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(Article from Insurance Law Alert, June 2015)

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Addressing an issue of first impression under Florida law, a Florida federal district court ruled that invoking a “notice and repair” statute does not constitute a “suit” for purposes of triggering an insurer’s duty to defend.  Altman Contractors, Inc. v. Crum & Forster Specialty Ins. Co., 2015 WL 3539755 (S.D. Fla. June 4, 2015).

A condominium served a contractor with a Notice of Claim pursuant to a Florida statute that sets forth pre-suit procedures for a property owner to assert construction defect claims against a contractor.  The contractor sought defense and indemnity from its insurer.  The insurer refused to defend on the basis that there was no “suit” as required by the policy.  The court agreed and granted the insurer’s motion for summary judgment.

The policy defined “suit” as a “civil proceeding.”  The contractor argued that the notice at issue constitutes a civil proceeding because it is “an act or step that is part of a larger action or step taken in the prosecution of an action.”  The court disagreed, explaining that the statute provides only “a mechanism to guide the parties to enter into discussions with one another.  No part of [the statute] provides for a setting where the parties would appear before anyone to assist with this process.  There is no procedure contained therein that results in a decision or delineation of private rights and remedies.”

Other courts have concluded that pre-suit procedures are not “suits” for purposes of an insurer’s duty to defend.  Outside of the construction defect context, courts have issued mixed decisions as to whether administrative procedural requirements and actions, including the issuance of a PRP letter in environmental contamination suits, constitute a “suit” triggering an insurer’s defense obligation.  See January and May 2013 Alerts; February 2011 Alert.