A federal appeals court Monday affirmed that Westfield Insurance Co. is not obligated to defend or insure a Florida contractor regarding the an intricate dispute with one of its subcontractors.
The Diaz Fritz Group Inc., based in Temple Terrace, Florida, hired Howard Baker Inc. in May 2009 as a subcontractor to do foundation work on University Community Hospital Carrollwood in Tampa, based on the ruling through the 11th U.S. Circuit Court of Appeals in Atlanta inThe Diaz Fritz Group Inc. d.b.a. Diaz Fritz Isabel vs. Westfield Insurance Co.
Diaz Fritz agreed to pay Tampa-based HBI $290,000 to complete the work. But problems developed and, according to Diaz Fritz, HBI negligently caused a few of the hospital's other property to flood, incurring substantial damage.
After a healthcare facility demanded Diaz Fritz remediate the situation within three days, the organization reached out to Westfield, but the insurer said HBI was responsible for the flooding. Westfield sent the claim to HBI's insurer, Zurich American Insurance Co., but the insurers couldn't agree on whether Zurich's policy required it to provide coverage to Diaz Fritz being an additional insured.
Meanwhile, without seeking Westfield's approval, Diaz Fritz taken care of the required repairs – which totaled about $506,000 – without admitting fault. After that it chose to withhold the $290,000 it had agreed to pay HBI for its work but nonetheless remained responsible for more than $200,000 of the amount it had paid a healthcare facility.
After Westfield refused to defend it, Diaz Fritz filed suit against HBI in state court, where a jury found HBI partially accountable for $267,00 in damages. Offsetting the $290,000 Diaz Fritz had withheld, the jury awarded HBI $23,400 in damages.
Diaz Fritz sued against Westfield in U.S. District Court in Tampa, seeking a declaratory judgment the insurer was obligated to protect and indemnify it.
The district court ruled in Westfield's favor and was affirmed with a three-judge appeals court panel.
The district court ruled in Westfield's favor “after concluding the plain and unambiguous policy language” covered “suits”' for damages due to property damage, the appeals court ruling said.
“In contrast, it discovered that HBI's affirmative defense only sought to offset the amount of damages Diaz Fritz claimed it had been owed inside a contract action. We agree, and find Diaz Fritz's contrary argument unconvincing,” the panel said, in holding Westfield was not obligated to supply whether defense or indemnification.
Westfield attorney Aram P. Megerian, someone with Cole, Scott & Kissane P.A., in Tampa, said in a statement he believed the court reached the best conclusion. Diaz Fritz attorneys did not respond to a request comment.
