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Condo Builder Gets Another Chance In Defect Coverage Suit

(October 20, 2016)

A Florida federal judge on Thursday conditionally agreed to reconsider his ruling that a general contractor’s insurance policy barred coverage for a lawsuit over damage to a condo tower because the damage was to the contractor’s own work, asking for more briefing.

U.S. District Judge Roy Dalton Jr. had granted summary judgment to Evanston Insurance Co. in September, ruling it had no duty to defend the general contractor, DiMucci Development Corp. of Ponce Inlet Inc., in the underlying action because of the policy’s “your work” exclusion. The underlying suit was filed by the unit owners’ association at the Towers Grande high-rise in Daytona Beach Shores, Florida.

But now Judge Dalton says he may have been wrong.

“In light of the insufficient briefing on the applicability of the your work exclusion, the court finds that additional briefing will benefit the court in its ultimate resolution. … The motion is due to be conditionally granted and the court’s summary judgment order is due to be vacated,” he said.

Judge Dalton had said the “your work” exclusion in DiMucci’s commercial general liability policy with Evanston precluded coverage because the underlying complaint alleged only damage to the builder’s own work. In its motion for reconsideration, DiMucci argued that the underlying suit stemmed in part from work performed by a subcontractor and included direct claims against the subcontractor, making the “your work” exclusion inapplicable.

But Evanston said the request didn’t meet the legal threshold for reconsideration; for a judge to reverse a prior decision, the court must be presented with strongly convincing facts or law that shows there’s been an intervening change in controlling law, new evidence or a clear error, none of which applies here, Evanston said.

DiMucci held three consecutive CGL policies with Evanston predecessor Essex Insurance Co., and during coverage it built the 132-unit Towers Grande with roofer Wayne’s Roofing and Sheet Metal. In 2012, the Towers Grande Condominium Association sued DiMucci and Wayne’s, alleging they botched their work and caused roofing and HVAC damage and water leakage.

Judge Dalton found that the underlying complaint alleged an accidental “occurrence” resulting in property damage, rejecting Evanston’s contention that the damage was expected or intended by DiMucci.

But the judge ultimately concluded that the “your work” exclusion negated Evanston’s duty to defend, noting that DiMucci’s work encompasses the Towers Grande building in its entirety.

The underlying complaint alleged only that poor construction on parts of DiMucci’s own work damaged other parts of its work; as a result, the exclusion applies, the judge said.

Representatives for the parties were not immediately available for comment.

Evanston is represented by Rebecca Appelbaum, R. Steven Rawls and Anthony Horrnik of Butler Weihmuller Katz Craig LLP.

DiMucci is represented by Clifford Shepard of Shepard Smith & Cassady PA.

The case is Essex Insurance Co. v. DiMucci Development Corp. of Ponce Inlet Inc., case number 6:15-cv-00486, in the U.S. District Court for the Middle District of Florida.

By Cara Salvatore