A federal court in Florida upheld Amerisure Insurance Co.’s denial of coverage in a dispute over construction defects at a condominium complex, ruling that the insurer had no obligation under its policies and that the settlement reached between the condo association and the contractor was not enforceable, according to BestWire.
The case concerns The Peninsula at St. John’s, a condominium project where Amerisure’s policyholder, Auchter Co. Inc., served as general contractor starting in 2005.
Auchter hired various subcontractors during construction. In 2007, Auchter informed the developer it could not complete the project due to financial issues.
A replacement contractor assumed control in August 2007 under a takeover agreement, continuing the project with the same subcontractors.
The city issued a certificate of occupancy in July 2008, and the condominium association assumed control of the property in November 2011.
In 2013, the association reported construction issues, including cracked brick veneer, weather damage near balcony posts, and failing balcony railings.
Additional inspections in 2016 and 2020 uncovered further defects. All reported issues surfaced after Amerisure’s policies had lapsed. The insurer also noted that most work occurred after Auchter exited the project.
The association had previously pursued construction-related litigation in state courts, resulting in several settlements, including a global agreement worth nearly $39 mn.
Some subcontractors also entered into separate settlements with the association.
The association executed an $8.5 mn Coblentz agreement with Auchter. These agreements allow recovery from insurers when they wrongly deny claims, provided that coverage exists, the denial was improper, and the settlement was reasonable and made in good faith.
Under the agreement, Auchter transferred its rights to pursue Amerisure.
However, the federal court found the association did not prove the damages were caused by a covered occurrence rather than construction defects.
Citing the 11th Circuit’s ruling in Amerisure v. Auchter, which reviewed the same general liability policy, the court reaffirmed that costs tied solely to repairing or replacing faulty work are not covered.
Because the association failed to demonstrate that the Coblentz agreement distinguished between covered and uncovered claims, the court ruled the agreement unenforceable.
