Pozzi Window Co. v. Auto-Owners Insurance

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
SEPT 26, 2008
No. 05-10559 THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 02-23093-CV-TK
POZZI WINDOW COMPANY,
Plaintiff-Counter-
Defendant-Appellee
Cross-Appellant,
versus
AUTO-OWNERS INSURANCE,
Defendant-Counter-
Claimant-Third
Party-Plaintiff-Appellant
Cross-Appellee,
versus
CORAL CONSTRUCTION OF SOUTH FLORIDA, INC.,
JAMES IRBY,
Third-Party-Defendants.
________________________
Appeals from the United States District Court
for the Southern District of Florida
_________________________
(September 26, 2008)
Before TJOFLAT and HULL, Circuit Judges, and RESTANI,* Judge.
PER CURIAM:
In this insurance dispute, Appellant Auto-Owners Insurance Company
(“Auto-Owners”) issued two commercial general liability policies (the “Policies”)
to Coral Construction of South Florida, Inc. (“Coral”) and Coral’s president, James
J. Irby (“Irby”). Appellee Pozzi Window Company (“Pozzi”) manufactured the
windows in a home that Coral, as a general contractor, constructed. After the
homeowner sued Pozzi for water damage due to leakage around the windows,
Pozzi cross-claimed against Coral and Irby, asserting that their subcontractor had
defectively installed the windows. Coral and Irby settled Pozzi’s claims against
them, and as part of the settlement, they assigned their rights under the Policies to
Pozzi. Auto-Owners and Pozzi dispute whether the Policies cover Coral’s and
Irby’s liability for the repair or replacement of the defectively installed windows.
The district court concluded that the Policies provided coverage and granted
*
Honorable Jane A. Restani, Chief Judge, United States Court of International Trade,
sitting by designation.
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partial summary judgment to Pozzi. The case then proceeded to a jury trial before
a magistrate judge on Pozzi’s claims of bad faith and breach of contract—i.e.,
breach of the Policies—and the jury found in Pozzi’s favor. Auto-Owners
appealed.
After review and oral argument, this Court certified the coverage issue to the
Florida Supreme Court. See Pozzi Window Co. v. Auto-Owners Ins., 446 F.3d
1178, 1188 (11th Cir. 2006) (“Pozzi I”).1 The specific question certified to the
Florida Supreme Court was:
DOES A STANDARD FORM COMPREHENSIVE GENERAL
L IA B I L IT Y P O L IC Y W I T H P R O D U C T C O M P L E T E D
OPERATIONS HAZARD COVERAGE, SUCH AS THE POLICIES
DESCRIBED HERE, ISSUED TO A GENERAL CONTRACTOR,
COVER THE GENERAL CONTRACTOR’S LIABILITY TO A
T H IR D PA RTY FO R T H E C O ST S O F R E P A IR O R
REPLACEMENT OF DEFECTIVE WORK BY ITS
SUBCONTRACTOR?
Id.In answering this certified question, the Florida Supreme Court opined that
there “appear[ed] to be a factual issue as to whether the windows themselves were
defective or whether the faulty installation by the Subcontractor caused damage to
1
In Pozzi I, this Court also affirmed the magistrate judge’s (1) grant of judgment as a
matter of law to Auto-Owners on Pozzi’s claim of bad faith, and (2) decision to set aside the
jury’s grant of punitive damages to Pozzi. See Pozzi I, 446 F.3d at 1179. Further background
can be found in the prior opinion. See id. at 1179-1182.
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both the windows and other portions of the completed project.” Auto-Owners Ins.
Co. v. Pozzi Window Co., 984 So. 2d 1241, 1247 (Fla. 2008). The Florida
Supreme Court dubbed this purported factual issue “critical,” and thus answered
the certified question as follows:
If the windows were purchased by the Homeowner and were not
defective before being installed, coverage would exist for the cost of
repair or replacement of the windows . . . . However, a different result
would follow if the windows were defective prior to being
installed . . . .
Id. at 1243, 1248 (emphasis added).
