Eleventh Circuit Affirms Summary Judgment in Favor of Insurance Carrier’s Declination of Defense of Insured
By: Hannah Kennedy
Swift Currie partners Lane Finch and Murray Flint obtained summary judgment in favor of an insurance carrier and secured a complete dismissal of the action after the U.S. District Court determined the insured failed to abide by multiple conditions precedent outlined in the policy. The insured appealed the dismissal to the Eleventh Circuit United States Court of Appeals, which subsequently affirmed the dismissal, because the insured failed to comply with its duties under the policy. Accident Insurance Co. Inc. v. Mathews Development Co., LLC, 2025 WL 842078 (11th Cir.).
The insurance dispute arose out of alleged defects in the construction of a new home. The insured, who was the general contractor for the residence, was sued by the homeowners for negligence and wantonness due to numerous defects in their newly constructed residence. The insured general contractor sought coverage from its insurer for defense against the homeowners’ lawsuit. In response, the insurer filed a declaratory judgment, seeking affirmation it owed no duty to defend the insured based on the terms of the policy. For example, the insured failed to comply with a “Contractors Special Condition Endorsement” governing coverage for claims based on the work of subcontractors.
The Contractors Endorsement stated, “[a]s a condition precedent to coverage for any claim for injury or damage based, in whole or part, upon work performed by independent contractors,” the insured must obtain (1) a written indemnity agreement from the subcontractor holding the insured harmless for all liability arising from the subcontractor’s work; (2) certificates of insurance from the subcontractor indicating that the insured is named as an additional insured and that coverage is at least $500,000 per occurrence; (3) proof that the subcontractor has workers’ compensation insurance, if required by state law; and (4) proof of all necessary licenses. Despite these written obligations, the insured admitted it failed to obtain certificates of insurance identifying itself as an additional insured on its subcontractors’ insurance policies and also failed to obtain written indemnity agreements from its subcontractors. In light of those admissions of the insured, the district court granted summary judgment in favor of the insurer. The insured then appealed the decision to the Eleventh Circuit.
The Eleventh Circuit upheld the lower court’s judgment, noting “Alabama courts enforce the insurance policy as written if the terms are unambiguous.” Robinson v. Liberty Mut. Ins. Co., 958 F.3d 1137, 1140 (11th Cir. 2020). In assessing ambiguity, we “give the terms the meaning that a reasonably prudent person applying for insurance would have understood the terms to mean,” instead of applying a “technical or legal” meaning. Id. The court highlighted that the “burden is on the insured to establish coverage exists under an insurance policy.” Emp’rs Mut. Cas. Co. v. Mallard, 309 F.3d 1305, 1307 (11th Cir. 2002). However, the court also pointed to the carrier’s obligation to prove application of an exclusionary provision. Snell v. United Specialty Ins. Co., 102 F.4th 1208 (11th Cir. 2024); see also Twin City Fire Ins. Co. v. Alfa Mut. Ins. Co., 817 So.2d 687, 697 (Ala. 2001).
In applying the precedent outlined above, the Eleventh Circuit concluded the insurer met its burden to prove application of the Contractors Endorsement at issue. It was undisputed the insured was required to submit documentation of the indemnity agreements with its subcontractors and certificate of insurance listing the insured as an additional insured under the subcontractors’ own insurance. Having failed to meet those requirements, the insured argued the insurer still owed a duty to defend as some of the claims against it, including the negligent hiring/training/supervision claim, were not attributable to actions of its subcontractors and were instead direct liability claims against the insured. The Eleventh Circuit disagreed and found the claims against the insured were solely based on the conduct of its subcontractors. The court noted, for example, a claim for negligent hiring, training or supervision, requires proof of damages caused by the party being hired, trained or supervised. Jones Exp., Inc. v. Jackson, 86 So.3d 298, 305 (Ala. 2010). The court concluded the homeowner could not prevail on their claim for negligent hiring/training/supervision without showing the subcontractors’ conduct caused their damages. It likewise concluded the homeowners’ claim for negligence was also tied to conduct of the subcontractors since the subcontractors constructed the entire residence. Thus, the Contractors Special Condition Endorsement applied and because the insured breached its duties under that endorsement, there was no duty to defend the insured against the homeowners’ lawsuit.
Attorney Contact Info
Hannah Kennedy
hannah.kennedy@swiftcurrie.com
205.313.3133
