Southern-Owners Insurance Company v. MAC Contractors of Florida, LLC et al

Filing 111

OPINION AND ORDER granting in part 103 Southern-Owners' Third Motion for Summary Judgment; denying 104 MAC Contractors of Florida's Motion for Partial Summary Judgment as to the Duty to Defend; denying 81 MAC Contractor's Appl ication for Appellate Attorneys' Fees. It is hereby declared that Southern-Owners Insurance Company did not owe a duty to defend. The request for additional and alternative relief is denied as moot. Therefore, judgment is entered in favor of Southern-Owners Insurance Company and against MAC Contractors of Florida, LLC d/b/a KJIMS Construction. The Clerk is directed to terminate all pending deadlines and motions, enter judgment accordingly, and close the file. Signed by Judge John E. Steele on 1/29/2020. (BLW)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
SOUTHERN-OWNERS
COMPANY,

INSURANCE

Plaintiff,
v.

Case No:

2:18-cv-21-FtM-29MRM

MAC CONTRACTORS OF FLORIDA,
LLC
d/b/a
KJIMS
Construction,
PAUL
S.
DOPPELT, Trustee of Paul S.
Doppelt
Revocable
Trust
dated 12/08/90, and DEBORAH
A.
DOPPELT,
Trustee
of
Deborah A. Doppelt Revocable
Trust dated 12/08/90,
Defendants.
OPINION AND ORDER
Southern-Owners Insurance Company (Southern-Owners) issued
two

commercial

general

liability

insurance

policies

to

MAC

Contractors of Florida, LLC, d/b/a KJIMS Construction (KJIMS). 1
During the relevant time period KJIMS was sued for breach of

1

Policy number 20723985 had effective dates of October 8,
2014 to October 8, 2015 (the “2014-15 CGL Policy”) (Docs. ##84-1,
97-4), while Policy number 20723985 had effective dates of October
8, 2015 to October 8, 2016 (the “2015-16 CGL Policy”) (Docs. ##841, 97-5) (collectively “the CGL Policies”).
For the same time
periods, Southern-Owners also insured KJIMS under two Commercial
Umbrella policies, policy number 48-172-892-00, which provided
excess coverage.
(Doc. #84-2.)
Neither party disputes the
authenticity of the CGL Policies submitted in the record, and the
two CGL Policies contain identical relevant provisions.

contract in a state court lawsuit brought by Paul and Deborah
Doppelt, styled Doppelt et al. v. MAC Contractors of Florida, LLC
d/b/a KJIMS Construction, No. 2016-CA-1530 (the “Doppelt Action”).
Southern-Owners temporarily provided a defense to KJIMS under the
CGL Policies, but then declined to provide further defense.

The

Doppelt Action has recently been settled for $70,000 and the case
dismissed.
Southern-Owners’ Second Amended Complaint (Doc. #84), the
operative pleading in this case, seeks a declaration that the CGL
Policies provided no coverage for defense or indemnity of the
Doppelt Action.

Specifically, Southern-Owners seeks a declaration

that it had no duty to defend KJIMS in the Doppelt Action (and
therefore no duty to indemnify) because: (1) the allegations in
the Doppelt Action’s Amended Complaint do not bring the breach of
contract claim within the scope of the general coverage provision
of

the

CGL

Policies

since

there

are

no

allegations

of

an

“occurrence” or of otherwise covered “property damage” which would
cause the Doppelt Action to constitute a “suit” under the policies
(Doc. #84, ¶ 19); (2) even if the claim in the Doppelt Action was
within the scope of coverage, four exclusions apply to preclude
coverage: (a) the entire property is excluded from coverage since
it meets the definition of “your work” within the meaning of
Exclusion l. Damage To Your Work (the “your work” exclusion) (Id.
at ¶ 20); (b) any alleged failures by KJIMS with respect to the

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performance of its work and any purely economic injuries are
excluded by Exclusion b. Contractual Liability (Id. at ¶ 21); and
(c) any claimed damages based upon ongoing operations are excluded
from coverage by Exclusion j(6) and (7), Damage To Property. (Id.
at ¶ 22.)
KJIMS filed an Amended Counterclaim (Doc. #97) seeking a
declaration that Southern-Owners was obligated to defend (and
indemnify)

KJIMS

Action’s original

under
and

the

CGL

Amended

Policies

Complaints

because

the

Doppelt

sufficiently

alleged

“property damage” within the meaning of the CGL Policies, and no
exclusion completely barred coverage.

KJIMS also asserted that

Southern-Owners must reimburse it for its costs of defense and the
$70,000 paid to settle the Doppelt Action.
Southern-Owners

responded

in

part

by

re-asserting

the

positions from its Second Amended Complaint as an affirmative
defense.

(Doc.

#98,

p.

6

“Second

Defense.”)

