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Commercial Litigation Attorneys
Miami, Florida

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A notice of claim of construction defect is suit

Construction is big business in South Florida, with its booming commercial real estate market. Occasionally, the rush to complete a project or development – or perhaps faulty engineering or design – can result in construction defects. When a construction defect is discovered in Florida, the typical procedure under state law is to file a notice of construction defect with the general contractor of the project. This is a requirement before a lawsuit can be filed.

The general contractor will then usually look to its insurer to cover not only the defects themselves but also to defend the contractor against liability for the construction defect(s) or to cover the costs of the defense. In one such case, Altman Contractors, Inc., general contractor on the Sapphire Condominium project – a high-rise in Fort Lauderdale – received numerous claim notices from condominium owners that alleged over 800 construction defects. Altman, in turn, tendered defense to its insurer, Crum & Forster Specialty Insurance Company.

Crum & Forster denied Altman’s demand to defend and indemnify because no suit had yet been filed, and its duty to defend and indemnify was only invoked by commencement of a law suit. Altman ultimately settled all the claims out of court but filed suit against Crum & Forster in federal court, demanding that the insurer indemnify the company for the claims it paid. The district court found in favor of the insurer, and Altman filed an appeal with the 11th Circuit Court of Appeals.

The appeals court certified a question regarding chapter 558 of the Florida Statutes, which details the procedure for notice-and-repair – which must be followed prior to filing a lawsuit – for a construction defect. The Florida Supreme Court, in a December opinion held that notice of a construction defect commenced a suit for the purposed of triggering insurance coverage. This ruling should assist general contractors in defending future construction defect claims in Florida.

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