The Peninsula at St. John's Center Condominium Association, Inc. v. Amerisure Insurance Company

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

JACKSONVILLE DIVISION

THE PENINSULA AT ST. JOHN’S

CENTER CONDOMINIUM

ASSOCIATION, INC.

Plaintiff,

v. Case No. 3:22-cv-792-ACC-LLL

AMERISURE INSURANCE

COMPANY, and AMERISURE

MUTUAL INSURANCE

COMPANY,

Defendants.

ORDER

This cause comes before the Court on cross-motions for summary judgment:

(1) Defendants Amerisure Insurance Company and Amerisure Mutual Insurance

Company’s (collectively, “Amerisure”) Motion for Summary Judgment Against

Plaintiff (Doc. 308), to which Plaintiff the Peninsula at St. John’s Center

Condominium Association, Inc. (the “Association”) responded in opposition (Doc.

322), and Amerisure filed a reply (Doc. 338); and (2) the Association’s Motion for

Partial Summary Judgment (Doc. 310), to which Amerisure responded in opposition

(Doc. 317), and the Association filed a reply (Doc. 339). For the following reasons,

the Court will grant Amerisure’s Motion for Summary Judgment and will deny the

Association’s Motion for Partial Summary Judgment.

INTRODUCTION

This case arises out of the construction of a condominium project called The

Peninsula at St. John’s (the “Project”) located in Jacksonville, Florida occurring

from 2005 through 2008. (Doc. 308-1 ¶¶ 15–16). The Association previously

litigated the underlying construction defect issues years ago in a state court lawsuit

brought against the general contractors, sureties, and subcontractors involved in the

original Project construction (the “Underlying Litigation”). 1 The Underlying

Litigation culminated in a series of settlement agreements, including one nearly

global agreement for approximately $39 million between the Association and some

of the contractors, sureties, and subcontractors working on the Project. Separately,

the Association settled claims for additional millions of dollars with some other

subcontractors of Auchter Company, Inc. (“Auchter”), the first general contractor

working on the Project before it defaulted. In addition to the foregoing settlement

agreements, the Association entered into a Coblentz agreement with Auchter in the

amount of $8.5 million in damages.2 (Doc. 308-37).

1 The Peninsula at St. John’s Center Condominium Association, Inc. v. The Auchter

Company, et al., Case No. 2013-CA-6582, Circuit Court of the Fourth Judicial Circuit in and for

Duval County, Florida.

2 “The term ‘Coblentz agreement’ refers to a settlement agreement entered into between

an insured and a claimant in order to resolve a lawsuit in which the insurer has denied coverage

In a Coblentz agreement, following an insurer’s alleged wrongful refusal to

defend, the insured (in this case, Auchter) negotiates a settlement with the claimant

(in this case, the Association) in an underlying action wherein the parties agree to

entry of a consent judgment fixing liability and damages amounts. As part of this

agreement, the insured (Auchter) assigns to the claimant (the Association) the right

to collect in a subsequent lawsuit from its insurance company (Amerisure). This is

that subsequent lawsuit. The Association, standing in the shoes of Auchter, seeks to

collect $8.5 million under commercial general liability (“CGL”) policies issued by

Amerisure to Auchter effective during some, but not all, of the Project’s

construction. The Court must decide whether the Association can recover from

Amerisure under this agreement.

FACTUAL BACKGROUND

I. Construction of the Peninsula Project

In 2005, Auchter was hired by the Project’s developer to serve as the general

contractor on the Project. (Doc. 31 ¶ 12; Doc. 32 ¶ 12). Auchter contracted with the

following relevant subcontractors. Blanchard Caulking & Coating (“Blanchard”)

was hired to furnish dampproofing over the cement masonry units (“CMU”) behind

the brick masonry at the parking garage. (Doc. 308-2 at 22–23). Cummings Masonry

and declined to defend.” Trovillion Const. & Dev., Inc. v. Mid-Continent Cas. Co., No. 6:12-cv-

914, 2014 WL 201678, at *3, n.2 (M.D. Fla. Jan. 17, 2014) (citing Coblentz v. Am. Sur. Co. of

N.Y., 416 F.2d 1059, 1063 (5th Cir.1969)).

Co. (“Cummings”) was hired to furnish and install the masonry work including the

CMU and brick veneer at the parking garage. (Doc. 308-3 at 22–23). Per the

Cummings’ contract, this included “all required masonry CMU block, brick, mortar,

sand, masonry wall wire reinforcing, flashing, weeps,” brick veneer, all wire

reinforcing, and all precast concrete lintels. (Id.) Sterling Dula Arch. a/k/a Kane Mfr.

Corp. (“Kane”) was hired to design, furnish, and install the garage screens, balcony

railings, and balcony posts. (Doc. 308-4 at 22–23). CECO Concrete Construction,

LLC (“CECO”) was hired to install the balcony slabs. (Doc. 308-5 at 22–23).

Two years into the Project, on or about April 25, 2007, Auchter informed the

Project developer that it was financially unable to complete its work as the general

contractor and advised that it was terminating its construction contract with the

developer. (Doc. 308-6). The parties agree that by August 2007, the developer and

Auchter’s sureties (the “Sureties”) entered into a Takeover Agreement under which

the Sureties would take over the Project, and Skanska USA, Inc. (“Skanska”) was

substituted in as a contractor in place of Auchter.3 (Doc. 308-1 at 10–11; Doc. 322

at 7; Doc. 310 at 306). The Takeover Agreement provides that Skanska would enter

3 The Association labels Skanska as a “subcontractor” but does not provide any evidence

supporting that Skanska would be a subcontractor rather than assuming the work that was intended

to be performed by Auchter. The Takeover Agreement references that Skanska will be an

independent contractor to the Sureties but also that Skanska will merely be a subcontractor to the

Association, presumably because Skanska was contracting directly with the Sureties and not the

Association. (Doc. 310 at 307).

into a completion agreement (the “Completion Agreement”) and perform the terms

of the original construction contract. (Doc. 310 at 307). Skanska, utilizing

Blanchard, Cummings, and Kane, among other subcontractors, subsequently

completed the Project, and the Certificate of Occupancy was issued on July 30, 2008.

