Construction Case Law Update - February 2015 #2

FLORIDA FEDERAL CASES

• Commercial General Liability Insurance Policies; Construction Defects; Self Insured Retention Amount; Subrogation; “Made Whole Doctrine” – Under the “made whole doctrine,” an insured has no affirmative right to recover settlement payments recovered by insured that exceed the Self-Insured Retention amounts that the insured must spend to trigger coverage under a commercial general liability policy. Insurer defended and indemnified general contractor in construction defect suits after the general contractor paid the Self-Insured Retention (SIR) amounts required to trigger coverage under several commercial general liability policies. In settling the various disputes, the insurer recovered more in indemnification funds than the general contractor spent to satisfy the SIR amounts. The Court held that the general contractor was not entitled to this excess money, given that Florida does not recognize an affirmative right for an insured to be “made whole” beyond the payment of the policy proceeds. Summit Contractors, Inc. v. Crum & Forster Specialty Ins. Co., No. 8:13-CV-295-T-17TGW, 2015 WL 628761 (M.D. Fla. Feb. 12, 2015).
• Commercial General Liability Insurance Policies; Declaratory Judgment; Severing Crossclaims Against Coparty – While a plaintiff may lack standing to sever defendant’s crossclaim against a codefendant under Fed. R. Civ. Pro. 13(g), the Court may still sever such claims under Rule 21 when the claims involve different factual and legal issues irrelevant to plaintiff’s claim that will greatly increase plaintiff’s costs. Subcontractor’s insurer brought declaratory judgment action against subcontractor and general contractor to determine whether subcontractor’s commercial general liability policy covered property damage caused by subcontractor. The Court denied insurer’s motion to dismiss or sever the general contractor’s crossclaims against the subcontractor, holding that the insurer had no standing under Fed. R. Civ. Pro. 13(g). However, under the severance provision in Rule 21, the Court agreed with the insurer that severance was appropriate because the general contractor’s crossclaims involved different factual and legal issues irrelevant to the insurer’s declaratory action and sought more comprehensive remedies and a jury trial, which would increase the insurer’s costs. Essex Ins. Co. v. Kart Const., Inc., No. 8:14-CV-356-T-23TGW, 2015 WL 628782 (M.D. Fla. Feb. 12, 2015).

FLORIDA STATE CASES

• Exculpatory Clauses; Indemnity; Negligence – A clear and unambiguous exculpatory clause releasing its drafter from “any and all claims and causes of action of every kind” is not per se ineffective to bar negligence actions despite not expressly referencing “negligence” or “negligent acts.” A mother injured at a resort brought a negligence action against the non-profit organization providing the “storybook vacation” for the family’s seriously ill child. The family had signed two releases: one contained in the wish request form and a second was signed upon arriving at the resort after the “wish” had been granted. The trial court granted plaintiff’s partial summary judgment motion on defendant’s affirmative defense of release. On appeal the Fifth District reversed, holding that clear and unambiguous language exculpating defendant from “any and all claims and causes of action of every kind” barred plaintiff’s negligence action despite no express reference to defendant’s negligence. The Fifth District certified its decision to the Florida Supreme Court as conflicting with decisions of the First, Second, Third, and Fourth Districts, which relied on Florida Supreme Court’s holding in University Plaza Shopping Ctr., Inc. v. Stewart, 272 So. 2d 507 (Fla. 1973), that indemnity agreements must expressly identify “negligence” in order to indemnify the indemnitee for damages caused by his sole negligence. In approving the Fifth District’s decision and disapproving those of the other districts, the Florida Supreme Court held that the differences between indemnity agreements and exculpatory clauses militated against extending University Plaza and its progeny to exculpatory clauses. “[B]ecause indemnification agreements allocate the risk of liability for injuries to an unknown third party [to the indemnitor], specificity is required so that the indemnitor is well aware that it is accepting liability for both its negligence and the negligence of the indemnitee. Exculpatory clauses, however, primarily release a party from liability for its own negligence and not vicarious liability.” Thus, in contrast to indemnity agreements, clear and unambiguous exculpatory clauses do not require a specific reference to “negligence” in order to bar such claims. Sanislo v. Give Kids the World, Inc., No. SC12-2409, 2015 WL 569119 (Fla. Feb. 12, 2015).
• A Negligent Designand Construction; Liability of Subsequent Engineers – The signing and sealing of design plans by a successor engineer does not place full and exclusive liability for those plans on the successor engineer. A fatal vehicle collision occurred within a County road-expansion project, for which the engineer’s signed and sealed plans called for a 55 mile per hour speed limit and advance-warning signs. After construction had began, the Count had submitted its own highly similar plans that changed the speed limit and were signed and sealed by the County’s own engineer. In plaintiff’s suit against the original engineering firm and the County, the trial court granted summary judgment for the firm, finding that the conflicting evidence favored the engineering firm’s argument that the accident scene was constructed using the County’s plans. The Fifth District reversed, holding that the trial court erred in weighing evidence on summary judgment. The Fifth District also reversed the trial court’s conclusion that the County’s plans, signed and sealed by its own engineer, absolved the original engineer from liability, as no precedent provided such a rule. Villanueva v. Reynolds, Smith and Hills, Inc., No. 5D13-3186, 2015 WL 585545 (Fla. 5th DCA Feb. 13, 2015) (NOTE: This opinion has not been released for publication in the permanent law reports. Until released, it is subject to revision or withdrawal).