Additionally,

Southern-Owners asserted that, should the Court determine there
was a duty to defend the Doppelt Action, Southern-Owners can have
no indemnity obligation for the Doppelt Action settlement amount
because there was no allocation of the settlement proceeds between
covered

and

non-covered

damages.

Defense.”)”

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(Id.

at

pp.

7-8

“Fifth

I.
The matter is now before the Court on cross motions for
summary judgment (Docs. ##103, 104) to which Responses (Docs.
##107, 108) in opposition have been filed.

Southern-Owners seeks

summary judgment on its duty to defend and its duty to indemnify,
while KJIMS seeks partial summary judgment on the duty to defend
issue.
A court may grant summary judgment only if satisfied that
“there is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of law.”
R. Civ. P. 56(a).

Fed.

A fact is “material” if it goes to “a legal

element of the claim under the applicable substantive law” and
thus may impact the case’s outcome.
121 F.3d 642, 646 (11th Cir. 1997).

Allen v. Tyson Foods, Inc.,
“An issue of fact is ‘genuine’

if the record taken as a whole could lead a rational trier of fact
to find for the nonmoving party.”

Hickson Corp. v. N. Crossarm

Co., 357 F.3d 1256, 1260 (11th Cir. 2004).
For the reasons below, the Court grants declaratory judgment
in favor of Southern-Owners as to the lack of a duty to defend
issue (and therefore a lack of duty to indemnify).

The Court

denies KJIMS’s motion for declaratory judgment.
II.
Southern-Owners first asserts that there was no coverage
under the CGL Policies, and therefore it had no duty to defend

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KJIMS in the Doppelt Action.

KJIMS responds that there was

coverage, and therefore a duty to defend was established.
A. Relevant Legal Principles
(1)

Florida Law Applies

In a diversity action such as this, the Court must apply the
“substantive law of the forum state.”

Tech. Coating Applicators,

Inc. v. U.S. Fid. & Guar. Co., 157 F.3d 843, 844 (11th Cir. 1998).
Thus, the Court applies Florida substantive law in this case.
Amerisure Mut. Ins. Co. v. Auchter Co., 673 F.3d 1294, 1300 (11th
Cir. 2012).
(2)

Duty to Defend Legal Standard

“It is well settled that an insurer’s duty to defend its
insured against a legal action arises when the complaint alleges
facts that fairly and potentially bring the suit within policy
coverage.”

Jones v. Florida Ins. Guar. Ass’n, Inc., 908 So. 2d

435, 442–43 (Fla. 2005) (citations omitted).
Infinity

Ins.

Co.,

945

F.3d

1144,

1148-49

See also Hallums v.
(11th

Cir.

Additionally,
[e]ven where the complaint alleges facts
partially within and partially outside the
coverage
of
a
policy,
the
insurer
is
nonetheless obligated to defend the entire
suit, even if the facts later demonstrate that
no coverage actually exists. And, the insurer
must defend even if the allegations in the
complaint
are
factually
incorrect
or
meritless. As such, an insurer is obligated
to defend a claim even if it is uncertain
whether coverage exists under the policy.

- 5 -

2019).

Furthermore, once a court finds that there is
a duty to defend, the duty will continue even
though it is ultimately determined that the
alleged cause of action is groundless and no
liability
is
found
within
the
policy
provisions defining coverage.
Advanced Sys., Inc. v. Gotham Ins. Co., 272 So. 3d 523, 527 (Fla.
3d DCA 2019) (internal punctuation and citations omitted.)

“In

short, [the insurer] was required to offer a defense in the
underlying action unless it was certain that there was no coverage
for

the

damages

sought

.

.

.

in

the

[underlying]

action.”

Carithers v. Mid-Continent Cas. Co., 782 F.3d 1240, 1246 (11th
Cir. 2015).
(3)

Determination Based on Allegations in Complaint

With certain exceptions not applicable here 2, “[t]he duty to
defend must be determined from the allegations in the complaint.”
Jones, 908 So. 2d at 443 (citations omitted).

It is “only the

allegations in the . . . complaint in the underlying action” which

2

See Higgins v. State Farm Fire & Cas. Co., 894 So. 2d 5, 10
n.2 (Fla. 2004)(exception to the general rule applies “where an
insurer’s claim that there is no duty to defend is based on factual
issues that would not normally be alleged in the underlying
complaint.”); Diamond State Ins. Co. v. Florida Dep’t of Children
& Families,
So. 3d
, 44 Fla. L. Weekly D2624 (Fla. 3d DCA
Oct. 30, 2019)(exception satisfied where issues are in existence
and exhaustion of policy limits); Stephens v. Mid-Continent Cas.
Co., 749 F.3d 1318, 1323 (11th Cir. 2014) (“Florida courts have
found, however, that in special circumstances, a court may consider
extrinsic facts if those facts are undisputed, and, had they been
pled in the complaint, they clearly would have placed the claims
outside the scope of coverage.”).

