cases seek punitive damages.  To support their allegations, litigants will usually seek a wide-array of documents and testimony.  Accordingly, litigating such matters can also become expensive. 

Read More »
June 24, 2016 Blog PostTreading Water: Florida Office of the Insurance Consumer Advocate Holds Forum on Florida's Ongoing Water Loss Crisis

The state of water loss claims abuses in Florida, the water loss marketplace, and water loss damage claims on a national scale were presented by the Division of Insurance Fraud, Bureau of Property & Casualty, and the National Insurance Crime Bureau, respectively. 

Read More »
October 28, 2015 Blog PostWhen Revenge Is Not So "Sweet": The Wages of "Revenge Porn" under Florida's New Cyber Harassment Statute

Policyholders who seek coverage for the monetary consequences of a violation of the statute under the “personal and advertising injury” or general liability coverage in their insurance’ policies are likely to find themselves looking elsewhere for funds.

Read More »
September 08, 2015 Blog PostNJ: Insurers Still On The Hook To Pay Innocent Parties Under Fraudulent Policies

The decision offers further guidance in the somewhat inconsistent world of rescission and automobile policy statutes, which – when accounting for the application misrepresentation, policy, and statutes – can be a tricky process.

Read More »
September 08, 2015 Blog PostNJ: Insurers Still On The Hook To Pay Innocent Parties Under Fraudulent Policies

The decision offers further guidance in the somewhat inconsistent world of rescission and automobile policy statutes, which – when accounting for the application misrepresentation, policy, and statutes – can be a tricky process.

Read More »
August 27, 2015 Blog PostLa. Federal District Court Greatly Expands the Duty to Preserve in Response to a Litigation Hold Notice

Takeda appealed the ruling to the Fifth Circuit Court of Appeals, but it reached a settlement in the MDL litigation in May of 2015 before appellate briefing commenced.  The Actos ruling is isolated to date; no other court has applied this holding or followed its interpretation.

Read More »
August 11, 2015 Blog PostInsurers Don't Sleep on Your Rights: Insurer's Motion to Intervene Denied as Untimely

The court noted that Cincinnati had been defending the action since 2012, but did not file the motion until 2015 and only on the eve of trial.  With regard to the damage interrogatories themselves, the parties argued that neither party’s expert had broken down the damages in the manner proposed by Cincinnati.

Read More »
June 10, 2015 Blog PostPost-Complaint Communications by Insurer's Employees Protected from Discovery in Bad Faith Litigation

The insured failed to articulate any type of argument that he could not obtain the substantial equivalent by other means without undue hardship.  The court recognized that the insured has the opportunity to conduct bad faith discovery, which may include deposing State Farm adjusters, to obtain the substantial equivalent...

Read More »
April 09, 2015 Blog PostCan an Insured Sue His Adjuster When the Insured is Injured Cleaning Debris, Because the Adjuster Incorrectly Denied Coverage for Debris Removal?

Imagine a gigantic tree limb weighing over 7,000 lbs falling onto your home.  You dutifully call your insurance company to report the loss. So when the adjuster inspects your home and (verbally) tells you that debris removal is not covered by your policy and that you need to clean up the debris (glass, limbs, branches) all by yourself, you clean it up yourself, right?  And when you hurt your hand in the process ...

Read More »
April 08, 2015 Blog PostFourth Circuit Sets Stage For Interpreting Contingent Business Interruption

CBI insurance provides coverage for loss of sales or revenue sustained when business is interrupted due to property damage that occurs away from the insured premises and, consequently, disrupts the flow of goods and services from/to a supplier or customer (referred to as the “dependent” or “contributing” properties). There are a limited number of cases discussing issues relating to CBI insurance; and the Fourth Circuit’s ruling provides greater clarity as to what constitutes a “direct” supplier, which is a common...

Read More »
April 08, 2015 Blog PostFourth Circuit Sets Stage For Interpreting Contingent Business Interruption

CBI insurance provides coverage for loss of sales or revenue sustained when business is interrupted due to property damage that occurs away from the insured premises and, consequently, disrupts the flow of goods and services from/to a supplier or customer (referred to as the “dependent” or “contributing” properties). There are a limited number of cases discussing issues relating to CBI insurance; and the Fourth Circuit’s ruling provides greater clarity as to what constitutes a “direct” supplier, which is a common...

