Westfield is below no obligation to defend a Florida contractor – business insurance
A federal appeals court ruled Monday that Westfield Insurance Co. is under no obligation to defend or insure a Florida contractor in connection with a complex dispute with any of its subcontractors.
The Diaz Fritz Group Inc., based in Temple Terrace, Florida, contracted Howard Baker Inc. in May 2009 as a subcontractor to carry out foundation work at the University Community Hospital Carrollwood in Tampa, according to the judgment of the 11th Atlanta in The Diaz Fritz Group Inc. dba Diaz Fritz Isabel v Westfield Insurance Co.
Diaz Fritz agreed to pay HBI in Tampa $ 290,000 to complete the project. Problems arose, however, and according to Diaz Fritz, the HBI negligently caused a flood of some of the other buildings in the hospital, causing significant damage.
After Diaz Fritz's hospital requested that the situation be corrected within three days, the company reached out to Westfield, but the insurer said HBI was responsible for the flood. Westfield sent the claim to HBI's insurer, Zurich American Insurance Co., but the insurers could not agree on whether Zurich's policy provided coverage for Diaz Fritz as an additional insured.
Meanwhile, without obtaining Westfield consent, Diaz Fritz paid for the necessary repairs – which amounted to about $ 506,000 – through no admission of fault. It then decided to withhold the $ 290,000 it paid HBI for its work, but got stuck with more than $ 200,000 of the amount it had paid the hospital.
After Westfield refused to defend it, Diaz Fritz filed a lawsuit against HBI in a state court, where a jury found HBI jointly responsible for $ 267.00 in damages. In compensation for the $ 290,000 withheld by Diaz Fritz, the jury awarded HBI $ 23,400 in damages.
Diaz Fritz filed a lawsuit against Westfield in the US District Court in Tampa, requesting a declaratory judgment, which the insurer was obliged to defend and indemnify.
The district court ruled in Westfield's favor and was upheld by a three-person appeals court.
The district court ruled in Westfield's favor "after it concluded that the simple and straightforward political language" covered "claims" for damages for property damage, the appeals court ruling said.
“In contrast, it found that HBI's affirmative defense only aimed to compensate for the amount of damage that Diaz Fritz claimed to be owed in a contractual action. We agree and find Diaz Fritz's argument to the contrary not convincing, ”said the panel, which Westfield is neither obliged to defend nor to compensate.
Westfield attorney Aram P. Megerian, an associate of Cole, Scott & Kissane P.A. in Tampa, said in a statement that it believed the court reached the correct conclusion. Diaz Fritz's lawyers did not respond to a request for comment.