In Pozzi Window Co. v. Auto-Owners Ins. Co., No. 05-10559 (11th Cir. Sept. 26, 2008), the U.S. Court of Appeals for the Eleventh Circuit affirmed the judgment against an insurer, finding that the general contractor’s commercial general liability (“CGL”) policy covered damages from water leakage around windows that a subcontractor had installed in a multimillion dollar home.

The Eleventh Circuit previously certified the following question to the Florida Supreme Court:

DOES A STANDARD FORM [COMMERCIAL] GENERAL LIABILITY POLICY WITH PRODUCT[S] COMPLETED OPERATIONS HAZARD COVERAGE, SUCH AS THE POLICIES DESCRIBED HERE, ISSUED TO A GENERAL CONTRACTOR, COVER THE GENERAL CONTRACTOR’S LIABILITY TO A THIRD PARTY FOR THE COSTS OF REPAIR OR REPLACEMENT OF DEFECTIVE WORK BY ITS SUBCONTRACTOR? 

The Florida Supreme Court answered the certified question in the negative, but later issued a revised opinion, stating that the condition of the windows at the time of installation determined whether the CGL policy covered a claim to repair or replace them.  The court reasoned that damage to windows, which were not initially defective but were defectively installed, was physical injury to tangible property and, thus, covered by the CGL policy.  Conversely, the court found that, if the windows were both initially defective and defectively installed, they were a “defective component,” and the claim for repair or replacement was not covered.  Because the facts concerning this outcome-determinative, factual issue were conflicting, the court returned the case to the Eleventh Circuit.

On remand, the Pozzi court found the insurer had waived any argument that the windows were originally defective by not raising that issue on appeal.  Accordingly, the court affirmed the judgment against the insurer.

The Pozzi opinion can be found here.  The Supreme Court’s revised opinion was previously reported here, and the original and withdrawn opinion was reported here.