ARE ATTORNEYS’ FEES AWARDED TO A PLAINTIFF PURSUANT TO FLORIDA’S CONDO ACT COVERED UNDER A COMMERCIAL GENERAL LIABILITY INSURANCE POLICY?
Hugh J. Connolly, Esq. • Volume 3, Issue 5 May 2009

INTRODUCTION
Pursuant to § 718.303, Fla. Stat., the prevailing party in an action between a unit owner and a condominium association is entitled to recover attorneys’ fees. Whether attorneys’ fees awarded to a plaintiff pursuant to this provision of Florida’s Condominium Act are covered under a commercial general liability insurance policy turns on the language of the insurance contract between the insurer and its insured. Generally, a CGL insurance policy provides that the insurer will “pay those sums that the insured becomes obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.”

In addition, a CGL insurance policy further provides coverage for “[a]ll costs taxed against the insured in the ‘suit’” pursuant to the supplementary payments provision of the policy. Thus, an insurer is liable for attorneys’ fees under these provisions only if attorneys’ fees are deemed to be damages or taxed costs under its insurance policy.

DO ATTORNEYS’ FEES CONSTITUTE “DAMAGES” WITHIN THE MEANING OF A STANDARD CGL POLICY?
In Florida, it is generally held that attorneys’ fees are not damages, and as such, they are arguably not damages within the meaning of a standard CGL insurance policy. In Scottsdale Ins. Co. v. Haynes, 793 So.2d 1006 (Fla. 5th DCA 2001), the court held that an insurance carrier was not obligated to indemnify its insured against an attorneys’ fee award assessed against it pursuant to Florida’s Assisted Living Facilities Act.

The court reasoned that the plain wording of the insurance policy at issue did not encompass liability for attorneys’ fees since attorneys’ fees are not commonly understood to constitute damages. Similarly, in First Specialty Ins. Co. v. Caliber One Indem. Co., 988 So.2d 708 (Fla. 2d DCA 2008), the court held that a carrier was not obligated to reimburse its insured for statutorily awarded attorneys’ fees since attorneys’ fees are not damages.

Although there does not appear to be any Florida decision applying this principal to attorneys’ fees awarded under Florida’s Condominium Act, the same rationale should still apply, and a strong argument can be made that such attorneys’ fees do not constitute damages within the meaning of a standard CGL policy.

However, in Assurance Co. of Am. v. Lucas Waterproofing Co., 581 F.Supp.2d 1201 (S.D. Fla. 2008), a federal court held that attorneys’ fees which are attributable to claims that are otherwise covered under the policy do constitute damages. In so holding, the court did not engage in a contractual analysis of the meaning of the term “damages”. Instead, the court based its holding on the assumption that an insurer not faced with paying an attorneys’ fee award can choose to aggressively defend a claim which may ultimately increase the liability of the insured while simultaneously decreasing its own liability.

DO ATTORNEYS’ FEES CONSTITUTE “TAXED COSTS” WITHIN THE MEANING OF A STANDARD CGL POLICY?
Liability insurers are responsible for the payment of taxable costs over and above policy limits in accordance with the provisions of the supplementary payments provision of the policy. Thus, an insurer is responsible for the payment of statutorily awarded attorneys’ fees to a plaintiff only if the fee award can be considered a species of taxable costs. Attorneys’ fees recoverable by statute are regarded as costs only when specified as such by the statute or contract which authorizes the recovery. Spiegel v. Williams, 545 So.2d 1360 (Fla. 1989); Royal Ins. Co. v. Barrs, 99 So. 668 (Fla. 1924).

The prevailing party fee provision of Florida’s Condominium Act does not specifically provide that an award of attorneys’ fees be taxed as costs. As such, this statute does not trigger coverage under the supplementary payments provision of a standard CGL insurance policy. However, it is necessary to review the specific terms of any applicable declaration of condominium, which generally contain prevailing party attorneys’ fees provisions. If the declaration does not specifically state that attorneys’ fees constitute taxable costs, then there is no coverage for the fees under the supplementary payments provision of the policy.

CONCLUSION
An argument can be made based on Florida law that attorneys’ fees awarded to a claimant pursuant to Florida’s Condominium Act are not covered under a standard CGL insurance policy. As such, liability insurers should consider reserving their rights to deny such coverage.

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