The court determined that the project owner's general partner was not an additional insured entitled to a defense and indemnity against claims for construction defects. St. Paul Fire & Marine Ins. Co. v,. Cypress Fairway Condo. Ass'n, 2015 U.S. Dist. LEXIS 94012 (M.D. Fla. July 20, 2015). Construction of the Cypress Fairway Condominium project took place in 1999 and 2000. Cypress Fairway Ltd. ("Cypress") was the owner and Vineland Partners , LLC ("Vineland") was its general partner. The general contractor was Winter Park Construction Company ("WPC"). Water intrusion and property damage occurred, but it was unclear when or whether the damage was known. Cypress' expert indicated that the damage began shortly after the end of construction. In 2004, the complex was sold to Cypress Madison Ownership Company. In 2010, the Cypress Fairway Condominium Association sued Cypress and Vineland. Count V of the underlying complaint asserted there were construction defects that Cypress and Vineland were responsible for when they owned and managed the project. Count VI alleged that Cypress and Vineland negligently supplied information which the Association relied on for the purchase of the condominiums. Cypress and Vineland entered a settlement with the Association that included a consent judgment for $2.5 million. Policy rights were also assigned to the Association. St. Paul had issued three policies to WPC, which named Cypress and Vineland as additional insureds. The policies ran from December 31, 1999 to the end of 2002. While it conceded a duty to defend Cypress, St. Paul argued on summary judgment the policies did not include Vineland as an additional insured because it was not an owner of the property. The policies covered, "[a]ll owners, contractors . . . who require that you add them as an Additional Protected Person in a specific written contract entered into by you." The construction contract required WPC to indemnify the owner, officers, directors, shareholders, partners and many others. This broad and general indemnification provision did not convert all the indemnitees into additional insureds. Therefore, St. Paul had no duty to defend or indemnify Vineland. St. Paul also sought a ruling on summary judgment that it had no duty to indemnify because the insureds could not show that the damages occurred during the policy periods. The court determined that the injury-in-fact rule was applicable. The relevant question, therefore, was whether there was evidence that showed damage occurred during the policy period. Defendants' expert testified that damages could have occurred soon after construction was complete. Construction was completed sometime in the year 2000. The policy periods ran from late 1999 to late 2002. The testimony indicated that damage could have happened within the policy periods. As to Count VI, St. Paul argued it had no duty to defend or indemnify because the negligent supply of information did not cause property damage. The court agreed. Representations about the state of the buildings did not cause water intrusion and the resultant property damage. Further, representations were not accidents and could not be "events" within the meaning of the policies. While the Association may have suffered economic damage based on Cypress and Vineland's representations, it did not suffer property damage caused by an event as defined in the policy.
Follow our page in Facebook "Insurance Online". from Insurance Law Hawaii
