In Auto-Owners Ins. Co. v. Pozzi Window Co., No. SC06-779 (Fla. June 12, 2008), homeowner Perez sued insured general contractor Coral Construction, window manufacturer Pozzi, window seller International, and window installation subcontractor Scott, alleging Scott’s defective installation of the defective Pozzi windows resulted in water penetration around the windows which caused property damage to other components of the home as well as personal property. Perez had purchased the Pozzi windows from International. Pozzi cross-claimed against Scott alleging Scott defectively installed the windows. Auto-Owners, Coral’s CGL insurer, settled Perez’ personal property “property damage” claim but denied coverage for the repair or replacement of the allegedly defectively installed defective windows. Pozzi settled with Perez by agreeing to correct the defective window installation. Pozzi then settled with Coral taking an assignment of Coral’s claims against Auto-Owners. Perez then sued Auto-Owners for breach of contract and bad faith. The federal trial court entered summary judgment for Pozzi. On appeal, the Eleventh Circuit certified the question to the Florida Supreme Court as to whether the costs to repair or replace a subcontractor’s defective work were covered under a CGL policy. The Florida Supreme Court first states that, under its holding in J.S.U.B., the subcontractor’s defective installation of the windows, being neither intended nor expected by the insured Coral, constituted an “occurrence.” However, the court states that whether the damage to the windows constituted “property damage” caused by an “occurrence” depended on whether the windows were defective prior to and at the time of installation. The court states:
If the windows were purchased by the Homeowner and were not defective before being installed, coverage would exist for the cost of repair or replacement of the windows because there is physical injury to tangible property (the windows) caused by defective installation by a subcontractor. In that instance, damage to the windows caused by the defective installation is the same as damage to other portions of the home caused by the leaking windows. However, a different result would follow if the windows were defective prior to being installed and the damage to the completed project was therefore caused by defective windows rather than faulty installation alone.
Id. at 1248. The court seems to imply that, even if the windows were further damaged by defective installation, if the windows were already defective, there would be no coverage. When Pozzi Window returned to the Eleventh Circuit, the court determined that there in fact was no factual dispute regarding defective installation versus defective windows, and that defective window installation by Scott was the sole issue. The court thus affirmed the trial court’s entry of summary judgment in favor of Pozzi. Pozzi Window Co. v. Auto-Owners Ins., 294 Fed. Appx. 588 (11th Cir. 2008).