Facts
In Southern-Owners Insurance Co. v. MAC Contractors of Florida, LLC, No. 23-11366 (11th Cir. 4/11/2024), MAC was the general contractor for a home. After MAC abandoned the project prior to completion, the owner sued MAC for breach of contract seeking damages in part for damage to the project. MAC’s CGL insurer Southern-Owners filed suit seeking declarations of no duty to defend or indemnify. Following a series of federal trial court decisions and appeals to the Eleventh Circuit, the sole remaining issue was whether exclusions j(5) and j(5) eliminated Southern-Owners’ duty to defend. Specifically, whether “that particular part” applied broadly to the entire project or narrowly to the distinct component parts on which work was being performed.
Holding
The Eleventh Circuit held that, because the law on the scope of the exclusions was uncertain when the underlying lawsuit against MAC was pending, they did not eliminate Southern-Owners’ duty to defend. Southern-Owners relied on the Eleventh Circuit’s 2021 decision in Travelers Indemnity Co. of Conn. v. Richard Mckenzie & Sons, Inc., 10 F.4th 1255 (11th Cir. 2021) in which the court applied the broad construction of “that particular part” as meaning all of the operations specified in the insured’s work contract, but in the context of the insured citrus grove manager performing operations on the grove. The court does not go as far as extending the broad construction to a general contractor such as MAC, in which case “that particular part” would mean the entire house MAC was hired to construct. Instead the court holds that, “even assuming Mckenzie & Sons is on point,” it was decided well after the underlying lawsuit against MAC was resolved, and the state of the law prior to Mckenzie & Sons was uncertain, as Florida federal district courts had adopted both broad and narrow constructions of “that particular part.” Therefore, although current law on the scope of “that particular part” might eliminate Southern-Owners’ duty to defend, because the law was uncertain at the time that Southern-Owners had to make a decision on a duty to defend, it had a duty to defend.
Takeaways
The takeaway is that, in determining a duty to defend under Florida law, any uncertainty in the law on a determinative coverage issue will be resolved in favor of the insured.