A federal district court in Florida has ruled that a commercial general liability insurer could not rely on the "Damage to Your Work" exclusion in its policy to avoid defending its insured against a complaint that could "reasonably" be interpreted to allege damage to property other than that on which its insured performed work.
The Case
In September 2009, Bahama Bay Condominium Association, Inc., contracted with Bobby T., Inc., to "repair and remediate the moisture intrusion problems at the exterior stairs and breezeways" at Bahama Bay Resort and to prevent it from reoccurring. The contract described the scope of work as "[s]horing, demolition, framing, waterproofing, installation of siding and soffits, flashing, painting, repair of exterior columns and rails, landscaping, cleaning and pulling all permits."
Bobby T. performed the work in 2009 and 2010.
Thereafter, Bahama Bay sued Bobby T. for damages for water intrusion caused by alleged construction defects. Bahama Bay asserted that, in 2014, it noticed "visible signs of damage beginning to appear in the same areas as those where the original damage and subsequent repairs were made in 2009 and 2010."
In addition, Bahama Bay alleged that "[s]igns of water damage and moisture infiltration not only appeared in areas where repairs had been made but also in areas indicating that leaks were permitting water to travel from points of penetration to other parts of the exterior stairwells causing further damage. . . . [and that] [t]he Resort has suffered continued damage by the ongoing water intrusion and must be repaired."
Bobby T.'s commercial general liability insurer, Auto-Owners Insurance Company, asked a court to declare that it had no duty to defend or indemnify Bobby T.
Auto-Owners moved for summary judgment, contending that the allegations against Bobby T. demonstrated that the claimed "property damage" fell within the exclusion for "Damage to Your Work," because Bahama Bay alleged damages related only to the work performed by Bobby T.
The Auto-Owners Policy
The commercial general liability insurance policy Auto-Owners issued to Bobby T. excluded from coverage:
"Property damage" to "your work" . . .The District Court's Decision"Your Work":
a. Means:
(1) Work or operations performed by you or on your behalf, and
(2) Materials, parts or equipment furnished in connection with such work or operations.
The district court denied the motion.
In its decision, the court ruled that Auto-Owners was not entitled to summary judgment because Bahama Bay's complaint against Bobby T. could "reasonably" be interpreted to allege damage to property other than that on which Bobby T. performed work.
According to the court, although Bahama Bay's complaint alleged damage to the exterior staircases and landings, the areas Bobby T. originally was hired to repair, it was "not clear that no other property was damaged."
For example, the court pointed out, paragraph 17 of Bahama Bay's complaint alleged:
In 2014, [Bahama Bay] noticed visible signs of damage beginning to appear in the same areas as those where the original damage and subsequent repairs were made in 2009 and 2010. Signs of water damage and moisture infiltration not only appeared in areas where repairs had been made but also in areas indicating that leaks were permitting water to travel from points of penetration to other parts of the exterior stairwells causing further damage.
(Emphasis added.)
Accordingly, the court found that Auto-Owners had not met its burden of demonstrating that the allegations in the Bahama Bay complaint fell "solely and entirely within the exclusion," concluding that any doubts as to whether Auto-Owners had a duty to defend had to be resolved in favor of Bobby T. The court added that it followed that there were disputed issues of fact as to the property damaged that also precluded summary judgment on the issue of indemnification.
The case is Owners Ins. Co. v. Bobby T., Inc., No: 8:16-CV-3428-T-27AAS (M.D. Fla. March 28, 2018). Attorneys involved include: For Owners Insurance Company, Auto-Owners Insurance Company, Plaintiffs: Andrew Frank Russo, LEAD ATTORNEY, Rywant, Alvarez, Jones, Russo & Guyton, P.A., Tampa, FL. For Bobby T., Inc., Defendant: Robert L. Gibson, Jr., LEAD ATTORNEY, Christine C. Daly, Gibson Law Firm, Lake Wales, FL. For Bahama Bay Condominium Association, Inc., Defendant: Brent Kimball, Edmund Oscar Loos, III, LEAD ATTORNEYS, Greenspoon Marder, PA, Orlando, FL.