Commercial general liability (CGL) policies contain a section called “Supplementary Payments – Coverages A and B.” This section states in relevant part:
1. We [insurer] will pay, with respect to any claim we investigate or settle, or any “suit” against an insured we defend:
e. All costs taxed against the insured in the “suit.”
In the recent decision, Mid-Continent Casualty Co. v. Treace, 41 Fla. L. Weekly D60c (Fla. 5th DCA 2015), an owner obtained a judgment against its contractor in a construction defect case. The court then entered a judgment for attorney’s fees and costs in favor of the owner. The owner then initiated a proceeding against the contractor’s CGL insurer to recover the judgments. The trial court refused to allow the owner to recover its attorney’s fees against the insurer and the owner appealed. On appeal, the Fifth District examined the above language in the contractor’s CGL policy that said the insurer would pay for “[a]ll costs taxed against the insured in the ‘suit.’” In examining this language, the court found that the language “‘all court costs’ could be read to include attorney’s fees, especially since there was no definition of that term in the policy…[T]he insurer did not, but could have, defined ‘court costs’ to specifically exclude attorney’s fees.” Treace, supra. For this reason, the court held that the attorney’s fees judgment was recoverable by the owner against the contractor’s CGL insurer.
This case provides a strong argument for a claimant that recovers a judgment against an insured in a construction defect lawsuit that includes attorney’s fees that attorney’s fees are recoverable under the insured’s CGL policy.
Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.