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are considered.

Carithers, 782 F.3d at 1245. See also Biltmore

Const. Co., Inc. v. Owners Ins. Co., 842 So. 2d 947, 949 (Fla. 2d
DCA 2003) (“An insurer’s duty to defend a complaint depends solely
on the allegations in the complaint . . . against the insured.”)
(citation omitted).
(4)

Effect of Amended Complaint

Furthermore, “[c]overage is determined from examining the
most recent amended pleading, not the original pleading.”

State

Farm Fire & Cas. Co. v. Steinberg, 393 F.3d 1226, 1230 (11th Cir.
2004).

In both Florida and federal practice, an original pleading

is superseded by an amended pleading which does not indicate an
intention to preserve any portion of the original pleading.

See

Oceanside Plaza Condo. Ass’n v. Foam King Indus., Inc., 206 So. 3d
785, 787 (Fla. 3d DCA 2016) (“Long-standing Florida case law makes
clear that the filing of an amended complaint constitutes an
abandonment of the original complaint which was superseded, [and
it] ceased to be part of the record and could no longer be viewed
as a pleading.”) (punctuation and citations omitted).
in Hoefling v. City of Miami,
As a matter of law, the second amended
complaint filed by Mr. Hoefling “supersede[d]
the
former
pleading[s];
the
original
pleading[s] [were] abandoned by the amendment,
and [were] no longer a part of [Mr.
Hoefling’s]
averments
against
his
adversar[ies].” Dresdner Bank AG v. M/V
Olympia Voyager, 463 F.3d 1210, 1215 (11th
Cir. 2006). So when Mr. Hoefling filed the

- 7 -

As stated

second amended complaint, the first amended
complaint (and its attached exhibits) became
a legal nullity.
Hoefling v. City of Miami, 811 F.3d 1271, 1277 (11th Cir. 2016).
“The question of duty to defend is answered based upon a review of
the underlying pleadings filed against the insured as well as the
insurance policy itself.

In cases where pleadings are amended

such that they supersede earlier filings, the amended allegations
control the duty to defend issue.”

Nationwide Mut. Fire Ins. Co.

v. Advanced Cooling & Heating, Inc., 126 So. 3d 385, 387 (Fla. 4th
DCA 2013) (citations omitted.)
(5)

Burdens of Proof

“Florida law places on the insured the burden of proving that
a claim against it is covered by the insurance policy.

The burden

of proving an exclusion to coverage is, however, on the insurer.”
LaFarge Corp. v. Travelers Indem. Co., 118 F.3d 1511, 1516 (11th
Cir. 1997) (citation omitted).
B. The Doppelt Action
In December 2014, KJIMS contracted with the Doppelts to serve
as the general contractor in the construction of their residence
in Marco Island, Florida on a cost-plus basis.
13-16; Exh. A.)

(Doc. #84-3, ¶¶

KJIMS did not obtain substantial completion of

the construction project, and either abandoned construction or was
terminated from further performance by the Doppelts.
3, ¶ 14.)

(Doc. #84-

On or about July 12, 2016, the Doppelts served KJIMS

- 8 -

with a Notice of Claim pursuant to Fla. Stat. § 558.01, et. seq.,
identifying eighty-six distinct defects that were caused by KJIMS
and/or its subcontractors which KJIMS had failed to correct.
(Doc. #97-6.)

KJIMS asserted that this list of defects was simply

punch-list items and failed to cure the alleged defects.
Doppelts

asserted

that

this

failure

was

an

The

anticipatory

repudiation and total breach of the contract.
On August 24, 2016, the Doppelts filed a Complaint (Doc. #977) in state court against KJIMS for breach of contract.

The Notice

of Claim was attached as Exhibit B to this Complaint. (Id., Exh.
B.)
KJIMS was served with the original Complaint in the Doppelt
Action on September 7, 2016 (Doc. #104-1, ¶ 4) and tendered the
Doppelt Action to Southern-Owners for defense and indemnification.
Southern-Owners initially accepted the claim and began providing
a defense.
On November 17, 2016, the Doppelts filed an Amended Complaint
(Docs. ##84-3, 97-8) in state court which continued to assert a
one count breach of contract claim.

The Amended Complaint stated

that the Notice of Claim was attached as Exhibit B and was
incorporated into the Amended Complaint. (Doc. #97-8, ¶ 43.)

In

fact, the Notice of Claim was not so attached.
By letter dated April 10, 2017 (Doc. #104-1), Southern-Owners
denied coverage of the claim.

After quoting multiple provisions

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of the CGL Policies, Southern-Owners stated: “As specified in the
policy language, the damages alleged in the complaint are not
covered by your insurance.”

(Id. at p. 22.)

that coverage would end on May 7, 2017.

The letter advised

(Id.)