(Doc. 308 at 2, 4; Doc. 308-1 at 9–10; Doc. 205-5).

The parties dispute how much, if any, of the dampproofing, masonry, garage

screens, and balcony work was completed at the time of Skanska’s takeover in

August 2007 and as of the expiration of the relevant Amerisure policies on January

1, 2008. It is undisputed that the Project’s Certificate of Occupancy was issued on

or about July 30, 2008. (Doc. 308-1, Ex. F). The Project was turned over to the

Association’s control on or about November 10, 2011. (Id. ¶ 50).

It is undisputed that the Association’s discovery of defects occurred years

after the Amerisure policies expired on January 1, 2008. The earliest record evidence

includes the identification of issues in the Turnover Evaluation Report issued on

April 26, 2013, which identified certain construction deficiencies at the Project

following inspections that had occurred in 2012 and 2013. (Doc. 308-22).

The Association observed various issues as follows: in 2012, rubber gaskets

on the aluminum balcony railings were deteriorating and were replaced pursuant to

work orders (Doc. 308-33, Deposition of Thamir Massraf (“Massraf. Dep.”) at 34–

39; Doc. 308-34); in 2013, anchoring cement utilized at some balcony railing posts

showed signs of weathering (Doc. 308-22); and in 2016, the Association observed

cracking and spalling in the brick veneer and CMU work performed by Cummings.

(Doc. 308-23 at 6, 18-23, 308-24 at 12, 35, 44).

There were more formal inspections in 2016 and 2020 from which the

Association determined that Cummings’ work was defective and caused the brick

veneer to crack. (Doc. 308-24 at 49; Doc. 308-27 at 7–8). In 2020, the brick veneer

was removed to inspect the CMU, which was determined to have been defectively

installed and resulted in an exposed rebar. (Doc. 308-11, Deposition of Ronald

Woods (“Woods Dep.”) at 128:20–22; Doc. 308-28 at 10–11; Doc. 308-26,

Deposition of John Jordan (“Jordan Dep.”) at 60). As a result, Amerisure contends

that the surface corrosion of the rebar was caused by the inadequate concrete cover—

work performed by Cummings. (Doc. 308-25, Woods Dep. at 73; 308-29 at 11; 308-

30, Deposition of Brett Newkirk (“Newkirk Dep.”) at 155–156). In contrast, the

Association maintains that the rebar corrosion was caused by the defective

dampproofing—work performed by Blanchard. (Doc. 308-26, Jordan Dep. at 60;

Doc. 322 at 15). Also in 2020, the Association discovered there was an absence of

dampproofing over certain areas of the CMU. (Doc. 308-27 at 10). Amerisure

contends that the Association failed to conduct any follow up testing to determine

the cause or the timing of the rebar corrosion and whether (and when) it was caused

by dampproofing failures versus inadequate concrete cover. (Doc. 308 at 7).

The Association contends that the garage screens had to be removed because

of the defective dampproofing work in order to fix the dampproofing defects. (Doc.

322 at 19). However, Amerisure maintains that the garage screens were defective

themselves and that is why they needed to be removed and replaced. (Doc. 308 at 8;

Doc. 308-12 at 29). As for defects with the balcony railings, the Association

contends that the balcony railings have “waterproofing issues” at the guard rail that

resulted in water intrusion and corrosion, (Doc. 308-11, Woods Dep. at 3, 133–36;

Doc. 308-23 at 66–68), and that the railings needed to be removed because of this

(Doc. 322 at 19). Amerisure maintains that the balcony railings were defective

themselves and there is no evidence of damage to another Project component

resulting from the balcony railings. (Doc. 308 at 9).

The timing of when the various scopes of work were completed is relevant to

the Coblentz analysis. The evidence shows that the masonry work performed by

Cummings was not completed before Skanska took over—this work was performed

and finished by December 2007. (Doc. 322 at 17). The parties dispute when the

dampproofing work was performed. Amerisure, relying on pay applications,

maintains it was performed primarily from June 2007 to December 2007 and was

not 100% complete until April or May of 2008. (Doc 308-32). In contrast, the

Association maintains that the dampproofing work was started and nearly completed

before Auchter’s default; the Association emphasizes that the dampproofing must

be complete before the masonry work could be completed, which was primarily

completed by December 2007. (Doc. 322 at 15–17; Newkirk Dep. at 70). The garage

screens were not installed until December 2007 and not completed until May 2008,

during Skanska’s control. (Doc. 308 at 8; Doc. 308-16; Doc. 308-32). Further, the

parties dispute the timing of the balcony railing install but seem to agree that this

occurred after Auchter’s April 2007 default and Skanska’s August 2007 takeover.4

The pay applications show the balcony railings were 45% complete in November

2007 and 100% by April 2008. (Doc. 308-13 at 7, 9, 11, 16).

II. The Underlying Lawsuit

On July 23, 2013, the Association sued Auchter, Skanska, and the Sureties,

among others, who brought in as third-party defendants Blanchard, Kane,

Cummings, CECO, and various other subcontractors in the Underlying Lawsuit

alleging that construction deficiencies were caused by Auchter, Skanska, their

subcontractors, and the Sureties. (Doc. 308-17; Doc. 31 ¶ 17, Doc. 32 ¶ 17). Auchter

tendered the underlying complaint and second amended complaint to Amerisure

separately as each complaint was filed.5 In response to each tender, Amerisure

4 The Association maintains that the railings were 90–92% complete by the end of 2007

according to pay applications (Doc. 322 at 17), but Amerisure maintains that the balcony railings

were still being installed in February 2008 and completed in May 2008 citing to pay applications

and photographs of ongoing work. (Doc. 308-4 at 21; Doc. 308-13; Doc. 308-32; Doc. 308-16).

