Policy Does Not Cover Wildfire Destruction of Two Residential Homes During Construction When Insured Failed to Disclose the Construction on Insurance Application

By Zachary D. Sonenblum

In Travelers Prop. Cas. Co. of Am. v. Talcon Grp. LLC, the United States Court of Appeals for the Eleventh Circuit affirmed the district court’s entry of summary judgment in favor of Travelers, and held that the Policy excluded coverage for Talcon’s two residential homes destroyed by wildfire during construction, where Talcon failed to disclose said residential construction on his insurance application. More specifically, the Court found that the Policy, “when viewed together with the insured’s insurance application as required by Florida law, unambiguously provides coverage for only underground utility operations and the site development work tied to those operations [but] did not extend to the construction of the two [residential] homes.”

By way of factual background, the named Insured, Talcon Group LLC (“Talcon”)—an underground utility contractor for sewer, storm drains, and treatment plants—submitted its renewal application via email to Travelers in August 2019 (for renewal of its 2018 Policy) and advised Travelers that Talcon conducted “predominately water and sewer line work.” Additionally, consistent with that representation, Rick Nesius—one of the owners of the Property—testified that “[a]lmost every bit of Talcon’s work was underground utilities, such as sewers, storm drains, and treatment plant work.”

Significantly, Talcon did not dispute that the construction of the two residential homes began prior to the renewal application, and further failed to disclose said residential construction on the renewal application. Instead, Talcon merely disclosed the following on its application:

• Talcon listed “[u]nderground utility contractor” for “Description of Primary Operations”

• 98%-99% “Underground Utility” work compared to 1%-2% “Site Development” work

• 100% “Municipal/Government” work compared to 0% Residential Work
  • As examples of past or present projects, Talcon listed “[r]eplacement of underground sewer lines along Nine Mile Rd” and “[r]unning water line to 3 mile bridge.”

• Talcon had no known future projects but “w[ould] continue to focus on placing underground water, sewer, and drainage lines in Pensacola and Tallahassee.”

Although Travelers did not dispute that fires are covered perils under the Policy, Travelers denied the claim explaining that “[t]he construction of two single family homes is not the same type [of] work as the installation of underground utility contractor work, which is what Travelers agreed to cover; therefore, the two homes you constructed which were damaged by the fire are not Covered Property under the . . . [P]olicy.”

Talcon argued that because the Policy definition for “Installation” excluded preexisting buildings, coverage extended to the construction of new buildings like the two residential homes but the Eleventh Circuit rejected this argument, and found that “[v]iewing the Policy and the renewal application together, this exclusion at most suggests coverage for buildings constructed after the Policy took effect, if such buildings were part of Talcon’s underground utility or site development work.” (emphasis added).

Finally, the Eleventh Circuit further explained:

Talcon’s interpretation of this exclusion also helps to illustrate why its reading of the Policy is both unbounded and unreasonable. Talcon’s reading would seemingly require Travelers to cover any one-off construction project wholly unrelated to Talcon’s underground utility or site development work—again, the only types of work disclosed by or provided in the renewal application and Policy. If this exclusion extended coverage to the construction of the two residential homes, it would also extend coverage to any assortment of undisclosed types of work carrying different types of risk. Coverage would follow if Talcon decided to install a skylight at a mall, repair the roof of a church, or construct a skyscraper from the ground up. Travelers would be on the hook for any number of such projects, even though they were not disclosed in Talcon’s application, contemplated by Travelers, or provided for in the Policy. Taken as the whole, the Policy and Talcon’s renewal application do not support such a reading. See Intervest Constr. of Jax, Inc., 133 So. 3d at 497 (“Courts may not rewrite contracts, add meaning that is not present, or otherwise reach results contrary to the intentions of the parties.” (quotation marks omitted)).

Instead, the only reasonable reading of the Policy and the renewal application is that Travelers provided coverage for Talcon’s underground utility and site development work. The construction of the two residential homes is neither of those items and is not covered by the Policy.

See Travelers Prop. Cas. Co. of Am. V. Talcon Grp. LLC, 2023 U.S. App. LEXIS 33817 at *6 (11th Cir. 2023) (emphasis added).

Ultimately, as Talcon failed to disclose any residential construction on its renewal application, the Travelers Policy excluded coverage for the two residential homes destroyed by wildfire during construction.

Accordingly, the Eleventh Circuit upheld the district court’s decision, and affirmed entry of summary judgment in favor of Travelers.