November 19th, 2015
The Eleventh Circuit’s Decision in Carithers v. Mid-Continent Cas. Co., 782 F.3d 1240 (11th Cir. 2015)
By: Amanda K. Anderson, Esquire
Prior to the Eleventh Circuit’s recent decision in Carithers, the law surrounding the removal and replacement of the defective work itself, even if it caused “property damage”, was less than clear. SeeBoran Craig Barber Homes v. Mid-Continent, No. 2:06-cv-89 – Doc. 262 (M.D. Fla. Feb. 19, 2009); Arnett v. Mid-Continent Cas. Co.,2010WL2821981 (S.D. Fla. 2010); Assurance Company of America v. Lucas Waterproofing Co. Inc., 581 F.Supp.2d 1201 (S.D. Fla.2008).
In Carithers, the district court found that a balcony was defectively constructed, which caused damage to a garage. Carithers v. Mid-Continent Cas. Co., 782 F.3d 1240 (11th Cir. 2015). The district court also recognized that, under Florida law, the defectively constructed balcony was not covered by the policy. Id. However, the district court found as a fact that, in order to repair the garage (which the parties agree constituted property damage), the balcony had to be rebuilt. Id.
The insurer, Mid–Continent Casualty Company (“MCC”), did not contend that this factual finding was clearly erroneous. Id.Rather, MCC claimed that the Carithers cannot recover for any defective work, even where repairing that work is a necessary cost of repairing work for which there is coverage. Id.
The Eleventh Circuit held that the district court did not err in awarding damages for the cost of repairing the balcony. Id. Under Florida law, the Carithers had a right to “the costs of repairing damage caused by the defective work….” U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So.2d 871, 889 (Fla. 2007). Since the district court determined that repairing the balcony was part of the cost of repairing the garage, which was defective work, the Carithers were entitled to these damages.Carithers, 782 F.3d at 1251. Thus, the Eleventh Circuit has clarified that removal and replacement of the defective work itself is covered a “damages because of ‘property damage’”.