CASE LAW UPDATE
OPERATION OF FLORIDA’S RIGHT OF CONTRIBUTION AMONG LIABILITY INSURERS FOR DEFENSE COSTS IN CONSTRUCTION DEFECT LITIGATION
Sam Scott Ross, Partner – Tampa Office
Now, six months after the Florida Legislature created a right of contribution among liability insurers for defense costs, the impact is evident in construction defect litigation. Since enactment of § 624.1055, Florida Statutes, on January 1, 2020, insurers construction defect lawyers have readily adopted the potential remedy as part of the fundamental case evaluation, negotiation and settlement strategy. A new factor to consider when attempting to settle a construction defect claim, is if the insured has a liability co-insurer which has refused to contribute after the co-insurer has been put on notice of the claim.
The law codified as § 624.1055, Florida Statutes, provides:
624.1055 Right of contribution among liability insurers for defense costs.–
A liability insurer who owes a duty to defend an insured or who defends the insured against a claim, suit, or other action has a right of contribution for defense costs against any other liability insurer who owes a duty to defend the insured against the same claim, suit, or other action, provided that contribution may not be sought from any liability insurer for defense costs that are incurred before the liability insurer’s receipt of notice of the claim, suit, or other action.
- APPORTIONMNET OF COSTS. – The court shall allocate defense costs among liability insurers who owe a duty to defend the insured against the same claim, suit, or other action in accordance with the terms of the liability insurance policies. The court may use such equitable factors as the court determines are appropriate in making such allocation.
- ENFORCEMENT OF RIGHT OF CONTRIBUTION. – a liability insurer who is entitled to contribution from another liability insurer under this section may file an action for contribution in a court of competent jurisdiction.
- This section is not intended to alter any terms of a liability insurance policy or to create any additional duty on the part of a liability insurer to an insured.
- An insured may not rely on section as grounds for a complaint against a liability insurer.
- – This section applies to liability insurance policies issued for delivery in this state, or liability insurance policies under which an insurer has a duty to defend an insured against claims asserted or suits or actions filed in this state. Such liability insurance policies include surplus lines insurance policies authorized under the Surplus Lines Law, ss. 626.913 – 626.937.
- – Notwithstanding subsection (4), this section does not apply to motor vehicle liability insurance or medical professional liability insurance.
It is clear that the right to contribution against a non-contributing co-carrier applies to any claim, suit or other action initiated on or after January 1, 2020. Fla. Stat. Ann. § 624.1055; KB Home Jacksonville LLC v. Liberty Mut. Fire Ins. Co., 2019 U.S. Dist. Lexis 151235, at HN12 (Sept. 5. 2019).
As such, the general consensus of the construction defect practitioners is that for the contributing liability co-carrier to have standing to bring a contribution claim against a non-contributing liability co-carrier, the underlying claim that is being settled, must be: (1) filed as a lawsuit or arbitration claim on or after the January 1, 2020, enactment of the contribution law, or, (2) a presuit claim from which a lawsuit or arbitration claim could be filed within the applicable statute of limitations.
Consequently, when the underlying construction defect claim was filed as a lawsuit before enactment of § 624.1055, Florida Statutes (prior to or on December 31, 2019), the contribution claim for defense costs against the non-contributing liability co-carrier, generally cannot be made by the contributing liability co-carrier.
Other causes of actions may be available to the contributing co-liability carrier against the non-contributing co-carrier in certain construction liability coverage scenarios.
The case cited to as having been an impetuous for the Florida Legislature to enact § 624.1055, Florida Statutes, is, Argonaut Ins. Co. v. Maryland Cas. Co., 372 So.2d 960 Fla. 3d DCA 1979), in which the court commented:
The Legislature has not seen fit to allow contribution for costs or attorney’s fees between insurance companies. If contribution for costs were allowed between insurance companies, there would multiple claims and lawsuits. The insurance companies would have no incentive to settle and protect the interest of the insured, since another law suit would be forthcoming to resolve the coverage dispute between the insurance companies. This is contrary to public policy, particularly since the insured has been afforded legal protection and has not had to personally pay any attorney’s fees.
The right of contribution among liability insurers for defense costs seemingly dovetails into the primary inquiry of when the property was damaged and the injury-in-fact trigger, approved of in Cartithers v. Mid-Continent Cas. Co., 782 F.3d 1240 (U.S. Ct. App. 11th Cir. (2015).
The savvy insurer representative and construction defect counsel, will evaluate the potential for a contribution claim under § 624.1055, Florida Statutes, in advance of entering into settlement negotiations of construction defect claims.