As promised,

Southern-Owners ceased providing a defense as of May 7, 2017.
(Doc. #104, ¶ 8.)
KJIMS retained its own counsel to defend the Doppelt Action.
(Doc. #104-1, ¶ 9.)

On January 16, 2018, that attorney sought to

withdraw for non-payment of fees.

(Id. at ¶¶ 11-12.)

On August

19, 2019, the Doppelt Action was settled for $70,000 and that case
was dismissed by Order on September 5, 2019.

(Doc. #95.) 3

C. Scope of Coverage Under CGL Policies
The coverage provided in the CGL Policies is set forth in an
“Insuring Agreement” provision of the CGL Policies, along with
certain definitions.
(1)
The

The Insuring Agreement Provision

“Insuring

Agreement”

portion

of

the

CGL

Policies

obligated Southern-Owners as follows:
1. Insuring Agreement

3

Unlike Foremost Signature Ins., MI v. Silverboys, LLC, 1814599, 2019 WL 6522041, at *1 (11th Cir. Dec. 4, 2019), the
dismissal of the underlying litigation does not result in this
case being moot. The Amended Counterclaim asserts an entitlement
to reimbursement of the $70,000 settlement, and KJIMS asserts it
incurred expenses by being compelled to hire an attorney after
coverage was withdrawn.

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a. We will pay those sums that the insured
becomes legally obligated to pay as damages
because of “bodily injury” or “property
damage” to which the insurance applies.
We
will have the right and duty to defend the
insured against any “suit” seeking those
damages. . . .
The “Insuring Agreement” portion of the CGL Policies also provided:
b. This insurance applies to ‘bodily injury’
and ‘property damage’ only if:
(1) The ‘bodily injury’ or ‘property
damage’ is caused by an ‘occurrence’ that
takes place in the ‘coverage territory’;
(2) The ‘bodily injury’ or ‘property
damage’ occurs during the policy period;
and
(3) [Prior to the policy period no
insured or employee knew that ‘bodily
injury’
or
‘property
damage’
had
occurred] . . .
(Doc. #97-4, p. 47; Doc. #97-5, p. 33, CGL Coverage Form, ¶ 1.)
(2)

Defined Terms of Insuring Agreement

The CGL Policies define the relevant “Insuring Agreement”
terms as set forth below.
(a)

Property Damage:
“Property damage” is defined as:
Physical
injury
to
tangible
property,
including all resulting loss of use of that
property.
All such loss of use shall be
deemed to occur at the time of the physical
injury that caused it; or
Loss of use of tangible property that is not
physically injured.
All such loss shall be
deemed
to
occur
at
the
time
of
the
“occurrence” that caused it.

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(Doc. #84-1, Definitions, ¶ 18.)
In Amerisure Mut. Ins. Co. v. Auchter Co., 673 F.3d 1294,
1300 (11th Cir. 2012), the Eleventh Circuit recognized that two
seminal cases by the Florida Supreme Court, United States Fire
Insurance Co. v. J.S.U.B., Inc., 979 So. 2d 871 (Fla. 2007), and
Auto–Owners Insurance Co. v. Pozzi Window Co., 984 So. 2d 1241
(Fla. 2008), controlled the scope of coverage provided by CGL
policies
cases.

issued

to

general

contractors

in

construction-defect

In addressing the definition of “property damage” the

Florida Supreme Court drew a distinction “between a claim for the
cost of repairing or removing defective work, which is not a claim
for ‘property damage,’ and a claim for the costs of repairing
damage caused by the defective work, which is a claim for ‘property
damage.’”

J.S.U.B., 979 So. 2d at 889.

“A claim limited to

faulty workmanship or materials is one in which the sole damages
are for replacement of a defective component or correction of
faulty

installation.”

Id.

quotation marks omitted).

at

889–90

(citation

and

internal

There is no property damage if there

is no damage beyond the faulty workmanship unless the faulty
workmanship has damaged some otherwise non-defective component of
the project.

Id. at 889.

“Moreover, if a subcontractor is hired

to install a project component and, by virtue of his faulty
workmanship, installs a defective component, then the cost to

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repair

and

damage.’”

replace

the

defective

component

is

not

‘property

Pozzi Window Co., 984 So. 2d at 1248.

After a lengthy discussion of J.S.U.B. and Pozzi, the Eleventh
Circuit stated:
Ultimately, we hold that the Florida Supreme
Court has drawn a distinction between “a claim
for the cost of repairing the subcontractor's
defective work,” which is not covered under a
CGL policy, and “a claim for repairing the
structural damage to the completed [project]
caused by the subcontractor’s defective work,”
which is covered. “A claim limited to faulty
workmanship or materials,” as the J.S.U.B.
court illustrated, “is one in which the sole
damages are for replacement of a defective
component
or
correction
of
faulty
installation.” Because of this principle,
there is no coverage “[i]f there is no damage
beyond the faulty workmanship,” i.e., unless
the faulty workmanship has damaged some
“otherwise nondefective” component of the
project.
Moreover, if a subcontractor is
hired to install a project component and, by
virtue of his faulty workmanship, installs a
defective component, then the cost to repair
and replace the defective component is not
“property damage.”
Similarly, nondefective
and properly installed raw materials can
constitute a defective project component when
the contract specifications call for the use
of different materials, yet the cost to
reinstall the correct materials is not
“property damage” — even though the remedy for
such a nonconformity is to remove and replace
that component of the project.
In other
words, “unless th[e] defective component
results in physical injury to some other
tangible property,” i.e., other than to the
component itself, there is no coverage.