Read More »
April 06, 2015 Blog PostIt's a "Storm Surge" -- not a "Flood"!

Both parties cited to the SEACOR Holdings, Inc. v. Commonwealth Ins. Co., 635 F.3d 675 (5th Cir. 2011) case. The SEACOR case held that flood limits did not apply to Hurricane Katrina-generated water damage. In the SEACOR policy, there were definitions for flood, windstorm and named windstorm. The definition of windstorm and named windstorm did not include the phrase “storm surge,” but the definition of flood included wind-driven water. The SEACOR court held that all damage caused by Katrina was the result of a named windstorm...

Read More »
April 06, 2015 Blog PostIt's a "Storm Surge" -- not a "Flood"!

Both parties cited to the SEACOR Holdings, Inc. v. Commonwealth Ins. Co., 635 F.3d 675 (5th Cir. 2011) case. The SEACOR case held that flood limits did not apply to Hurricane Katrina-generated water damage. In the SEACOR policy, there were definitions for flood, windstorm and named windstorm. The definition of windstorm and named windstorm did not include the phrase “storm surge,” but the definition of flood included wind-driven water. The SEACOR court held that all damage caused by Katrina was the result of a named windstorm...

Read More »
September 26, 2014 Blog PostWhen It Comes to Sinkholes, Contracts, Statutes and Regulations Do Matter

On August 21, 2014, the United States Court of Appeals for the Eleventh Circuit vacated the decision of the U.S. District Court for the Middle District of Florida in Shelton v. Liberty Mutual, Case number 13-15371 / D.C. Docket No. 8:12-cv-02064-JSM-AEP. This decision confirms that the statutory definitions for structural damage under the May 17, 2011 amendments to the Florida sinkhole statutes apply to property policies issued after those amendments were enacted. The court’s order reversed the positions taken by the District Court that seemed bent on plotting a new course for Florida jurisprudence.

Read More »
September 26, 2014 Blog PostWhen It Comes to Sinkholes, Contracts, Statutes and Regulations Do Matter

On August 21, 2014, the United States Court of Appeals for the Eleventh Circuit vacated the decision of the U.S. District Court for the Middle District of Florida in Shelton v. Liberty Mutual, Case number 13-15371 / D.C. Docket No. 8:12-cv-02064-JSM-AEP. This decision confirms that the statutory definitions for structural damage under the May 17, 2011 amendments to the Florida sinkhole statutes apply to property policies issued after those amendments were enacted. The court’s order reversed the positions taken by the District Court that seemed bent on plotting a new course for Florida jurisprudence.

Read More »
July 24, 2014 Blog PostThe Emperor's New Property Damage?

For many years, Florida courts appeared to say that general liability insurance policies did not cover a subcontractor’s faulty work that damaged other parts of a general contractor’s work. That all changed with the Supreme Court of Florida’s decision in United States Fire Insurance Company v. J.S.U.B., Inc., in 2007. In J.S.U.B. the court found that present GL policies covered the faulty work of a subcontractor that damaged other parts of a general contractor’s work. The reasoning used by the J.S.U.B. court to reach that conclusion would seem to also apply to claims for property damage to a subcontractor’s work that resulted from the subcontractor’s faulty work. However, courts applying Florida law have not yet found this to be so, and in fact say just the opposite.

Read More »
July 22, 2014 Blog PostFeng Shui: Direct Physical Loss Does Not Include Damage to Invisible Forces

A federal judge recently ruled that an insurer was not obligated to pay $50,000 for a feng shui consultant following a fire loss in a dentist’s office. Patel v. American Economy Insurance Co. et al., No. 12-cv-04719, 2014 WL 1862211 (N.D. Cal. May 8, 2014). While the cost to repair the physical damage from the fire was insured under the policy, the court found that the cost to repair damage to any invisible forces that may have been at work in the office was not.

Read More »
Key Points
Author Practice Area CASE TYPE
  • Coverage Defense