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Commercial General Liability (“CGL”) Policies and Attorney’s Fees

In a recent case out of Florida’s Fifth District Court of Appeal, the Court held that attorney’s fees awarded to a Plaintiff in a construction defect action against an insured contractor were covered under a supplementary payment provision in a CGL policy.  Specifically, in Mid-Continent Casualty Company v. James T. Treace, 41 Fla. L. Weekly D60c (Fla. 5th DCA Dec. 31, 2015), homeowners argued that their attorneys’ fees were covered under the subject policy’s supplemental payment provision that provides the insurer will pay “all costs taxed against the insured in the ‘suit.’” The court concurred, holding that “all costs” was substantially similar to “all court costs” analyzed in other court decisions on the supplementary payment provision, and could similarly be read to include attorney’s fees, especially since the insurer did not, but could have, defined the term to exclude attorney’s fees.

Among other cases, the Court relied upon Geico General Insurance Co. v. Hollingsworth, 157 So. 3d 365 (Fla. 5th DCA 2015), and Geico General Insurance Co. v. Rodriguez, 155 So. 3d 1163 (Fla. 3d DCA 2014) in coming to its determination.  In Hollingsworth, the Fifth District concluded that a similar provision provided coverage for attorney’s fees. The relevant provision in Hollingsworth specified in the “Additional Payments” section that the carrier would pay “[a]ll court costs charged to an insured in a covered lawsuit.”  As such, the court reversed this portion of the judgment and remanded for an award granting the homeowners their attorneys’ fees and costs awarded against the contractor in the underlying defect litigation.  Thus, in evaluating potential damages or liability, it is crucial to take note of the policy language at issue. If a policy expressly states that “costs” or “court costs” are covered, then Rodriguez, Hollingsworth, and Treace suggest that attorney’s fees may be covered damages.

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