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Auchter Co., 673 F.3d at 1306–07 (citations omitted.)
(b)

Occurrence:

“[O]ccurrence”

is

defined

as

“an

accident,

including

continuous or repeated exposure to substantially the same general
harmful conditions.”

(Doc. #84-1, Definitions, ¶ 14.)

The term

“accident” is not further defined in the CGL Policies.
The Florida Supreme Court has held that the term “accidental,”
as used in this type of an insurance policy, means unexpected or
unintended.

Dimmitt Chevrolet, Inc. v. Southeastern Fid. Ins.

Corp., 636 So. 2d 700, 704 (Fla. 1993).

When not defined in a

liability policy, “occurrence” encompasses not only “accidental
events” but also injuries or damages neither expected nor intended
from the standpoint of the insured.

State Farm Fire & Cas. Co.

v. CTC Dev. Corp., 720 So. 2d 1072, 1076 (Fla. 1998).
(c)

Suit:

“Suit” is defined as:
a civil proceeding in which damages because of
‘bodily injury’, ‘property damage’, ‘personal
injury’ or ‘advertising injury’ to which this
insurance
applies
are
alleged.
‘Suit’
includes:
a. An arbitration proceeding in which
such damages are claimed and to which the
insured must submit or does submit with
our consent; or
b.
Any
other
alternative
dispute
resolution proceeding in which such
damages are claimed and to which the
insured submits with our consent.

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(Doc. #84-1, Definitions, ¶ 21).
D. Comparison of Coverage Provisions to Doppelt Allegations
To determine coverage (or exclusion) under the CGL Policies,
the Court compares the factual allegations in the complaint with
the text of coverage under the policies.
444.

Jones, 908 So. 2d at

A preliminary issue, however, involves KJIMS’s reliance on

the original complaint filed in the Doppelt Action.
(1)

Which Pleading May Be Considered

KJIMS relies on the “eight corners” of the Doppelt Action
complaints to establish the duty to defend, i.e., the language and
attachments

in

both

the

original

Complaint.

(Doc. #104, p. 7.)

Complaint

and

the

Amended

This appears to be because the

Notice of Claim attached as Exhibit B to the original Complaint
filed in the Doppelt Action was not attached to the Amended
Complaint in that action.
An insurer may assume the defense of an action, conduct an
investigation, conclude that no coverage exists, and withdraw its
defense.

Baron Oil Co. v. Nationwide Mut. Fire Ins. Co., 470 So.

2d 810, 814–15 (Fla. 1st DCA 1985).

If an amended pleading is

filed, the original complaint can no longer furnish a basis for
determining the insurer’s duty to defend, which must be determined
solely from the amended complaint.

Id. at 815.

As discussed

earlier, the general rule in Florida is that determination of a
duty to defend is based upon the amended complaint, not the

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original
preserve

complaint,
a

portion

unless
of

there

the

was

an

original

expressed

complaint

intent
or

to

special

circumstances which justify an exception to the general rule.
Neither is the situation in this case.
makes

no

reference

circumstances

exist

original Complaint.

to

the

which

original

would

allow

The Amended Complaint

complaint.

No

reference

back

special
to

the

It is clear that the Court may not consider

the allegations in the original Complaint filed in the Doppelt
Action, including the Notice of Claim attached as Exhibit B.
Unless the Notice of Claim may be considered as part of the Amended
Complaint, it may not be considered by the Court in determining
the existence of a duty to defend.
As noted above, the Amended Complaint in the Doppelt Action
stated that the Notice of Claim was attached and was incorporated
into the Amended Complaint.

(Doc. #97-2, ¶ 43.)

The Court finds

that the failure to actually attach the document does not preclude
its consideration as part of the Amended Complaint.
In Horsley v. Feldt, 304 F.3d 1125, 1134 (11th
Cir. 2002), we held that the court may
consider a document attached to a motion to
dismiss without converting the motion into one
for summary judgment if the attached document
is (1) central to the plaintiff’s claim and
(2)
undisputed.
In
this
context,
“undisputed” means that the authenticity of
the document is not challenged.
Id.
Our
prior decisions also make clear that a
document need not be physically attached to a
pleading to be incorporated by reference into
it; if the document’s contents are alleged in

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a complaint and no party questions those
contents, we may consider such a document
provided it meets the centrality requirement
imposed in Horsley. Harris v. Ivax Corp., 182
F.3d 799, 802 n.2 (11th Cir. 1999); see also
In re Silicon Graphics Inc. Securities
Litigation, 183 F.3d 970, 986 (9th Cir. 1999)
(same).
Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005).