Both parties rely on pay applications, and Amerisure also submits photographs of the railing

install.

5 The tenders of the original and second amended complaints were on September 27, 2013

denied its duty to defend finding that there was no coverage under its policies.6 It is

undisputed that in the Underlying Litigation, Auchter did not tender the operative

Third Amended Complaint (“TAC”) to Amerisure. (Doc. 308-20; Doc. 308-21,

Deposition of M. Garvin (“Garvin Dep.”) at 114:15–17). It is also undisputed that

the TAC is the operative complaint for purposes of the Court’s Coblentz analysis.

The claims brought against Auchter in the operative TAC include breach of

performance bond, breach of implied warranties, breach of statutory warranties,

violations of Florida’s building code, negligence, and breach of contract. (Doc. 308-

1). The defects that the TAC relied on as grounds for each of the foregoing claims

brought against Auchter included the above-discussed deficiencies with the

dampproofing, masonry work, garage screens, and balcony railings but also many

other construction deficiencies, such as failure to properly design the Project,

defective stucco, defective roof flashing, defective post-tension cables, defective

window systems, improper mechanical system design, and defective concrete floors.

(Doc. 308-1 at 15–18). It is undisputed that the Association failed to bring a vicarious

liability claim against Auchter for the liability of Auchter’s subcontractors. Skanska

was also sued for the same claims and construction deficiencies as Auchter, except

and June 9, 2016. (Doc. 31 ¶¶ 34, 38); (See also Doc. 195-2; Doc. 195-4; Doc. 195-6; Doc. 195-

8; Doc. 195-10; Doc. 195-13).

6 Amerisure declined coverage in responsive correspondence in October 2013, January

2014, and November 2016. (Doc. 31 ¶¶ 35, 37, 39).

that a breach of contract claim was brought only against Auchter. (Doc. 308-1).

III. Global Settlements and the Coblentz Agreement

On December 23, 2020, the Association, Skanska, the Sureties, and many

other defendants entered into a nearly global settlement in the amount of $39.5

million. (Doc. 308-36). Relevant here, Skanska settled for $1.5 million, Cummings

settled for $2.125 million for the masonry work, CECO settled for $3.25 million for

balcony slabs issues, and Blanchard settled for $250,000 for the dampproofing work.

(Id.). Thereafter, on July 6, 2021, by way of a Coblentz agreement, a final consent

judgment was entered against Auchter for $8.5 million plus a $150,000 initial

payment due immediately (the “Coblentz Agreement”). (Doc. 308-37). The Coblentz

Agreement stated that it was intended to “avoid further expense in prosecuting and

defending [the underlying lawsuit.].” (Id. at 8). The Coblentz Agreement included

the following allocation: $1.8 million for dampproofing, $4 million for balcony

railings and garage screens, $350,000 for design and contract administration of

hazardous material removal, $2.2 million for attorney’s fees and costs, and $150,000

prejudgment interest. (Id.). Notwithstanding claims brought against Auchter related

to defective stucco, roofs, windows, and other issues, the Consent Judgment and

Coblentz Agreement do not allocate any damages for these claims. (See id. at 23).

After entry of the consent judgment against Auchter, the Association settled

with Kane, the subcontractor responsible for the balcony rails and garage screens,

for $4 million—the exact amount allocated to the balcony issues in the Coblentz

Agreement. (Doc. 308-42). In this lawsuit, the Association seeks the entirety of the

$8.5 million Coblentz award. (Doc. 31 ¶ 1). The Association maintains all $8.5

million is covered under Amerisure’s policies. (See id. at 10, 12).

IV. The Applicable Insurance Policies

Auchter had Commercial General Liability (“CGL”) policies with Amerisure

in effect from January 1, 2006 to January 1, 2008 (the “Amerisure Policies”). (Doc.

308-7; Doc. 308-8). The Amerisure Policies provide “that Amerisure will pay those

sums that the insured becomes legally obligated to pay [as] damages because of

‘property damage’ caused by an ‘occurrence’ during the policy periods of the

Amerisure CGL Policies.” (Doc. 193 at 8–9; Doc. 193-10; Doc. 193-11).

DISCUSSION

I. Legal Standard

Summary judgment is appropriate when the moving party demonstrates “that

there is no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(a). The movant must satisfy this

initial burden by “identifying those portions of the pleadings, depositions, answers

to interrogatories, and admissions on file, together with the affidavits, if any, which

it believes demonstrate the absence of a genuine issue of material fact.” Norfolk S.

Ry. Co. v. Groves, 586 F.3d 1273, 1277 (11th Cir. 2009) (quoting Celotex Corp. v.

Catrett, 477 U.S. 317, 323 (1986)). In response, “a party opposing a properly

supported motion for summary judgment may not rest upon mere allegation or

denials of [its] pleading, but must set forth specific facts showing that there is a

genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 256

(1986) (citation omitted). The movant is entitled to summary judgment where “the

nonmoving party has failed to make a sufficient showing on an essential element of

her case with respect to which she has the burden of proof.” Celotex, 477 U.S. at

323. In deciding whether to grant summary judgment, the Court resolves all

ambiguities and draws all permissible factual inferences in favor of the non-moving

party. Anderson, 477 U.S. at 255; Shotz v. City of Plantation, Fla., 344 F.3d 1161,

1164 (11th Cir. 2003) (citation omitted).

Federal courts cannot weigh credibility at the summary judgment stage. See

Feliciano v. City of Mia. Beach, 707 F.3d 1244, 1252 (11th Cir. 2013) (“Even if a

district court believes that the evidence presented by one side is of doubtful veracity,

it is not proper to grant summary judgment on the basis of credibility choices.”

