Coverage Analysis
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  The Florida Supreme Court ruled in State Farm Fire & Cas. Co. v. CTC Development Corp., No. 91,717 (Fla. October 8, 1998)  that the undefined use of the term “accident” in the CGL definition of “occurrence” should extend coverage “not only to accidental events but also to injuries or damage not expected or intended from the standpoint of the insured.” The Supreme Court set aside its 1953 Gerrits opinion, in which the court had declared that even unintended injuries were not an “accident” if they were the “natural and probable consequences” of intentional acts.  In CTC, the court ruled that Gerrits had improperly applied tort concepts of foreseeability to contract claims.  Accordingly, the court found coverage for claims that a contractor had negligently sited the plaintiff’s home in violation of local setback requirements. 

  In general, a specific intent to injure must be proved. Allstate Ins. Co. v. Steinemer, 723 F.2d 873, 875 (11th Cir. 1984). Prior to 1989, a conflict existed among Florida's District Courts of Appeal as to whether an intent to injure could be inferred in more egregious cases.  In Landis v. Allstate Ins. Co., 546 So.2d 1051, 1053 (Fla. 1989), the Florida Supreme Court resolved this dispute, holding that intent would be inferred as a matter of law where the insured's conduct was inherently injurious, as in cases of sexual molestation.  This result will not be changed by the inclusion of alternative legal theories alleging negligent or reckless conduct.  Allstate Ins. Co. v. Bailey, 723 F.Supp. 665, 668 (M.D. Fla. 1989).  Earlier, the U.S. District Court had extended this inferred intent to injure rule to a case of sexual assault where the perpetrator was an older child.  Allstate Ins. Co. v. Roelfs, 698 F.Supp. 815 (D. Ala. 1987).

  The Florida District Court of Appeal has refused to give a separate meaning to "expected" and "intended."  Grange Mutual Casualty Co. v. Thomas, 301 So.2d 158, 159 (Fla. DCA. 1974).  The court refused to find that foreseeable injuries were "expected", holding that such construction would eliminate coverage for mere negligent acts. 

  An insured that intentionally brandished a gun in the hope of frightening away the plaintiff was held not to have intended the wounds that subsequently resulted when the  accidentally discharged.  In Prudential Property & Cas. Ins. Co. v. Swindal, 622 So.2d 467 (Fla. 1993), the Supreme Court of Florida declined to apply tort principles of foreseeability to insurance contracts, holding instead that an "intentional injury" exclusion did not apply where the immediate cause of the plaintiff's injuries was a negligent act.

  Allegations of sexual harassment have been held not to describe an "occurrence" since the conduct is necessarily intentional and harmful.  State Farm Fire & Cas. Co. v. Compupay, Inc., 654 S.E.2d 944 (Fla. App. 1995).

  Absence of mental capacity does not bar the application of an exclusion for intentional acts.  Prasad v. Allstate Ins. Co., 644 So.2d 922 (Fla. 1994)(stabbing by insane relative).

  Insurers are not required to prove that the insured expected or intended the precise resulting injury to defeat coverage.   State Auto Mut. Ins. Co. v. Scroggins, 592 So.2d 1194 (Fla. DCA5 1988)(insured's deliberate act in pulling chair out from under plaintiff was not an "occurrence" even if insured did not intend serious injury from resulting fall).  See also  Clemmons v. American States Ins. Co., 412 So.2d 906 (Fla. 5th DCA 1982), rev. denied, 419 So.2d 1196 (Fla. 1982).

  Intentional acts are not covered merely because they occur as self-defense.  Aetna Cas. & Sur. Co. v. Griss, 568 So.2d 903 (Fla. 1990).

  Florida Supreme Court ruled in Ranger Ins. Co. v. Bal Harbour Club, 549 So.2d 1005 (Fla. 1989) that insureds could not secure coverage for claims of intentional discrimination as a matter of public policy.


  In general, if any part of the suit is covered, the insurer must provide a defense to the entire action, at least until such time as the covered portion of the claim is eliminated from the suit.  Employers Commercial Union Ins. Co. of America v. Kottmeier,  323 S.2d 605 (Fla. DCA2 1975).  Thus, the Fifth Circuit has ruled that an insurer may not limit its payment of defense costs where there is a factual overlap between the covered and non-covered claims.  Harborside Refrigerated Services, Inc.  v.  IARW Ins.  Co., 759 F.2d 829 (5th Cir.  1985).

  A U.S. District Court adopted a Keene-style "pick and choose" trigger for pollution claims in CSX Corp. v. Admiral Ins. Co., 1996 U.S. Dist. LEXIS 17125 (M.D. Fla. November 6, 1996).  Similarly, a federal district court ruled that a non-settling insurer’s duty to defend was “joint and several” in a pollution case.  Miami Battery v. Boston Old Colony (S.D. Fla. May 1999).

  Where only part of the settlement relates to occurrences within the policy period, however, the settlement must be apportioned by determining which occurrences fell within the period of coverage.  Keller Industries v. Employers Mutual Ins. Co., 429 So.2d 779 (Fla. App. 1983).

  The Florida District Court of Appeal has rejected a contention that self-insurance is not insurance.  Aetna Casualty & Surety Co. v. Market Ins. Co., 296 So.2d 555, 558 (Fla. App. 1974). 