As with a

motion to dismiss, the trial court “must limit itself to the four
corners of the complaint, including any attached or incorporated
exhibits, . . .” Grove Isle Ass’n v. Grove Isle Assocs., LLLP, 137
So. 3d 1081, 1089 (Fla. 3d DCA 2014) (citations omitted; emphasis
added).”
Here, the Notice of Claim was expressly incorporated into the
Amended Complaint.

Additionally, the details of the damages set

forth in the Notice of Claim allegedly caused by KJIMS were central
to

the

breach

of

contract

claim

for

the

Doppelts

and

the

declaratory judgment action by both parties in the federal case.
The authenticity of the Notice of Claim in not disputed by either
party, having been provided to Southern-Owners as an attachment to
the original complaint.

The Court concludes that the Notice of

Claim incorporated (but not attached) to the Amended Complaint in
the Doppelt Action may be considered in the determination of
Southern-Owners’ duty to defend.

- 17 -

(2)

CGL Policies Insuring Agreement Provisions

Several of the preliminary requirements under the Insuring
Agreement are not discussed by Southern-Owners but nonetheless
must be established by KJIMS if KJIMS is to prevail on its request
for a declaratory judgment that there was a duty to defend.

As

with all the requirements of the Insuring Agreement provisions, to
establish coverage KJIMS must prove that the allegations of the
Doppelt Action’s Amended Complaint fairly and potentially brought
the suit within the CGL Policies coverage.

Jones, 908 So. 2d at

442-43.
(a)

Coverage Territory

The Insuring Agreement requires that the property damage is
caused

by

territory.”

an

occurrence

which

(Doc. #97-4, p. 47.)

takes

place

in

the

“coverage

“Coverage territory” is defined

to include the “United States of America.”

(Doc. #97-4, p. 58.)

The events alleged in the Amended Complaint of the Doppelt Action
took place on Marco Island, Florida.
that

the

allegations

of

the

Therefore, KJIMS has proven

Amended

Complaint

fairly

and

potentially bring the suit within the CGL Policies definition of
“coverage territory.”
(b)

Policy Period

The Insuring Agreement requires that the property damage
occur during the policy period.

(Doc. #97-4, p. 47.)

Here, the

two annual CGL Policies were in effect from October 8, 2014 through

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October 8, 2016.

The Amended Complaint implicitly alleges that

the damages occurred during the construction of the Doppelts’
residence, which began with a contract dated December 19, 2014
(Docs. ##97-3, 97-4, ¶ 17) and ceased on or before July 26, 2016,
when a Notice of Claim was served.

(Doc. #97-2, ¶ 43.)

Therefore,

KJIMS has proven that the allegations of the Amended Complaint
fairly and potentially bring the suit within the CGL Policies
requirement that the damage occur during the policy period.
(c)

Prior Knowledge

The Insuring Agreement requires that no insured or employee
knew,

prior

occurred.

to

the

policy

period,

(Doc. #97-4, p. 47.)

that

property

damage

had

The Amended Complaint alleges no

such knowledge until approximately July 12, 2016, when KJIMS was
served with a Notice of Defect upon refusing to remedy alleged
construction

defects.

Therefore,

KJIMS

has

proven

that

the

allegations of the Amended Complaint fairly and potentially bring
the suit within the CGL Policies requirement that no insured or
employee knew, prior to the policy period, that property damage
had occurred.
(d)

Property Damage

The sufficiency of the allegations as to “property damage” is
the crux of the dispute between the parties.

As recognized by the

Eleventh Circuit, “[i]f the Doppelts did not allege ‘property
damage,’ there is no coverage under the CGL policies, regardless

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of

any

exclusionary

provision

or

the

timing

of

damages.”

Southern-Owners Ins. Co. v. MAC Contractors of Florida, LLC, 768
F. App’x 970, 974 (11th Cir. 2019).
The Insuring Agreement provides that Southern-Owners will pay
those sums which KJIMS becomes legally obligated to pay as damages
because of “property damage” to which the CGL Policies apply.
(Doc. #97-4, p. 47.)

As discussed earlier, “property damage” is

defined as:
Physical
injury
to
tangible
property,
including all resulting loss of use of that
property.
All such loss of use shall be
deemed to occur at the time of the physical
injury that caused it; or
Loss of use of tangible property that is not
physically injured.
All such loss shall be
deemed
to
occur
at
the
time
of
the
‘occurrence’ that caused it.
(Doc. #84-1, Definitions, ¶ 18.)
The Doppelt Action’s Amended Complaint alleged breach of the
cost-plus

contract

involving

the

repair

and

replacement

of

improper and/or defective materials, improper installation, and
the use of materials that did not comport with building codes
and/or plan specifications.