(citation and quotation marks omitted)). Therefore, the Court will “make no

credibility determinations or choose between conflicting testimony, but instead

[will] accept [the nonmoving party’s] version of the facts drawing all justifiable

inferences in [the nonmovant’s] favor.” Burnette v. Taylor, 533 F.3d 1325, 1330

(11th Cir. 2008). However, “[t]here is [still] no genuine issue for trial unless the

nonmoving party establishes, through the record presented to the court, that [it] is

able to prove evidence sufficient for a jury to return a verdict in [its] favor.” Cohen

v. United Am. Bank of Cent. Fla., 83 F.3d 1347, 1349 (11th Cir. 1996).

II. Coblentz Framework

“In Florida, a party seeking to recover under a Coblentz agreement must

prove: (1) coverage; (2) a wrongful refusal to defend; and (3) that the settlement was

objectively reasonable and made in good faith.” Sinni v. Scottsdale Ins. Co., 676 F.

Supp. 2d 1319, 1324 (M.D. Fla. 2009), as amended (Jan. 4, 2010); see also Horn v.

Liberty Ins. Underwriters, Inc., 391 F. Supp. 3d 1157, 1159 (S.D. Fla. 2019), aff’d,

998 F.3d 1289 (11th Cir. 2021). “Florida law clearly states that liability of an insurer

depends upon whether the insured’s claim is within the coverage of the policy. This

remains true even when the insurer has unjustifiably failed to defend its insured in

the underlying action.” Spencer v. Assurance Co. of Am., 39 F.3d 1146, 1149 (11th

Cir. 1994). “A determination of coverage, therefore, is a condition precedent to any

recovery against an insurer.” Id.

The party seeking recovery has the burden “to allocate the settlement amount

between covered and uncovered claims.” Trovillion Const. & Dev., Inc. v. Mid-

Continent Cas. Co., No. 6:12-cv-914, 2014 WL 201678, at *8 (M.D. Fla. Jan. 17,

2014). “[A]n insurer faced with a Coblentz action has the right to litigate its

contractual duty to indemnify on the actual facts of the underlying litigation just as

it would in an action against its insured.” Sinni, 676 F. Supp. 2d at 1331. Once the

party seeking to recover under a Coblentz agreement has established coverage and

allocated damages amounts between covered and uncovered claims, the burden

shifts to the defendant who must then prove that either the Coblentz agreement was

unreasonable or was negotiated in bad faith. Bond Safeguard Ins. Co. v. Nat’l Union

Fire Ins. Co. of Pittsburgh, Pa., No. 6:13-cv-561, 2014 WL 5325728, at *6 (M.D.

Fla. Oct. 20, 2014), aff'd, 628 F. App’x 648 (11th Cir. 2015).

In this case, although the Court finds that there are some disputed questions

of fact relating to whether there is coverage for some of the damages, the Court

ultimately finds that the Association has failed to satisfy its burden allocating

amounts between covered and uncovered claims and failed to show there was a duty

to defend. The Court also agrees that the Coblentz Agreement was unreasonable.

Accordingly, the Court finds that summary judgment in favor of Amerisure is

appropriate.

III. Coverage Under the Policy

To establish coverage under the Amerisure Policies, the Association must be

able to show that there was “property damage” caused by an “occurrence” during

the Amerisure Policies’ effective dates. (Doc. 308-7; Doc. 308-8). The Amerisure

Policies define “property damage” as “[p]hysical injury to tangible property,

including all resulting loss of use of that property” and the “[l]oss of use of tangible

property that is not physically injured.” (Doc. 308-7 at 27; Doc. 308-8 at 27). The

Amerisure Policies include exclusions for “‘[p]roperty damage’ to ‘your work’

arising out of it or any part of it and included in the ‘products-completed operations

hazard.’” (Id. at 16–17). The “your work” exclusion does not apply “if the damaged

work or the work out of which the damage arises was performed on your behalf by

a subcontractor.” (Id.)

Under Florida law construing the same or nearly identical provisions, the

Amerisure Policies provide coverage for damage to the completed Project caused by

Auchter’s negligent work, but do not provide coverage for the repair of the defective

subcontractor work standing alone. See Amerisure Ins. Co. v. Auchter Co., No. 3:16-

cv-407, 2018 WL 4293149, at *11 (M.D. Fla. Mar. 27, 2018). In Florida, a

subcontractor’s defective work constitutes an “occurrence” under a CGL policy such

as those at issue here. Amerisure Ins. Co. v. Auchter, 673 F.3d 1294, 1303 (11th. Cir.

2012). While it remains unsettled law in Florida whether damage occurs when the

injury-in-fact occurs or when the damage manifests, in Carithers, the Eleventh

Circuit reasoned that “property damage occurs when the damage happens, not when

the damage is discovered or discoverable.” Carithers v. Mid-Continent Cas. Co., 782

F.3d 1240 (2015). Here, neither party seems to be arguing that the damage

“occurred” when it was discovered (which is clearly beyond the Amerisure Policies’

effective dates), so the Court will analyze the issues under the “injury-in-fact”

analysis used by the Court in Carithers.

The parties dispute whether there was an occurrence within the Amerisure

Policies’ effective period, and whether the Association seeks coverage for damage

to non-defective property. The parties’ briefing was poorly organized and jumbled

making it difficult to decipher coverage arguments from exclusion arguments. The

Association argued coverage under both Coverage A and Coverage E, but the

Association only alleged in its operative complaint coverage under Coverage A,

Products Completed Operations Hazard.7 (Doc. 31 ¶ 27 (referring only to PCOH

coverage)). The Court agrees that because Coverage E was not alleged in the

operative Complaint or brought up during discovery, the Association cannot now

raise this coverage claim for the first time on summary judgment. (Doc. 317 at 14);

Gilmour v. Gates, McDonald & Co., 382 F.3d 1312, 1315 (11th Cir. 2004).

