Trigger: A Previously Unsettled Issue That Now Appears to be Settled
By Ellen G. Smith, Esq.
Boyle, Gentile & Leonard, P.A.
Two main trigger theories have been recognized in Florida. The “manifestation” trigger and the “injury-in-fact” trigger. Under the manifestation trigger the property damage occurs when the property damage manifests itself and/or could have be discoverable by reasonable inspection. Carithers v. Mid-Continent Cas. Co., 782 F. 3d 1240, 1245 (11th Cir. 2015). The “injury-in-fact” trigger identifies that the property damage occurs when the property is damaged. Id. Recent Florida decisions have leaned toward an injury-in-fact trigger. Id.; Travelers Prop. Cas. Co. of Am. v. Amerisure Ins. Co., 2015 WL 5769247, at *4 (N.D. Fla. 2015); Voeller Const., Inc. v. Southern-Owners Ins. Co., 2014 WL 1779289 (M.D. Fla. May 5, 2014); Trovillion Const. & Development, Inc. v. Mid-Continent Cas. Co., 2014 WL 201678 (M.D. Fla. Jan. 17, 2014); Axis Surplus Ins. Co. v. Contravest Constr. Co., 23 Fla. L. Weekly Fed. D 279 (M.D. Fla. June 5, 2012) and Johnson-Graham-Malone, Inc. v. Amerisure, 18 Fla. L. Weekly Supp. 870a (Fla. April 29, 2011), dismissed Amerisure Ins. Co. v. Johnson-Graham-Malone, Inc., 66 So. 3d 415 (Fla. 1st DCA 2011).
However, despite the trend towards holding the “injury-in-fact” trigger is the applicable trigger theory, a trigger theory has not officially been decided by the Florida Supreme Court. Importantly, courts are now recognizing that because of this unsettled trigger theory, that could be a reason an insurer has a duty to defend since any ambiguity in coverage sides with the insured. See Travelers Prop. Cas. Co. of Am., 2015 WL 5769247, at *4; Prudential Prop. and Cas. Co. v. Swindell, 622 So. 2d 467 (FIa. 1993); Westmoreland v. Lumbermens Mut. Cas. Co., 704 So. 2d 176 (Fla. 4th DCA 1997); and Hartnett v. Southern Ins. Co., 181 So. 2d 524, 528 (Fla. 1965).
The court in Travelers had to decide this issue as the parties disagree whether the “manifestation” or “injury-in-fact” trigger applied. Travelers Prop. Cas. Co. of Am., 2015 WL 5769247, at *3. The insurer argued the manifestation trigger applied and the property damage happened when the damages could have been discovered, therefore the property damage happened outside of the policy period. Id. The insured argued for the injury-in-fact trigger. Id. The Travelers court relied on Trizec Properties, Inc. v. Biltmore Construction Co., 767 F. 2d 810 (11th Cir. 1985), which applied the injury-in-fact trigger and held the insurer had a duty to defend because “the complaint alleged only that the damage could not be discovered until several years after the policy period ended”, as such from the allegations in the complaint the damage could have occurred during the policy period. The court then looked to the decision in Carithers, which had to decide the issue between which trigger theory applied. The Carithers court ultimately ruled that even if it did agree the manifestation trigger applies, that does not relieve the insurer from defending because the uncertainty of the law required the insurer to defend. Id. at 1246.
The Travelers court shied away from deciding whether a manifestation trigger or an injury-in-fact trigger applied, and simply held:
The bottom line is. The underlying complaint alleged damage caused by defective stucco work. For all that was alleged in the complaint, the damage may have occurred during the policy period, either after completion of the work (bringing the case within the your-work or completed-operations coverage) or perhaps even while the work was ongoing (bringing the case within the ongoing-operations coverage). Amerisure had a duty to defend the claims.
The result should not be surprising. The whole point of the contractual provision requiring [subcontractor] to obtain coverage was to protect against defective-stucco claims just like this. The reason [subcontractor] bought the coverage was to protect against claims just like this. Amerisure took a premium for accepting the risk of actions just like this. It had a duty to cover the risk. The plain terms of Amerisure’s policy so provide.
Id. at 4.
Insurance carriers should take these recent decisions as a warning. Given the remaining uncertainty of the applicable “trigger” in the law, it seems carriers would embrace their duty to defend proactively.