Core Construction Services Southeast, Inc. v. Crum & Forster Specialty Insurance Company , 658 F. App'x 534 ( 2016 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-10030
Non-Argument Calendar
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D.C. Docket No. 6:14-cv-01790-GAP-KRS
CORE CONSTRUCTION SERVICES SOUTHEAST, INC.,
a Florida Corporation,
d.b.a. Core Construction,
f.k.a. Southern Gulf West Construction, Inc.,
Plaintiff-Appellant,
versus
CRUM & FORSTER SPECIALTY INSURANCE COMPANY,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(September 28, 2016)
Before TJOFLAT, WILLIAM PRYOR and JILL PRYOR, Circuit Judges.
PER CURIAM:
Core Construction Services Southeast, Inc., appeals the summary judgment
in favor of Crum & Forster Specialty Insurance Company. Core Construction, a
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general contractor for a condominium development, sued Crum & Forster for
allegedly breaching its duties to defend and indemnify Core Construction as an
additional insured on a commercial general liability insurance policy issued to its
subcontractor, Patnode Roofing, Inc. The district court ruled that Crum & Forster
owed no duty to defend or indemnify because the action against Core Construction
to recover the costs of repairing and replacing roofing installed incorrectly by
Patnode did not constitute “property damage” under the insurance policy. We
affirm.
I. BACKGROUND
After Core Construction relinquished control of the condominium
development to a homeowners association, Hurricane Wilma damaged several
roofs in the development. The association and its insurer, Empire Indemnity
Insurance Company, discovered that the roofing had been installed incorrectly by
Patnode. Empire paid for the damages and, in exchange, the association assigned
its claims against Core Construction and its subcontractors, including Patnode, to
Empire. The assignment provided that it pertained to “the damages and defects
sustained by the roofs of . . . 24 buildings” and that it was “restricted to the
damages to the roofs . . . arising from [their] faulty construction and development.”
Empire sued Core Construction, Patnode, and other subcontractors in a
Florida court for negligence, breach of express and implied warranties, and
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violations of building codes. Core Construction was a named insured on a general
commercial liability insurance policy that Crum & Forster had issued to Patnode.
Core Construction requested a defense from Crum & Forster, which it refused to
provide. Crum & Forster determined that a claim for reimbursement for defective
work by Patnode did not constitute “property damage,” which its policy defined as
“[p]hysical injury to tangible property, including all resulting loss of use of that
property.” Empire later settled with Core Construction.
In the meantime, Core Construction filed a complaint in the district court
that Crum & Forster had breached duties owed Patnode to defend and indemnify
Core Construction as an additional insured. Crum & Forster and Core Construction
filed cross motions for summary judgment. Crum & Forster argued that Core
Construction was not an additional insured. Alternatively, Crum & Forster argued
that the claim asserted against Core Construction in the underlying state action did
not involve “property damage.”
The district court granted the motion of Crum & Forster for summary
judgment and denied the motion filed by Core Construction. The district court
ruled that, “even assuming arguendo that Core Construction was an additional
insured under the CGL polic[y],” Crum & Forster was not obligated to defend or
indemnify Core Construction in an action that did not involve “property damage,”
which the Supreme Court of Florida had explained in United States Fire Insurance
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Co. v. J.S.U.B., Inc., 979 So. 2d 871 (Fla. 2007), and Auto–Owners Insurance Co.
v. Pozzi Window Co., 984 So. 2d 1241 (Fla. 2008), requires damage to tangible
property other than defective work. Empire did not make “any allegations that
Patnode’s (allegedly faulty) work resulted in ‘property damage,’ as . . . defined in
the 2005 Policy,” the district court determined, because the complaint “only
asserted that the roofs had been damaged, rather than asserting that the roofs had
caused damage to other elements of” the buildings. “Because Crum & Forster had
no obligation to defend Core Construction,” the district court ruled that the insurer
“also has no duty to indemnify . . . .”
II. STANDARD OF REVIEW
We review de novo a summary judgment. Amerisure Mut. Ins. Co. v.
Auchter Co., 673 F.3d 1294, 1295 n.2 (11th Cir. 2012). Summary judgment is
appropriate when “there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
III. DISCUSSION
Core Construction argues that Crum & Forster was obligated to provide a
defense in the state action filed by Empire. The complaint in that action, Core
Construction contends, alleged that the defective installation of roofing by its
subcontractor caused “property damage.” Core Construction argues that the district
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court failed to consider the complaint in conjunction with the written assignment
and with documents that described the damage to the condominiums.