The parties have litigated this case as though the only matter at issue was
whether coverage would exist under the Policies if the windows were defectively
installed—and not whether coverage would exist if the windows were defective
prior to installation. As detailed in Pozzi I, this litigation commenced when Jorge
Perez hired Coral and Irby to construct his house. Pozzi I, 446 F.3d at 1180. The
house included windows manufactured by Pozzi and installed by Coral’s and
Irby’s subcontractor, Brian Scott Builders, Inc. (“Scott”). Id. After Perez moved
into the house, he complained of water damage due to leakage around the windows
and filed suit against Pozzi, Coral, and Scott. Id.
In Perez’s lawsuit, Pozzi cross-claimed against Coral and Irby for negligent
4
supervision of Scott during the window installation.2 Id. Coral and Irby filed
claims with Auto-Owners for coverage under the Policies for their liability arising
from Pozzi’s claim that the windows were defectively installed, but Auto-Owners
responded that the damages sought by Pozzi were not covered. Id. Pozzi
ultimately settled its cross-claims against Coral and Irby, and as part of that
settlement, Coral and Irby assigned to Pozzi their rights under the Policies,
including their claims against Auto-Owners for denying coverage for Pozzi’s
original cross-claims that alleged defective installation of the windows. Id.
Pozzi’s cross-claims unambiguously asserted that the damages caused to
Perez’s home were the result of Scott’s improper or defective installation of the
windows. Amended Cross-Claim ¶ 14. More importantly, in Auto-Owners’
December 2000 letter denying coverage to Coral and Irby for Pozzi’s cross-claims,
Auto-Owners advised as follows:
In accordance with Florida Law, our policy will not extend coverage
for the damages consisting of the defective construction performed by
you or by your subcontractors. The costs incurred to remedy the
defective installation of windows are not damages covered under your
policy.
Letter from Auto-Owners to Coral (Dec. 27, 2000) (emphasis added). In other
words, from the very beginning of this case, Auto-Owners denied coverage for
2
Pozzi settled Perez’s claims and agreed to remedy the problems with the windows.
Pozzi I, 446 F.3d at 1180.
5
Pozzi’s cross-claims based solely on the argument that defective work performed
by the subcontractor Scott was not covered under the Policies. Auto-Owners never
asserted that Pozzi’s claims were not covered due to defects in the windows that
existed prior to installation.
Indeed, even on appeal before this Court, the statement of issues in Auto-
Owners’ brief identified one issue and framed the only issue as whether the
Policies covered “damages for repair and replacement due to defective
workmanship of the general contractor or its subcontract.” Appellant’s Br. at 1
(emphasis added). It is well-settled that an argument not raised or developed on
appeal is waived. See McFarlin v. Conseco Servs., LLC, 381 F.3d 1251, 1263
(11th Cir. 2004) (collecting cases). Even assuming arguendo that Auto-Owners at
one time might have raised the argument that the only liability and loss in this case
arose from defective manufacture of the windows and that coverage was
unavailable under the Policies due to defects in the windows themselves, Auto-
Owners did not raise that issue and thus waived it. The sole issue in this particular
case has always been whether, under Florida law, the Policies covered Coral’s and
Irby’s liability for repairing and replacing Scott’s defective installation of the
windows. See Pozzi I, 446 F.3d at 1188. Because the Florida Supreme Court has
now answered that question in the affirmative, we affirm the breach-of-contract
6
judgment in Pozzi’s favor.3 We remand for consideration of whether Pozzi is
entitled to attorney’s fees, but express no opinion about that issue.4
AFFIRMED and REMANDED.
3
The Florida Supreme Court’s conclusion that there “appear[ed] to be a factual issue as to
whether the windows themselves were defective or whether the faulty installation by the
Subcontractor caused damage to both the windows and other portions of the completed project”
seems to be based primarily on language in our original Pozzi I opinion. See Auto-Owners Ins.
Co., 984 So. 2d at 1247 (“The Eleventh Circuit characterizes the ‘defective work’ in this case in
two distinct manners.”). Our opinion in Pozzi I contained at least fourteen references to
“defective work,” but there are two stray references to “defective windows.” After reviewing the
record again and for the reasons already outlined above, we conclude there is no factual dispute
in this coverage lawsuit, and the only issue on appeal is whether the Policies covered “damages
for repair and replacement due to defective workmanship of the general contractor or its
subcontractor.” Appellant’s Br. at 1.
4
We note that in 2005, after a joint motion to stay by the parties, the magistrate judge
entered an order staying determination of attorney’s fees and costs until this appeal was resolved.
7