IN THE SUPREME COURT OF FLORIDA OWNERS INSURANCE COMPANY and AUTO-OWNERS INSURANCE COMPANY Petitioners, CASE NO: vs. Lower Tribunal No. 2D01-5770 BILTMORE CONSTRUCTION CO., INC. and CENTRAL-ALLIED ENTERPRISES, INC., a continuing joint venture, by and through BILTMORE CONSTRUCTION CO., INC., and CENTRAL-ALLIED ENTERPRISES, INC., its co-venturers, Respondents. / ON DISCRETIONARY REVIEW FROM THE DISTRICT COURT OF APPEAL SECOND DISTRICT, STATE OF FLORIDA CASE NO.: 2D01 5770 PETITIONERS BRIEF ON JURISDICTION MICHAEL S. RYWANT, ESQUIRE Florida Bar No.: 240354 BURKE G. LOPEZ, ESQUIRE Florida Bar No.: 855669 RYWANT, ALVAREZ, JONES & RUSSO, P.A. 109 North Brush St., Suite 500 P.O. Box 3283 Tampa, Florida 33601 (813) 229-7007 Tel: (813) 229-7007 Fax: (813) 223-6544 Attorneys for Petitioners
TABLE OF CONTENTS Table of Contents... i Table of Citations...ii, iii Preliminary Statement...1 Statement of Jurisdiction... 1-2 Statement of the Case and Jurisdictional Facts... 2-4 Summary of Argument...5 Argument... 5-8 The Second District s decision expressly and directly conflicts with the Third District s decision in Auto Owners Insurance Co. v. Tripp Construction, Inc. by expanding the four corners of the Complaint Rule. Conclusion...8 Certificate of Service...9 Certificate of Compliance...9 i
TABLE OF CITATIONS Auto Owners Insurance Co. v. Tripp, 737 So. 2d 600 (Fla. 3d DCA 1999)...1,3,4,5,8 Biltmore Construction Company, Inc., et al v. Owners Insurance Company, et al, 28 Fla. L. Weekly D785 (Fla. 2d DCA 2003)... 1 Vest v. Travelers Insurance Co., 753 So. 2d 1270 (Fla. 2000);... 2 Arab Termite and Pest Control of Florida, Inc. v. Jenkins, 409 So. 2d 1039 (Fla. 1982).... 2 Bayshore Heights Associates, et al v. Biltmore Construction Company, Inc., Pinellas Circuit Court, Case No. 95-01859... 2 Homeowners Warranty Corp. v. Hanover Insurance Company, 683 So. 2d 527 (Fla. 3d DCA 1996)... 6 LaMarche v. Shelby Mutual Insurance Co., 390 So. 2d 325 (Fla. 1980)... 7 ii
OTHER AUTHORITIES Article V, 3(b)(3), Fla. Const.... 8 iii
PRELIMINARY STATEMENT Petitioners, Owners Insurance Company and Auto-Owners Insurance Company, Petitioners herein, will refer to themselves as Owners. Owners will refer to Respondent, Biltmore Construction Co. and Central-Allied Enterprises, Inc., a joint venturer and its co-venturers, collectively as Biltmore. Owners will refer to Bayshore Heights Associates, Ltd., Respondent in the underlying action, as Bayshore. References to the Record on Appeal will be as R. followed by the page number. STATEMENT OF JURISDICTION This Petition arises from a decision the Second District Court of Appeal reversing the summary judgment granted in favor of Petitioners, Owners Insurance Company and Auto-Owners Insurance Company. The Second District Court of Appeal s Opinion in this case, Biltmore Construction Company, Inc., et al v. Owners Insurance Company, et al, 28 Fla. L. Weekly D785 (Fla. 2d DCA 2003) gives rise to a decisional conflict which exists with the holding in Auto-Owners Insurance Co. v. Tripp Construction, Inc., 737 So. 2d 600 (Fla. 3d DCA 1999). Decisional conflict may be created by a conflict in the legal principles appearing on the face of decision or by misapplication of 1
a specific holding previously announced by the Court. Vest v. Travelers Insurance Co., 753 So. 2d 1270 (Fla. 2000); Arab Termite and Pest Control of Florida, Inc. v. Jenkins, 409 So. 2d 1039 (Fla. 1982). STATEMENT OF THE CASE AND JURISDICTIONAL FACTS This litigation was initiated by Biltmore for the sole purpose of recovering attorney s fees and costs that were expended in the defense of an underlying case, Bayshore Heights Associates, et al v. Biltmore Construction Company, Inc., Case No. 95-01859, in and for the Circuit Court of Pinellas County, Florida. ( The Bayshore litigation ) (R. 1-5). Biltmore had requested Owners to defend and indemnity it in the Bayshore litigation Owners originally declined to defend or indemnify based on the allegations in Bayshore s Complaint. Biltmore initiated this lawsuit against Owners in a two-count complaint: Count I seeking declaratory relief from Owners regarding coverage under its commercial general liability policy and Count II seeking declaratory relief against Auto-Owners under its umbrella policy. (R. 1-6). On October 27, 2001, the trial court (the Honorable Crockett Farnell of the Sixth Judicial Circuit) granted Owners summary judgment motion. (R. 1190-92). A Final Judgment in favor of Owners was entered November 15, 2001 and an appeal was taken by Biltmore. (R. 1207-08). The Second District Court of Appeal issued its Opinion on March 21, 2
