Grove Towers, Inc. v. Davis Engineers, P.A.
529 So. 2d 1255, 13 Fla. L. Weekly 1979, 1988 Fla. App. LEXIS 3733 (1988)
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Rule of Law:
When an essential term in a "claims made" insurance policy, such as "claim," is undefined and the contract's language is ambiguous, whether a subsequent list of damages constitutes a new claim or a supplement to a timely original claim is a question of fact regarding the parties' intent that cannot be resolved by summary judgment.
Facts:
- Imperial Casualty and Indemnity Company issued a 'claims made' professional malpractice insurance policy to Davis Engineers, P.A., with coverage from July 18, 1982, to July 18, 1983.
- Davis Engineers provided engineering services for the design and construction of the Grove Towers condominium.
- On April 11, 1983, within the policy period, Grove Towers notified Imperial of structural, mechanical, and electrical design defects attributed to Davis' negligence.
- Grove Towers' initial notice included a preliminary cost estimate of $813,733.32 and specified that the list of defects was 'by no means exhaustive at this time.'
- On May 6, 1986, nearly three years after the policy expired, Grove Towers provided Imperial with a supplemental list of damages detailing additional defects.
- The insurance policy issued by Imperial did not provide a definition for the term 'claim'.
Procedural Posture:
- Grove Towers filed a complaint against Davis Engineers and Imperial Casualty and Indemnity Company in the trial court to recover damages for professional malpractice.
- Imperial moved for partial summary judgment, arguing that damages detailed after the policy's expiration were not covered.
- The trial court granted partial summary judgment in favor of Imperial, ruling that all claims made by Grove Towers after the policy's expiration on July 18, 1983, were not covered.
- Grove Towers, as the appellant, appealed the final judgment to the intermediate court of appeal.
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Issue:
Does a supplemental list of damages submitted after the expiration of a 'claims made' insurance policy constitute a new, uncovered claim as a matter of law, where the initial notice of the underlying issue was timely and the policy failed to define the term 'claim'?
Opinions:
Majority - Per Curiam
No. A supplemental list of damages does not constitute a new claim as a matter of law. When an essential term in an insurance policy is undefined and reasonably susceptible to more than one construction, the parties' intent becomes a question of fact that cannot be resolved by summary judgment. The court reasoned that the policy did not define the essential term 'claim,' nor did it specify that an initial notice must contain an exhaustive list of all damages. Because Grove Towers' initial notice stated it was not exhaustive, and the term 'claim' is ambiguous, it is plausible that the supplemental list was merely a continuation of the original, timely claim. Citing Universal Underwriters Ins. Co. v. Steve Hull Chevrolet, Inc., the court held that such ambiguity creates an issue of fact as to the parties' intent, making summary judgment inappropriate.
Analysis:
This decision reinforces the principle that ambiguity in an insurance contract is typically construed against the insurer, who drafted the policy. By holding that an undefined key term creates a question of fact, the ruling prevents insurers from using summary judgment to narrowly interpret 'claims made' policies and deny coverage for later-discovered damages stemming from a single, timely reported incident. The case serves as a strong reminder for insurers to draft policies with clear and precise definitions for critical terms like 'claim' to avoid litigation over the scope of coverage. For policyholders, it provides a basis to argue for coverage of evolving damages so long as the initial notice of the underlying problem was provided within the policy period.
