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Case Law Update: Mid-Continent Casualty Co.

A recent 5th DCA decision further clarified a reoccurring issue in construction litigation cases involving insurance companies.  Commercial general liability (“CGL”) policies typically contain a section called “Supplementary Payments ” section that generally states as follows:

Insurer will pay, with respect to any claim we investigate or settle, or any “suit” against an insured we defend:

“All costs taxed against the insured in the “suit.”

In Mid-Continent Casualty Co. v. Treace, WL 9491876 (Fla. 5th DCA 2015), an owner prevailed in a construction defect claim against a contractor and obtained a judgment.  The court subsequently entered a judgment for attorney’s fees and costs in favor of the owner, and thereafter, the owner initiated a proceeding against the contractor’s CGL insurer to recover the judgments.  After the trial court denied the owner from recovering its attorney’s fees against the insurer, the owner appealed.  The appellate court reviewed the above language in the contractor’s CGL policy.  The policy stated that said the insurer would pay for “[a]ll costs taxed against the insured in the ‘suit.’” 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.  The court stated, “The insurer did not, but could have, defined ‘court costs’ to specifically exclude attorney’s fees.”   As such, the court held that the attorney’s fees judgment was recoverable by the owner against the contractor’s CGL insurer.

Accordingly, this case seemingly provides an argument for an owner that recovers a judgment against an insured in a construction defect lawsuit (which includes attorney’s fees) that such attorney’s fees are recoverable under the insured’s CGL policy.