In Amerisure v. Auchter, the Eleventh Circuit analyzed an identical CGL

policy with PCOH coverage to that of the Amerisure Policies at issue here. 673 F.3d

at 1303–10. The Auchter Court reaffirmed that “[c]laims solely for the costs of

7 Amerisure argues that the Association has not even established that PCOH coverage

would be applicable because Auchter did not complete the Project, and if any defects occurred,

they occurred while Auchter was still performing operations. (Doc. 338 at 10–11). If Auchter

abandoned the Project, Amerisure maintains that coverage still would not apply because Exclusion

j(2) provides that there can be no property damage arising out of an abandoned premises. The

Association does not clearly address this argument, and the Court need not address it here because

other issues dispose of the case.

repairing and replacing the actual defects in . . . construction are not covered under

CGL policies.” Id. at 1304; see also S.-Owners Ins. Co. v. MAC Contractors of Fla.,

LLC, 819 F. App’x 877, 881 (11th Cir. 2020) (holding that plaintiffs “could not

recover for damage to brick caused by the negligent application of brick coating or

damage to tile caused by defective installation because the damage to the brick and

the tile was ‘part of the sub-contractor’s work,’ and this defective work caused no

damage apart from the defective work itself”).

While CGL policies do not cover a claim solely for repairing defective work,

they will cover a claim for repairing damage to the non-defective portions of a

completed project caused by the defective work. Auchter, 673 F.3d at 1304 (“[T]here

is a difference between a claim for the costs of repairing or removing defective work,

which is not a claim for ‘property damage,’ and a claim for the costs of repairing

damage caused by the defective work, which is a claim for ‘property damage.’”);

Bradfield v. Mid-Continent Cas. Co., 143 F. Supp. 3d 1215, 1235 (M.D. Fla. 2015)

(“[T]he mere inclusion of a defective component, such as a defective window or the

defective installation of a window, does not constitute property damage unless that

defective component results in physical injury to some other tangible property.”).

Additionally, there is coverage for the costs to repair defective work if repairing such

work is necessary to prevent further damage to non-defective components of the

project that would continue to be damaged without the repair. Auchter, 2018 WL

4293149, at *14 (citing Carithers, 782 F.3d at 1250). It is not the value of the damage

to other non-defective property that matters, but “the fact of property damage to

other property” that would trigger insurance coverage. Auchter, 2018 WL 4293149,

at *14.

There are several coverage issues here some of which could not be resolved

on summary judgment if the issues were presented in isolation and separate from a

Coblentz analysis.8 This case involves at least two, if not several, occurrences, some

of which present factual issues relating to both causation and the underlying reason

for the repairs. For example, there is evidence that both the dampproofing performed

by Blanchard and the CMU and brick veneer masonry work performed by

Cummings are defective. While the Association maintains that the defective

dampproofing caused water intrusion resulting in corrosion of the rebar (damage to

a non-defective component of the Project)9 (Doc. 322 at 15; Doc. 297 at 70),

8 Amerisure argues that various exclusions apply, and Amerisure has the burden of proving

an exclusion. Carithers, 782 F.3d at 1250. One such exclusion is the “your work” exclusion. “[T]he

‘your work’ exclusion, states that insurance does not apply to ‘property damage’ to ‘your work’

arising out of it or any part of it and included in the ‘products-completed operations hazard.’”

J.B.D. Const., Inc. v. Mid-Continent Cas. Co., 571 F. App’x 918, 924–25 (11th Cir. 2014). The

Court need not determine whether any exclusions apply because the existence of coverage cannot

be established on the record at this stage, and there should be a finding of coverage before

considering whether an exclusion would apply. However, the Amerisure Policies contained the

subcontractor exception to the “your work” exclusion which would likely render the “your work”

exclusion inapplicable in this case. “As to the ‘Your Work’ exclusion, ‘[b]y incorporating the

subcontractor exception into the ‘your-work’ exclusion, the insurance industry specifically

contemplated coverage for property damage caused by a subcontractor’s defective performance.’”

Auchter, 2018 WL 4293149, at *24.

9 The Eleventh Circuit has recognized that the commencement of rust (corrosion) is

Amerisure contends that the Association noticed defects with the brick veneer first,

and that these defects are the cause of water intrusion and damage to the rebar, not

the dampproofing. (Doc. 308 at 6). Neither party identifies which contractor installed

the rebar, but it appears to be included within Cummings’ scope of work outlined in

the Cummings contract. If Cummings’ own defective work damaged work also

performed by Cummings, there may not have been “property damage.” Auchter 673

F.3d at 1300 (reasoning that “a claim for ‘property damage’ requires physical injury

to some tangible property other than the contractor’s own defective work”).

Similarly, Amerisure claims that the garage screens were themselves defective and

that the damages associated with them are simply damages to repair defective work,

which is not covered. (Id.) In contrast, the Association claims that the garage screens

had to be removed as part of the brick removal to access the defective dampproofing

and that this work is covered because it was required to be done to remedy the

dampproofing defects. (Doc. 322 at 19).

Setting aside these disputed factual issues regarding “cause-and-effect” and

whether certain components were “defective themselves” versus “damaged due to

other defects,” the major coverage hurdle is whether there is insurance coverage for

covered property damage under CGL policies. Trizec Props., Inc. v. Biltmore Constr. Co., 767

F.2d 810 (11th Cir. 1985).

defective work performed after Auchter’s default and under Skanska.10 If there is no

coverage for work performed under Skanska, there is no coverage for the balcony

railing damages.11 While the parties dispute the timing of the balcony railing install

by a matter of months, there is no record evidence that the balcony railing install

began prior to August 2007 when Skanska took over. Most of the install, if not all

of it, occurred from November 2007 to April 2008.12 Additionally, the evidence

shows that the balconies themselves were defective,13 so it matters when they were

installed.

10 “Although an ‘occurrence’ need not necessarily take place during the policy period,

‘property damage’ must occur during the policy period.” Mid-Continent Cas. Co. v. Frank

Casserino Const., Inc., 721 F. Supp. 2d 1209, 1215–16 (M.D. Fla. 2010). There is no evidence of

damage caused by any alleged defects prior to completion of a particular scope of work. For

example, no evidence that dampproofing defects caused damage to the rebar before the

dampproofing install was complete, and no evidence the balcony rails caused damage before their

install was complete.

