Defense Counsel Journal - International Association of Defense ...

Raising the Roof Page 473Florida Supreme Court’s decision inJ.S.U.B., which followed the samerationale as that of the Texas SupremeCourt in Lamar Homes v. MidContinentCasualty Company. 19In J.S.U.B., the builder built severalhomes under contract. After delivery ofthe homes, the homeowners begandiscovering cracks in the ceilings, drywalland concrete slabs of the homes.Investigation revealed that the crackingwas a result of differential settlementcaused by poor soil compaction andfailure to remove loose organic materialby the site preparation contractors. Whensued by the homeowners, the buildersought coverage under its policy withU.S. Fire. This insurer, relying on a priordecision of the Florida Supreme Court,LaMarche v. Shelby Mutual Ins. Co., 20denied coverage for anything other thanpersonal property of the homeownersdamaged by the settlement.J.S.U.B. repaired the homes and filedsuit against U.S. Fire to determinecoverage. On appeal, the intermediatecourt held that LaMarche did not applyand found coverage for all of the damagessought by the homeowners. The FloridaSupreme Court agreed with theintermediate court and issued a lengthydecision in an attempt to justify thewholesale abandonment of decades ofprecedent.First, the Court considered the“occurrence” issue. Putting the cart wellbefore the horse, the Court engaged in alengthy exposé of the history of the “yourwork” exclusion in the broad form19 See J.S.U.B. 979 So. 2d 871 (Fla. 2007);Lamar Homes, Inc. v. Mid-Continent CasualtyCo., 242 S.W.3d 1 (Tex. 2007).20 390 So. 2d 325 (Fla. 1980).general liability policy. Putting aside itsown rule that exclusionary clauses cannotbe relied upon to create coverage, it choseinstead to read the policy “as a whole” todetermine whether work performed by asubcontractor came within the definitionof an “occurrence.” The Court found thatthe subcontractor exception to the “yourwork” exclusion indicated that workperformed by a subcontractor was meantto be covered in the first instance.In doing so, the Court explained thatits prior decision in LaMarche was basednot on whether defective construction wasan “occurrence,” but whether the businessrisk exclusions were ambiguous. Fromthat unremarkable proposition, the Courtconcluded that consideration of the “yourwork” exclusion was a proper method ofdetermining whether the defective workconstituted an “occurrence” in the firstinstance. Its justification was as follows:We conclude that the holding inLaMarche, which relied onWeedo and involved the issue ofwhether there was coverage forthe contractor’s own defectivework, was dependent on thepolicy language of pre-1986CGL policies, including therelevant insuring provisions andapplicable exclusions. . . .Because LaMarche involved aclaim of faulty workmanship bythe contractor, rather than a claimof faulty work by thesubcontractor, and because thepolicy being interpreted involveddistinct exclusions andexceptions, we do not regard