In the policy that Crum & Forster issued, “property damage” is defined as
“physical injury to tangible property.” And we must interpret the language of the
policy consistent with Florida law. See Amerisure, 673 F.3d at 1300. The Supreme
Court of Florida has concluded that “property damage” involves “damage beyond
the faulty workmanship or defective work.” J.S.U.B., 979 So. 2d at 889. The
“faulty workmanship or defective work . . . [must] damage[] the otherwise
nondefective completed project.” Id. As a result, there is no coverage for “property
damage” when a claim seeks solely “the costs of repairing and replacing the actual
defects in . . . construction.” Id.We have held that a claim for the costs to repair and replace a roof was not
covered as “property damage” in a commercial liability policy like the one issued
by Crum & Forster. Amerisure, 673 F.3d at 1306. In Amerisure, the insurer for a
general contractor assumed the defense in an action by the owner of an inn to
recover the costs of repairing and replacing roof tiles that were installed
improperly and that later dislodged and damaged other roof tiles. Id. at 1296.
Because the owner did not allege that the inn suffered any “damage beyond the
faulty workmanship” and sought “solely to remedy the installation of a defective
component, which . . . [was] the roof as a whole,” we concluded that the owner’s
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claim did not constitute “property damage” under the commercial liability policy.
Id. at 1307–09. We reached that conclusion based on the distinction the court had
drawn in J.S.U.B., 979 So. 2d at 890, “between a claim for the cost of repairing the
subcontractor’s defective work, which is not covered under a CGL policy, and a
claim for repairing the structural damage to the completed project caused by the
subcontractor’s defective work, which is covered.” Amerisure, 673 F.3d at 1306
(internal citation marks, brackets, and citation omitted).
The complaint that Empire filed against Core Construction alleged a claim
for the cost of repairing and replacing a roof that had been installed improperly by
its subcontractor. Empire alleged that “the roofs of the condominiums were
negligently and improperly constructed” and, due to the companies’ negligence in
using “deficient and substandard tile installation procedures and practices,” Empire
had “to repair and replace the roofs of the condominiums resulting in damages in
excess of $2,500,000.” In its counts for breach of express and implied warranties,
Empire alleged that the “defect in the condominiums . . . caused the total loss of
the condominiums roofs” and that the companies had been “timely notified of the
loss of the condominiums and[, despite being] given the opportunity to honor their
warranties,” they “failed and refused to” do so. And in its count about the violation
of building codes, Empire alleged that it had “been required to repair and replace
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the latently defective roofs of the condominiums resulting in damages in excess of
$2,500,000.”
Crum & Forster owed no duty to provide a defense to Core Construction
because the complaint against it did not allege a claim for “property damage.”
Empire failed to allege that the defective installation of roofing caused “physical
injury to tangible property” such that there was “damage to the completed project
caused by the subcontractor’s defective [roofing] work,” Amerisure, 673 F.3d at
1306, or that the defective work “caused the roof to fail in such a way as to allow
the elements to damage other components of the project,” id. at 1297. Empire, like
the owner of the inn in Amerisure, “never alleged that any part of the [buildings or
development] other than the roof was damaged by the defective roof.” Id. at 1307.
Core Construction argues that the complaint alleged “property damage” in
three ways, but its arguments fail. First, Core Construction argues that the
complaint “alleged [there] was a catastrophic total loss . . . of the condominiums,”
but the complaint alleged that there was a “total loss of the condominiums roofs”
and that the “repair and replace[ment of] the roofs of the condominiums result[ed]
in damages.” Although Empire alleged that it gave “timely notice of the loss of the
condominiums,” as the district court stated, that “language is too vague” to allege
damage independent of the repair and replacement of the roofs. Second, Core
Construction argues that the written assignment that Empire attached to the
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complaint “establish[ed] that the alleged roof defects not only caused, but
increased, other storm damage,” but the assignment was explicitly “restricted to the
damages to the roofs . . . arising from [their] faulty construction and development.”
Third, Core Construction argues that “Empire’s reference to [expert reports and
other] documents establish[ed] . . . additional property damage,” but Empire
alleged that it “provided copies of” the documents to the companies in an
unsuccessful attempt to resolve the dispute. It was not enough, as Core
Construction and its amici contend, for the complaint to “indicat[e] there may have
been covered damage,” because “an insurance company’s duty to defend an
insured is determined solely from the allegations in the complaint against the
insured, not by the true facts of the cause of action against the insured . . . .” State
Farm Fire & Cas. Co. v. Steinberg, 393 F.3d 1226, 1230 (11th Cir. 2004); see
Jones v. Fla. Ins. Guar. Ass'n, Inc., 908 So. 2d 435, 443 (Fla. 2005).
IV. CONCLUSION
We AFFIRM the summary judgment in favor of Crum & Forster.
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