11 Additionally, if the water intrusion to the rebar in areas impacted by the dampproofing

and/or masonry defects is determined to be caused by defective CMU and brick veneer work, as

opposed to the dampproofing work, there would be a timing issue as well because Cummings

performed masonry work under Skanska towards the end of 2007 after Skanska took over.

However, because the balcony railings were clearly performed under Skanska, the Court will focus

only on this issue for purposes of this analysis, as it is dispositive.

12 Amerisure argues they were being installed in February 2008 and completed in May

2008, long after Auchter’s default. (Doc. 308 at 31). The Association maintains the balcony

railings were 90-92% installed by “end of 2007.” (Doc. 322 at 17).

13 The Association maintains there were “waterproofing issues” at the balcony guardrail

that resulted in water intrusion and corrosion to the rebar that occurred while they were being

installed. (Doc. 301-1 at 3–5; Doc. 301-9, Woods Dep. 134:16–136:23). In contrast, Amerisure

argues that the balcony railings had to be removed and replaced only because they were defective

themselves. (Doc. 338 at 8). The Association asserts that its expert recommended the railings be

removed and replaced because of “defective waterproofing” but the Association does not clarify

what type of waterproofing. (Doc. 320-3 at 3–4). The Association cites to its expert Mr. Woods’s

report which explains that the balcony rails were defectively installed, and also the water intrusion

Amerisure argues that neither Skanska nor the Sureties qualify as insureds or

additional insureds under the Amerisure Policies. (Doc. 308 at 16). In response, the

Association merely argues that Auchter’s duties and liability are established by the

construction contract and the performance bond, and that Amerisure lost the ability

to dispute Auchter’s liability when it refused to provide a defense. (Doc. 322 at 6).

The Association contends that Auchter remained responsible for completing the

Project even after its default because, as part of the original contract, Auchter, agreed

to execute the work as outlined by the construction documents. (Id. at 7).

The Association’s argument is misplaced as it conflates the issue of Auchter’s

contractual liability with that of insurance coverage. It is undisputed that Auchter

terminated the original construction contract, Auchter ceased work on the Project,

and that subsequent documents, including the Takeover Agreement and Skanska’s

completion contract, were executed by the Sureties and Skanska. These agreements

are not at issue here. The issue is one of insurance coverage. Even so, the Court is

not persuaded that Auchter remained the only liable party, as Skanska, an entirely

separate and unrelated party, stepped in to complete the Project. A performance

issues resulted from the grout pockets that were required to be waterproofed. (Id.). There is no

indication that anyone other than the balcony installer, Kane, was responsible for this

waterproofing issues. Mr. Woods further states that “[t]he defective condition occurred at the

original construction as the railings were being improperly installed” and that the damage begins

to occur at the time the defective construction is in place. Id. Therefore, the defects associated with

the balcony railings and any subsequent damage to the non-defective rebar occurred when Kane

installed them either under Skanska’s control or after the January 1, 2008 policy expiration date.

bond, which is what obligated the Sureties to step in and hire Skanska, is intended

to protect the Association by ensuring continued performance of a construction

contract in the face of Auchter’s default. U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So.

2d 871, 887 (Fla. 2007) (“[U]nlike an insurance policy, a performance bond benefits

the owner of a project rather than the contractor.”). But the Association is standing

in the shoes of Auchter in this lawsuit, seeking to recover from its insurer. The

Association has not offered legal support for its contention that a performance bond

would extend the insurance coverage of the defaulting party to cover work

performed by a substitute contractor once the Sureties step in. While it may be true

from a contractual perspective that Auchter faced continued contractual liability to

the developer beyond its default, the Association’s burden in this case is really to

show that the language of the Amerisure Policies themselves extended coverage for

work under Skanska.

The Association does not address Amerisure’s argument that Skanska was not

an additional insured under the Amerisure Policies. Instead, the Association vaguely

argues that Skanska was an agent of Auchter (see Doc. 322 at 7), but there is no

factual or evidentiary support for such a conclusion. The Association also argues

that the definition of “your work” under the Amerisure Policies’ coverage provisions

includes work performed on the insured’s behalf. (Id. at 7–8). But the record

evidence does not support that Skanska and Auchter had any relationship or that

Skanska was working for or on behalf of Auchter. There is no evidence that Auchter

was involved in the Surety’s decision to retain Skanska or had any control over the

methods Skanska employed to complete the Project. The Court cannot conclude that

Skanska was a subcontractor or agent to Auchter or that Skanska’s work was insured

under Auchter’s insurance policies.

Since the Association has failed to show that Skanska is an additional insured

under the Amerisure Policies or that there is coverage for defects arising out of

Skanska’s work after it took over, there is no coverage for the balcony railings

damages. Even though there are some factual disputes relating to coverage for the

dampproofing and defective masonry work, because the balcony railings were

installed under Skanska, not Auchter, the Association has not shown that there is

sufficient evidence to support coverage for the $4 million sought for these defects

(the railings were lumped with the garage screens and there is no further allocation).

Accordingly, the Association has not shown that there is coverage for all the

damages amounts sought in the Coblentz Agreement.

IV. Allocation of the Coblentz Agreement

The Association, as the party seeking recovery, has the burden “to allocate the

settlement amount between covered and uncovered claims,” which includes “both

temporal and categorical allocation.” Trovillion, 2014 WL 201678, at *8. The

agreement itself need not include the necessary allocation between covered and

uncovered claims, the claimant can allocate independently of the agreement.