Specifically, paragraph 54 of the

Amended Complaint alleges the following breaches:
(i) failing to construct the Residence and related
improvements to the Property according to plans,
specifications and applicable code;

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(ii) demanding payment from Plaintiffs for work not
performed, not completed and/or not completed in
accordance with the contract plans and specifications;
(iii) failing to timely transmit to Plaintiffs, release
of liens from subcontractors, vendors, materialmen and
laborers;
(iv) failing to provide access to books and records;
(v) failing to provide evidence of insurance;
(vi) failing to comply with Contractor’s assurances of
remediation particularly with respect to the damage to
wood floors and the metal roof;
(vii) failing to ensure that the outdoor kitchen was
manufactured
and
installed
in
accord
with
specifications;
(viii) failing to ensure outdoor kitchen cabinets were
measured consistent with approved drawings;
(ix) failing to coordinate subcontractors and completing
the construction timely;
(x) anticipatorily repudiating the Cost-Plus Contract by
effectively shutting-down construction;
(xi) encouraging sub-contractors to file liens on the
Property in an effort to extract unwarranted payments
from Plaintiffs;
(xii)
unjustifiably
Residence, and

ceasing

construction

of

the

(xii) [sic] unjustifiably terminating subcontractors
that attempted to complete their respective scope of
work.
(Doc. #84-3, ¶ 54.)

The Amended Complaint also alleged that the

Doppelts “incurred damages in having to complete the scope of work
under the contract in amounts over and above the anticipated
contract amount.”

(Id., ¶¶ 59, 60.)

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The Notice of Claim,

incorporated into the Amended Complaint, set forth in detail the
alleged construction defects attributed to KJIMS.
KJIMS relies upon the allegations of paragraphs 27, 32, and
39 of the Doppelt Action’s “Underlying Complaints” to support its
position that “property damage” was sufficiently alleged.
#104, p. 15.)

(Doc.

None of these paragraphs, in either the original

Complaint or the Amended Complaint, address the matters asserted
by KJIMS.

Rather, the numbered paragraphs refer to allegations

in the Notice of Claim.

KJIMS also relies upon another eleven of

the eighty-six defects identified in the Notice of Claim (Doc.
#97-1, ¶¶ 6, 8, 15, 25, 26, 31, 34, 35, 43, 65, 69).
pp. 14-15.)

(Doc. #104,

But none of these paragraphs allege damages which

fall within the CGL Policy’s definition of “property damage” even
under the “fairly and potentially” standard.
A claim for the cost of repairing or removing defective work
is not a claim for property damage, while a claim for the costs of
repairing damage caused by the defective work is a claim for
“property damage.”
property

damage

workmanship,”
“otherwise
“Moreover,

J.S.U.B., 979 So. 2d at 889.

“[i]f

unless

there

the

nondefective”
if

a

is

faulty

no

beyond

workmanship

component

subcontractor

damage

is

of

hired

has

the
to

There is no
the

faulty

damaged

project.

install

a

some
Id.

project

component and, by virtue of his faulty workmanship, installs a
defective component, then the cost to repair and replace the

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defective component is not ‘property damage.’”

Auchter Co., 673

F.3d at 1306 (citing Pozzi, 984 So. at 1241).

“Conclusory ‘buzz

words’ unsupported by factual allegations are not sufficient to
trigger coverage.”

State Farm Fire & Cas. Co. v. Steinberg, 393

F.3d 1226, 1230 (11th Cir. 2004) (citing Amerisure Ins. Co. v.
Gold Coast Marine Distributors, Inc., 771 So. 2d 579, 580–81 (4th
DCA 2000)).
All of the paragraphs cited by KJIMS assert a claim for the
costs of repairing or completing defective work, and none seek
damages injuries caused by the defects.

The Notice of Claim

purports to set forth “the claimed construction defects resulting
from work performed under the terms of the Cost Plus Contract (the
“Defects”).”

(Doc. #97-1, p. 49.)

None of the paragraphs relied

upon by KJIMS even suggests that the Doppelts were asserting a
claim for damages caused to anything other than KJIMS breaches of
contract for its or its subcontractors conduct to the construction
of the residence itself.

There are no factual allegations of

damage beyond the faulty workmanship or defective work which
damaged

otherwise

non-defective

components

of

the

project.

Rather, the Notice of Claim sought solely the costs of repairing
and replacing the actual defects in construction.

The Court finds

that KJIMS has not proven that the Doppelt Amended Complaint,
including Attachment B, fairly and potentially bring the suit

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within

the

CGL

Policies

definition

of

“property

damage.”

