In Great American Fidelity Ins. Co. v. JWR Construction Serv's, Inc., 2012 WL 1193848 (S.D. Fla. April 9, 2012), Download Great Am. Fid. Ins. Co. v. JWR Construction Serv's, Inc. (S.D. Fla. No. 10.61423, Order Filed April 9, 2012) PUBLIC ACCESS, a Florida Judge was confronted with the issue of whether there is a Duty to Defend underlying Chinese Drywall Damages claims under environmental liability insurance policies. The Court in that case held that the Liability Insurer which issued the environmental liability insurance policies to the General Contractor at bar, owed a Duty to Defend Chinese Drywall Damages Claims in Florida under New York Law.
The first of two Exclusions relied on by the carrier in this case, "the Faulty Workmanship / Own Work Exclusion," was held inapplicable first. Id., 2012 WL 1193843 at *11-*15. Great American relied apparently on the Florida rule governing the determination of a Duty to Defend, which is to compare the allegations in the underlying complaint against the Policyholder or other Insured, with the provisions of the Liability Policy. However, this case as noted was determined by New York Law instead. "New York law does not limit itself only to the four corners of the underlying complaint." The carrier produced no evidence concerning key factual issues raised by the underlying complaint with respect to the Duty to Defend issue. The Federal Court held that the carrier failed to meet its burden in moving for Summary Judgment and its motion was denied. Id. at *15-*16.
The carrier relied on one other Exclusion in its environmental liability insurance policies to defeat its Duty to Defend, its "Products Liability Exclusion". The Federal Court held that this Exclusion did not apply in this posture, either. Id. at *16-*20.
And the Court did more in this decision. The Court granted the Insureds' Motion for Summary Judgment and affirmatively declared that the carrier in this case owes a Duty to Defend the underlying claims including the claims alleged for Chinese Drywall Damages. Id. at *20.
Even more. As noted, the Court determined that Florida's choice-of-law rules require that New York Law be applied to Great American's Motion for Summary Judgment in this decision. Nonetheless, the Federal Court in Florida had no trouble applying Florida's Statute on Attorney's Fees to be awarded to a Policyholder or other Insured which successfully contests Insurance Coverage:
In addition, the Court orders that Great American must immediately reimburse JWR for its defense costs thus far incurred in the underlying suits, establish a continual defense fund to provide for JWR's future defense costs, and pay attorney's fees for this action to JWR pursuant to Section 627.428, Florida Statutes. Furthermore, these proceedings shall be stayed until an underlying judgment or settlement has occurred.
Id. at *20.
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