Highland Holdings, Inc. v. Mid-Continent Cas. Co., No. 8:14-cv-1334-SDM-TBM,

2016 WL 3447523, at *4 (M.D. Fla. June 23, 2016), aff'd, 687 F. App’x 819 (11th

Cir. 2017). “Inability to allocate precludes recovery.” Trovillion, 2014 WL 201678,

at *8; J.B.D. Const., Inc. v. Mid-Continent Cas. Co., 571 F. App’x 918, 928 n. 7

(11th Cir. 2014) (“Under Florida law, [the insured] has the burden of allocating the

settlement amount between covered and uncovered claims and the inability to do so

precludes recovery.”); Keller Indus. v. Empl. Mut. Liab. Ins. Co., 429 So. 2d 779,

780 (Fla. 3d DCA 1983) (affirming the lower court’s refusal to award damages under

the insurance contract based on a settlement entered into by the insured because “as

the party claiming coverage, [the insured] had the burden, which it failed to carry,

to apportion damages and show that the settlement, or portions thereof, represented

costs that fell within the coverage provisions of the policy”).

As outlined above, the Coblentz Agreement includes $4 million in damages

including the balcony railing defects, but the Association has not proven that there

is coverage under the Amerisure Policies for this amount. As a result, the Coblentz

Agreement is unenforceable because it does not properly allocate between covered

and uncovered claims.

Moreover, the claims brought against Auchter in the Underlying Lawsuit

included claims and defects beyond those expressly mentioned here, claims that do

not appear to be covered. For example, the TAC alleged claims for building code

violations and breach of contract, and it also sought recovery for extensive defects

relating to stucco, roofing, and windows that were not even mentioned or addressed

in the Coblentz Agreement. (Doc. 308-1 ¶¶ 56, 58, 150, 158); see Trovillion, 2014

WL 201678, at *8 (finding a Coblentz agreement unenforceable in part where the

agreement subjected the insured to liability beyond the scope of the policy at issue

and reasoning that the agreement expressly stated it was intended to resolve the legal

exposure faced by the insured). The language of Auchter’s and the Association’s

Coblentz Agreement makes clear that the agreement is intended to be “in full

resolution of the Litigation” in the amount of $8.5 million. (Doc. 308-37). The

agreement further states that the total $8.5 million amount “includes” various

amounts for the dampproofing, railings and garage screens, and design and contract

administration of Phase 1 hazardous material removal, fees and costs and

prejudgment interest. (Id. at 9). But in order to settle all the claims against Auchter,

the agreement should have allocated amounts for uncovered claims as well, such as

non-covered claims for building code violations and defects relating to stucco, the

roofs, and the windows.

The Association also does not address in its briefing the $350,000 for design

and contract administration of Phase 1 hazardous material removal for which it seeks

recovery in this lawsuit.14 It is the Association’s burden to show that the $350,000

for hazardous waste removal is a covered claim under the Amerisure Policies, and

its failure to do so is fatal to its claim. Bradfield, 143 F. Supp. 3d at 1248

(emphasizing that it is not the Court’s burden to dig through the record and assist the

claimant with its required allocation between covered and uncovered claims).

V. Duty to Defend

The Court will briefly address the duty to defend. “Under Florida law, an

insurance provider’s duty to defend an insured party ‘depends solely on the facts and

legal theories alleged in the pleadings and claims against the insured.’” Stephens v.

Mid-Continent Cas. Co., 749 F.3d 1318, 1323 (11th Cir. 2014). An insurer has a

duty to defend “when the relevant pleadings allege facts that ‘fairly and potentially

bring the suit within policy coverage.’” Lawyers Title Ins. Corp. v. JDC (Am.) Corp.,

52 F.3d 1575, 1580 (11th Cir. 1995). “Thus, an insurer is obligated to defend a claim

even if it is uncertain whether coverage exists under the policy.” Stephens, 749 F.3d

at 1323. Any doubt about whether the insurer owes a duty to defend must be resolved

against the insurer and in favor of the insured. MAC Contractors, 819 F. App’x at

879.

14 Amerisure says these are costs incurred in the context of replacing faulty work such as

the defectively installed brick veneer and non-compliant garage screens. (Doc. 308 at 24).

Amerisure argues that because the Association failed to tender the operative

TAC to it, the Association cannot later recover under a Coblentz agreement arising

out of that complaint. (Doc. 308 at 13–14). In response, the Association maintains

that it tendered to Amerisure the original complaint and the second amended

complaint and sent correspondence to Amerisure following its continuously denying

the duty to defend. (Doc. 322 at 1–2). Notably, Amerisure contends that “[t]he TAC

differs materially from prior pleadings as it contains new claims by the Association–

as an assignee of the Developer–against Auchter, which form the basis of the

Association’s claims against Amerisure.” (Doc. 338 at 2).

Neither party provides an analogous case holding an insurer liable under a

Coblentz Agreement where it is undisputed that the insurer was not tendered the

operative complaint that resulted in a Coblentz agreement and consent judgment.

The notice issues involved here are concerning. Even though Amerisure received

prior versions of complaints and engaged in back-and-forth communication with

Auchter’s counsel regarding its declining to defend based on the allegations of those

complaints, it remains undisputed that the TAC was never provided to Amerisure.

The parties agree that the Coblentz analysis and the duty to defend prong specifically

look only to the TAC. Landmark Am. Ins. Co. v. N. Captiva Island Club, Inc., No.

2:16-cv-582, 2016 WL 7440846, at *1 (M.D. Fla. Dec. 27, 2016) (“[W]hen an

original complaint has been superseded by an amended complaint, the original

complaint can no longer furnish a basis for determining the insurer’s duty to

defend.”). Thus, the versions of the underlying complaint that Amerisure actually

received are legally irrelevant to the present analysis.

In the context of a Coblentz agreement and in the absence of legal support for

the Association’s position, the Court declines to hold the insurer liable for significant

settlement amounts derived from a settlement agreement the insurer did not

participate in and which settled claims derived from a complaint it is undisputed the

insurer did not receive—a complaint which forms the basis of the duty to defend

inquiry now. Sinni, 676 F. Supp. 2d at 1329 (finding exceptional circumstances

warranted relieving the insurer of its duty to defend). The Court cannot simply

speculate that Amerisure would have denied the defense because it did in response

to prior versions of the complaint. There is insufficient legal or factual support on

the record for that hypothetical conclusion.15 As a result, there was no wrongful

refusal to defend.