2003 and corrected that Opinion on March 26, 2003. (App. 1-3). In the Opinion, the Court found that Owners duty to defend arose because, here the allegation that there was damage due to severe water infiltration could obviously include damage to property other than the improperly constructed windows and exterior walls, as it could include damage to carpeting and drywall. (App. 1-3). The Court found there was potential coverage under the policy and Owners had a duty to defend the claim. Although no allegations in the Complaint made reference to damage to carpeting and drywall the Court ruled that the duty to defend arose because such damage could be implied. However, such a ruling is contrary to the ruling in Auto Owners Insurance Co. v. Tripp Construction, Inc., 737 So. 2d 600 (Fla. 3d DCA 1999). The Tripp court found that, in order for the duty of Auto Owners Insurance to defend Tripp to arise, the allegations contained in the four corners of the Complaint filed by the Homeowners must set forth a cause of action that seeks recovery for the type of damages that are covered by the insurance policy in question. The Tripp decision requires a restricted reading of the Complaint. Such a restricted reading in the instant case would not allow for the implied damage to carpeting and drywall to give rise to the duty to defend unless the words damage to carpeting and drywall, are included in the Complaint. As such, the Second District Court of Appeal misapplied the four corners of the Complaint Rule and improperly expanded the type of allegations 3
which can give rise to coverage under a comprehensive general liability insurance policy. SUMMARY OF THE ARGUMENT The instant decision cannot be reconciled with the Third District Court of Appeal s decision in Auto Owners Insurance Co. v. Tripp Construction, Inc., 737 So. 2d 600 (Fla. 3d DCA 1999). Instead, the Second District has expanded insurance company s duty to defend arising from complaints that do not specifically state covered damages within the four corners of the Complaint. The Second District s ruling in the instant case requires insurers to provide a defense where the allegations of the underlying complaint imply that covered damages are potentially being sought, even if those damages are not specifically delineated in the complaint. As such, a decisional conflict exists between the instant decision and the Auto Owners Insurance Co. v. Tripp Construction, Inc. decision cited above. ARGUMENT The Second District s decision expressly and directly conflicts with the Third District s decision in Auto Owners Insurance Co. v. Tripp Construction, Inc. by expanding the four corners of the Complaint Rule. The Second District s decision in the instant case improperly expands the 4
four corners of the Complaint Rule as enunciated in Auto Owners Insurance Company v. Tripp Construction, Inc., 737 So. 2d 600 (Fla. 3d DCA 1999). Insurance companies are required to review every complaint filed against its insured in order to determine whether or not their duty to defend has been triggered. The Tripp Court adheres to the longstanding principle in Florida Law that the allegations contained within the four corners of the Complaint must set forth a cause of action that seeks recovery for the type of damages that are covered by the insurance policy in question. See also Homeowners Warranty Corp. v. Hanover Insurance Company, 683 So. 2d 527 (Fla. 3d