Addison Ins. Co. v. 4000 Island Blvd. Condo. Ass’n, 2017 U.S. App. LEXIS 26870 (11th Cir. Dec. 28, 2017)
The owner of a high-rise condominium building in Florida hired a contractor to replace the building’s concrete balcony railings with new railings featuring aluminum and glass. The contractor on the project, Poma Construction (“Poma”), entered into a subcontract with Windsor Metal Specialties (“Windsor”), under which Windsor agreed to paint the new aluminum railings.
Two years after the work was completed, the owner sued Poma and Windsor in Florida state court, alleging that the railings were defective and required replacement. In addition to replacing the railing system, the owner alleged that Windsor’s defective paint finish damaged other surrounding property, including railing post pockets and the concrete balcony slabs.
Windsor submitted the claim to its liability carrier, Addison Insurance Company (“Addison”). Addison then filed a declaratory judgment action in the United States District Court for the Southern District of Florida, seeking a declaration that it had no duty to defend Windsor in the owner’s underlying lawsuit. Windsor’s policy provided a defense against claims alleging that an “occurrence” caused “property damage.” But the policy excluded claims alleging damage to Windsor’s own work product or to the particular part of a property on which Windsor performed its work. Addison had invoked that exclusion, arguing that the owner merely alleged damage to Windsor’s own work and/or the part of the property on which Windsor performed its work, i.e. the balcony. The District Court granted summary judgment in favor of Windsor, and Addison appealed.
On appeal, the Eleventh Circuit applied Florida’s “eight corners rule,” under which an insurer has a duty to defend if allegations within the four corners of the complaint allege a loss covered under the four corners of the insurance policy. The court found that the owner’s complaint against Windsor triggered the duty to defend under this rule because it alleged that Windsor’s faulty rail painting damaged concrete slabs on the balconies. Rejecting Addison’s attempt to invoke the policy exclusion, the court found that the allegedly damaged balcony slabs did not constitute Windsor’s own work or the particular part of the property on which Windsor performed its work because Windsor painted only the balcony railings.
The court noted that its conclusion was consistent with the Florida Supreme Court’s interpretation of commercial general liability policies in prior cases: Under Florida law, an insured’s faulty workmanship does not itself constitute “property damage,” but there is “property damage” under a commercial general liability policy if the insured’s faulty workmanship causes physical injury to otherwise non-defective property. And damaging otherwise non-defective property constitutes an “occurrence” so long as the insured’s faulty workmanship was unintentional. Because the owner alleged Windsor’s faulty workmanship – defective rail painting – caused physical injury to otherwise non-defective property – concrete slabs – the owner alleged that an “occurrence” had resulted in “property damage,” thus creating a duty to defend by Addison.