15 Additionally, the Association contends that Amerisure failed to comply with § 627.426,

Fla Stat., and therefore, cannot rely on a coverage defense now, such as not receiving notice of the

TAC, in this litigation. (Doc. 322 at 2). The Court finds these arguments misplaced. Horn, 391 F.

Supp. 3d at 1166 (finding § 627.426 inapplicable to an insured’s burden to enforce a Coblentz

agreement); Petro v. Travelers Cas. & Sur. Co. of Am., 54 F. Supp. 3d 1295, 1305 (N.D. Fla. 2014)

(“[T]he Claims Administration Statute, Fla. Stat. 627.426, applies only to preclude particular

coverage defenses and is therefore not relevant to a determination of whether there is a valid

Coblentz agreement.”).

The Association requests to recover for costs and fees under the

supplementary payments provision for breach of the duty to defend but does not cite

any case law applying this provision outside of a Coblentz agreement analysis. (Doc.

310 at 21). This case is governed by the Coblentz framework, and there is no separate

damages award for establishing only a breach of the duty to defend. Spencer, 39 F.3d

at 1149 (finding that under Coblentz, the liability of an insurer depends entirely on

coverage even if the court were to find an “unjustifiable” failure to defend); Horn,

391 F. Supp. 3d at 1166 (finding that no coverage precluded recovery of settlement

and defense costs). Because the Association has not satisfied its Coblentz burden,

the Court need not award attorney’s fees nor address the reasonableness of the fees’

allocation. For these reasons, the Association’s Motion for Partial Summary

Judgment will be denied.

V. Reasonableness of Coblentz Agreement

The inquiry could end here as the Court has found that the Association has not

satisfied its burden to allocate between covered and uncovered claims and that there

was no wrongful refusal to defend. Nonetheless, the Court finds it worthwhile to

make note of some concerns regarding the reasonableness of the amounts included

in the Coblentz Agreement. “What Coblentz does not do is authorize the insured to

indiscriminately load the carrier’s wagon with bricks of damage that no reasonable

person would expect as consequences of the underlying claim.” Bond Safeguard,

2014 WL 5325728, at *9. Therefore, to prevent such abuse by the insured, Florida

applies a reasonableness requirement, and the Court determines “what a prudent

person in the position of the [insured] would have settled for on the merits of

plaintiff’s claim.” Id.

The Coblentz Agreement is not reasonable because it does not account for

Skanska’s liability and instead lumps all damages on Auchter despite evidence that

Skanska continued in place of Auchter for a nearly 12-month period when many

portions of the Project were not yet complete. The agreement included the total

damages for the balconies, dampproofing, masonry work, and garage screens despite

that some of this work was performed under Skanska. Moreover, despite Skanska

being sued for nearly identical claims and the same defects as Auchter and serving

as a contractor on the Project for nearly a year, the Association settled with Skanska

for only $1.5 million—less than 20% of the amount the Association agreed to settle

with Auchter. Amerisure also points out that the Association accepted the settlement

sum of $250,000 from Blanchard, the dampproofing subcontractor, despite that the

Association now contends that the recovery of millions of dollars of damages in the

Coblentz Agreement are covered because of Blanchard’s dampproofing deficiencies.

Moreover, before the Association brought this lawsuit, the Association settled with

Kane, the balcony and garage screen contractor, for $4 million, which is the exact

amount of which Auchter agreed to settle the balcony and garage screen claims

against Auchter in the Coblentz Agreement.16

Additionally, Amerisure argues that it is not reasonable to include damages

for Auchter’s vicarious liability for Kane in the Coblentz Agreement because the

TAC did not allege that Auchter was vicariously liable for Kane (or anyone else),

and it would be unreasonable to recover for a nonexistent claim. (Doc. 308 at 17).

Florida law requires a claim for vicarious liability to be specifically alleged in order

to hold a party vicariously liable. See Goldschmidt v. Holman, 571 So. 2d 422, 423

(Fla. 1990). The claims actually brought against Auchter are the essential framework

for purposes of the settlement of those claims. Accordingly, on the face of the

Coblentz Agreement, and simply considering the above undisputed facts without

digging into additional evidence of arms-length negotiations and bad faith, it appears

that this agreement was an effort to unfairly and unreasonably load Amerisure’s

“wagon with bricks of damage” based on Auchter’s fault where Auchter is just one

responsible party among many others from whom the Association has already

recovered tens of millions of dollars. Bond Safeguard, 2014 WL 5325728, at *9.

16 Interestingly, the Association’s own document entitled “Coblentz Analysis” lists Kane

as separately responsible from Auchter, and tags Kane with all the exposure and damages relating

to the garage screens and the balcony railings. (Doc. 308-40). The listed damages “attributable to

Auchter” do not include the garage screens or the balcony railings. (Id.)

Based on the foregoing, the Court finds that there are no disputed questions

of fact precluding the Court from entering summary judgment in favor of Amerisure

finding that the Association has failed to put forth enough evidence to avoid

summary judgment on its claims brought under the Coblentz Agreement. It is

ORDERED as follows:

1. Amerisure’s Motion for Summary Judgment Against Plaintiff (Doc.

308) is GRANTED.

2. The Association’s Motion for Partial Summary (Doc. 310) is DENIED.

3. The Clerk is directed to enter a judgment providing that Plaintiff the

Peninsula at St. John’s Center Condominium Association, Inc. shall take nothing on

their claims against Defendants Amerisure Insurance Company and Amerisure

Mutual Insurance Company. Defendants are entitled to recover the costs of this

action.

4. The Clerk is DIRECTED to close the file.

DONE and ORDERED in Chambers, in Orlando, Florida on May 30, 2025.

Bsn Corsseg

United States Ditict Jade

Qn”

COPIES FURNISHED TO:

Counsel of Record