DCA 1996). If no allegations contained within the four corners of the Complaint give rise to coverage, then the duty to defend is not triggered. In the instant case, the Second District has expanded this Rule. The Second District found that the duty to defend arose when the allegations of the Complaint could possibly be interpreted to include covered damages. In the instant case, the four corners of the Complaint alleged damage by water infiltration to constructed windows and exterior walls (excluded damages). The Complaint made no reference to damage to carpeting and drywall. However, the Appellate Court said that the water infiltration could have included damage to carpeting and drywall and, therefore, the duty to defend should have been triggered. In affect, the Second District has expanded the four corners of the Complaint Rule. The Second District s decision triggers the duty to defend 5
when allegations of covered damages are not included within the four corners of the Complaint but rather could be implied. By triggering the duty to defend for damage to carpeting and drywall without the words carpeting and drywall appearing in the Complaint, the Second District now holds insurance carriers to a higher burden in which they are required to interpret the allegations of the Complaint in a broader sense and provide a defense if it is possible that covered damages may be potentially included. Such an expansion places an unreasonable burden on insurance carriers and unreasonably expands the scope of the duty to defend in an unpredictable way. As stated in LaMarche v. Shelby Mutual Insurance Co., 390 So. 2d 325 (Fla. 1980), the purpose of a comprehensive liability insurance coverage is to provide protection for personal injury or for property damage caused by the completed product, but not for the replacement and repair of that product. In order for an insurance company to determine whether or not the complaint includes property damage outside the completed project, the complaint giving rise to the potential duty to defend must expressly state that covered damages are included. If a complaint fails to expressly allege covered damages, then the duty to defend is not triggered. The instant case involves a situation where such allegations do not appear within the four corners of the Complaint. Rather, they are implied or inferred to be potentially included in the allegations. Such implication or inference is, by 6
its varying nature, uncertain, subjective and inconsistent. The better rule to apply is the four corners of the Complaint Rule as enunciated by the Tripp Court. CONCLUSION In that the Second District s decision in the instant case improperly expands the four corners of the Complaint Rule, it is in decisional conflict with the findings of the Third District in Auto Owners Insurance Co. v. Tripp Construction, Inc. For all the foregoing reasons, Petitioners respectfully invoke this Court s jurisdiction under Article V, 3(b)(3) of the Florida Constitution and requests the Court to: (1) accept jurisdiction; (2) establish a briefing schedule on the merits; and (3) quash the decision of the Second District Court of Appeal in the instant case. Dated: May 5, 2003 Respectfully submitted, MICHAEL S. RYWANT, ESQUIRE Florida Bar No: 240354 RYWANT, ALVAREZ, JONES, RUSSO & GUYTON, P.A. 109 North Brush Street Suite 500 Tampa, Florida 33602 Tel: (813) 229-7007 Fax: (813) 223-6544 Attorney for Petitioners CERTIFICATE OF SERVICE 7
I HEREBY CERTIFY that a copy of the foregoing has been furnished by regular U. S. mail to Charles W. Pittman, Esquire (co-counsel for Plaintiffs) at 400 North Tampa Street, Suite 2300, Tampa, Florida 33602; and Dennis P. Thompson, Esquire (co-counsel for Plaintiffs) at 1150 Cleveland Street, Suite 301, Clearwater, Florida 34615 on this the of May, 2003. Attorney CERTIFICATE OF COMPLIANCE I HEREBY CERTIFY that this brief is typed in Times New Roman 14- point font and complies with the font requirements as set forth in Fla. R. App. P. 9.210. Attorney 8