Therefore, Southern-Owners did not have a duty to defend KJIMS.
(e)

Occurrence

The Insuring Agreement requires that the property damage be
caused by an occurrence, (Doc. #97-4, p. 47) which is defined as
an

accident,

(id.,

Definitions,

¶

14),

which

in

turn

means

unexpected or unintended, and encompasses not only “accidental
events” but also injuries or damages neither expected nor intended
from the standpoint of the insured.
at

1076;

Dimmitt

Chevrolet,

Inc.,

CTC Dev. Corp., 720 So. 2d
636

So.

2d

at

704.

The

allegations of the Amended Complaint in the Doppelt action assert
that the alleged construction defects were neither expected nor
intended from KJIMS’s standpoint.

The Court finds that KJIMS has

proven that the Doppelt Amended Complaint fairly and potentially
brings the suit within the CGL Policies definition of “occurrence”
but for the lack of “property damage.”
(f)

Suit

The Insuring Agreement states that Southern-Owners has a
“right and duty to defend the insured against any ‘suit’ seeking”
such damages.

(Doc. # 97-4, p. 47.)

“Suit” is defined as: “a

civil proceeding in which damages because of . . . ‘property
damage’. . . to which this insurance applies are alleged.”
¶ 21.)

(Id.,

The Doppelt Action would clearly be such a “suit” but for

the absence of “property damage.”

- 24 -

In sum, the Court finds that KJIMS has not proven that the
Doppelt Amended Complaint, including Attachment B, fairly and
potentially brought the suit within the CGL Policies definition of
“property damage.”
“property

damage”

Since the existence of such allegations of
was

necessary

for

a

coverage

obligation,

Southern-Owners did not have a duty to defend KJIMS in the Doppelt
Action.

Because the Court determines that the Doppelt Action

involved no “property damage,” the Court need not determine whether
any CGL Policies exclusion applied.
1309.

Auchter Co., 673 F.3d at

Because there was no duty to defend, as a matter of law

there can be no duty to indemnify.

Trailer Bridge v. Illinois

Nat. Ins. Co., 657 F.3d 1135, 1146 (11th Cir. 2011).
III.
Following remand, the Eleventh Circuit transferred KJIMS’s
Application for Appellate Attorneys’ Fees to this Court “for its
consideration.”

(Doc. #81.)

KJIMS contends that it is entitled

to reasonable attorney’s fees in the amount of $54,621 pursuant to
Florida Statutes § 627.428(1).

Section 627.428(1) provides that

in the event of an appeal in which the insured or beneficiary
prevails, the appellate court shall award a reasonable sum as
attorney’s fees for the attorneys prosecuting the suit on behalf
of the prevailing party.

KJIMS concedes in the briefing that it

is conditionally entitled to the attorney’s fees, pending the
resolution of the duty to defend issue.

- 25 -

(Doc. #81, p. 68.)

Southern-Owners opposes an award of attorney’s fees primarily on
the ground that MAC has not prevailed, as required for an award of
fees under § 627.428.
The Eleventh Circuit has explained that “because section
627.428 is in the nature of a penalty against an insurer who
wrongfully refuses to pay a legitimate claim, we strictly construe
its language . . . and the statute authorizes the recovery of
attorney’s

fees

from

wrongfully

withheld

the

insurer

payment

of

only

the

when

proceeds

the
of

insurer
the

has

policy.”

Fireman’s Fund Ins. Co. v. Tropical Shipping & Const. Co., Ltd.,
254 F.3d 987, 1010 (11th Cir. 2001).
Here, KJIMS did not prevail on the duty to defend issue.
Because the Court has declared that Southern-Owners owed no duty
to defend, and therefore no proceeds are due under the Policy, the
request for appellate attorney’s fees pursuant to Florida Statutes
§ 627.428 is denied.
Accordingly, it is hereby
ORDERED AND ADJUDGED:
1.

Southern-Owners’ Third Motion for Summary Judgment (Doc.

#103) is GRANTED IN PART and MAC Contractors of Florida’s Motion
for Partial Summary Judgment as to the Duty to Defend (Doc. #104)
is DENIED.
2.

It is hereby declared that Southern-Owners Insurance

Company did not owe a duty to defend MAC Contractors of Florida,

- 26 -

LLC (d/b/a KJIMS Construction) in the matter of Doppelt et al. v.
MAC Contractors of Florida, LLC d/b/a KJIMS Construction, No. 2016CA-1530.

The request for additional and alternative relief is

denied as moot.
3.

Judgment

is

entered

in

favor

of

Southern-Owners

Insurance Company and against MAC Contractors of Florida, LLC d/b/a
KJIMS Construction.
4.

MAC Contractor’s Application for Appellate Attorneys’

Fees (Doc. #81) is DENIED.
5.

The Clerk is directed to terminate all pending deadlines

and motions, enter judgment accordingly, and close the file.
DONE and ORDERED at Fort Myers, Florida, this 29th day of
January, 2020.

Copies:
Counsel of Record

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