In a case closely watched by insurance carriers, insureds and attorneys alike in the construction industry, the Florida Supreme Court, answered a questioned certified by the 11th Circuit United States Court of Appeals, holding the notice and repair process set forth in Florida Statutes Chapter 558, is a “suit” within the meaning of the commercial general liability policy issued by a carrier to its insured.
In Altman Contractors, Inc., v. Crum & Forster Specialty Insurance Company, Altman was the general contractor for a condominium construction project and was insured by Crum &Forster for the project through a standard commercial general liability policy. The policy contained language which, stated generally, provided for a duty to defend the insured in any civil proceeding or alternative dispute resolution proceeding in which qualifying damages were claimed. Following the completion of the project, and pursuant to Florida Statutes Chapter 558, the condominium association notified Altman of alleged construction defects at the project. After receiving the condominium association’s notice, Altman notified Crum &Forster of the claim and demanded a defense and indemnification. Crum & Forster denied it had a duty to defend or indemnify Altman because the notices did not constitute a “suit” pursuant to the language contained in the policy. Altman sued Crum & Forster in Federal Court seeking an order Crum &Forster must defend and indemnify Altman in connection with the notices it had received. The Southern District of Florida trial court granted a Motion for Summary Judgment for Crum & Forster, holding that nothing about the 558 notice process satisfies the definition of a civil proceeding and therefore does not constitute a suit triggering the insured duty to defend. An appeal to the United States Court of Appeals for the 11th Circuit resulted in the appellate panel’s acknowledgement there were reasonable arguments presented by both sides as to whether the Chapter 558 process constituted a “suit” or “civil proceeding” within the meaning of the policy, and resulted in appellate court certifying a question to the Florida Supreme Court.
Florida Statute Chapter 558 sets forth certain procedural requirements that must be met before a claimant may file an action for a construction defect. Specifically, the claimant must serve written notice of a claim on the contractor, subcontractor, supplier, or design professional, as applicable, before the claimant may file an action for construction defect. It is a pre-suit process whereby the claim may be resolved solely by the parties through a negotiated settlement or the performance of voluntary repairs without a lawsuit ever being filed.
In interpreting the language of the insurance policy in light of past precedent, the Court held the Chapter 558 notice and repair process did not qualify as a “civil proceeding” under the definition of “suit” pursuant to the policy terms. However, recognizing the existence of a subparagraph of the policy which provided a broader definition of “suit” to “include… any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent,” the Court interpreted the Chapter 558 notice and repair process did fall within the definition of an alternative dispute resolution proceeding, reasoning that it is a statutorily required pre-suit process aimed to encourage the clamant and insured to settle claims without resorting to legislation. The Court also held the Chapter 558 notice and repair process provides for damages, as required by the policy’s definition of a “suit.” Importantly, the Court, did not comment on the policy’s requirement that Crum & Forster consent to Altman’s submission to the alternative dispute resolution proceeding in order to invoke Crum & Forster’s duty to defend under the policy, leaving that disputed issue of fact to be later determined by the fact finder. The decision not to address whether Crum and Forster consented to Altman’s participation in the Chapter 558 process, leaves open the question of whether the duty to defend had been triggered in that instance.
The opinion does leave open potential practical questions for carriers, insured and attorneys going forward, including, when should a carrier provide consent to participate in the chapter 558 process? What, if any consequences does a carrier invite if it prohibits or delays in its consent to an insured from participating in the Chapter 558 process? Reasonable minds may disagree regarding the ultimate answers to those questions, and the practical effects of this ruling may well be varied depending on the factual scenarios of future claims of construction defects; however, what can be taken away is that the Court’s holding that the Chapter 558 notice and repair process constitutes a “suit” under a general commercial liability policy should encourage both carriers and their insureds to engage each other soon after the initiation of the Chapter 558 process by a claimant.
If you have any questions about Altman or would like to discuss how it may apply to a particular set of facts, please contact Haldon Greenburg at firstname.lastname@example.org
 No. SC16-1420 (Fla. 2017).
 Id. at 2-3.
 The policy was a standard GC 00 01 commercial general liability policy which provided in relevant part that Crum & Forster had a duty to defend the insured against any “suit” seeking damages because of bodily injury or property damage to which the insurance applied. The policy defined the term “suit” as a civil proceeding in which damages to which the insurance applies are alleged. The policy also noted that “suit” includes any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent.
 No. SC16-1420 (Fla. 2017) at 3-4
 Id. at 4
 Id. at 5; see also Altman Contractors, Inc. v. Crum & Forster Specialty Ins. Co., 124 F. Supp. 3d 1272, 1275 (S.D. Fla. 2015).
 Altman Contractors, Inc. v. Crum & Forster Specialty Ins. Co., 832 F.3d 1318 (11th Cir. 2016).
 Florida Statute §558.003 (2012)
 Florida Statue §558.004(1) (2012)
 Florida Statute §558.004(5) (2012)
 No. SC16-1420 (Fla. 2017) at 10-11
 Id. at 11-12.
 Id. At 12.
 No. SC16-1420 (Fla. 2017) at 2, 12-13.