  Florida has both an intermediate appellate court and a state Supreme Court.  The District Court of Appeals is regionally subdivided into various separate Districts.


  The Florida Supreme Court has ruled a third party claimant may pursue an action against a liability insurer for violation of Florida's Unfair Claims Practices Act, Insurance Section 626.9641.  Auto-Owners Ins. Co. v. Conquest, 658 So.2d 928 (Fla. 1995).  See also Zebrowski v. State Farm Fire & Cas. Co., 673 So.2d 562 (Fla. App. 1996)(recognizing private right of action under Section 624.155(1)(b) of Florida Unfair Claims Practices Act).

  Further, the 11th Circuit has suggested that Florida courts would permit the assignment of claims against insurance companies based upon allegations that claims were handled in bad faith.  Forgione v. Dennis Pirtle Agency, Inc., 1996 U.S. App. LEXIS 23305 (11th Cir. September 5, 1996).

  A policyholder may pursue a claim for emotional distress as the result of the insurer's denial of his claim for disability benefits if he can show that the insurer did not act "fairly and honestly...and with due regard for his interests" under Fla. Stat. §624.155.  DiDomenico v. New York Life Ins. Co., 837 F.Supp. 1203 (M.D. Fla. 1993). 

  In considering whether an insurer has acted in bad faith in rejecting a policy limit settlement, the Florida District Court of Appeal declared in Robinson v. St. Farm Fire & Casualty Co., 583 S.2d 1063, 1068 (Fla. App. 1991), that a court should consider (1) whether the insured was able to obtain a reservation of rights; (2) efforts or measures taken by the insurer to resolve the coverage dispute promptly or in such a way to limit any potential prejudice to the insured; (3) the substance of the coverage dispute or the weight of legal authority on the coverage issue; (4) the insurer's diligence and thoroughness in investigating the facts specifically pertinent to coverage; and (5) efforts made by the insurer to settle the liability claim in the face of the coverage dispute.

  Florida has recognized a cause of action for an insurer’s negligent failure to settle within policy limits.  The existence of a coverage dispute is a factor to be considered in assessing whether the insurer was negligent in refusing to settle within policy limits.  Robinson v. State Farm Fire & Casualty Co., 583 So.2d 1063, 1068 (Fla. App. 1991).  Further, a demand to settle within policy limits is a necessary precondition to a lawsuit against an insurer for negligent failure to settle.  Seward v.  State Farm Mutual Auto Ins.  Co., 392 F.2d 723, 727 (5th Cir.  1968).

  A liability insurer is not precluded from paying its policy limits to settle claims against some (but not all) of its policyholders so long as it attempted to achieve a global settlement and did not discriminate between its policyholders with respect to the manner in which the defense is conducted.  Underwriters Guaranty Insurance Company v. National Mutual Fire Insurance Company, 578 S.2d 34 (Fla. App. 1991)

  An insurer may not be held vicariously liable for the malpractice of its appointed defense counsel in defending the insured.  Aetna Casualty & Surety Co. v. Protective National Ins. Co., 631 So.2d 305, 306 (Fla. DCA. 1993). 

  Unfair or deceptive consumer practices are proscribed by Fla. Stat. Ann. § 501.201 (West 1985).


  Held to encompass claims for mental distress in McGuire v. American States, Inc. Co., 491 So.2d 606 (Fla. Dist. App., 1986), aff'd. on other grounds, 510 So.2d 1227 (Fla. App. 1987). 

 In the absence of an explicit definition to the contrary, Florida courts construe a “sickness” as a condition interfering with one’s usual activities or one that keeps someone from performing his usual occupation.  Continental Cas. Co. v. Gold, 194 So.2d 272, 276 (Fla. 1967).  The Supreme Court in Gold approved the definition of sickness as set forth in 29 Am. Jur., Insurance § 1154, 301:

The words “sickness” and “disease” are technically synonymous, but when given the popular meaning as required in construing a contract of insurance, “sickness” is a condition interfering with one’s usual activities, whereas disease may exist without such result; in other words, one is not ordinarily considered sick who performs his ususal occupation, though some organ of the body may be affected, but is regarded as sick when such diseased 


  Eleventh Circuit affirmed lower court ruling in City of Del Ray Beach v. Agricultural Ins. Co., 85 F.3d 1527 (11th Cir. 1996) that a suit against the City by abutters for having polluted their water supply was not based on a claim that the plaintiff had sought to interfere with the insured's possessory rights or had intended to occupy the property in any manner and therefore did not allege a claim for "wrongful invasion of the right of private occupancy." 

  Although the "occurrence" policy limitation bars coverage for intentional acts, ambiguity has been found given the conflict between this limitation on coverage and the grant of insurance for intentional torts under "personal injury" coverage provisions.  Purrelli v. State Farm Fire & Casualty Co., 698 So.2d 618 (Fla. DCA 1997) (invasion of privacy)

  The Eleventh Circuit has asked the Florida Supreme Court to advise whether allegations of “unwelcome conduct” or sexually suggestive statements fall within the scope of “occurrence” coverage or “personal injury” coverage for “invasion of privacy” or are subject to exclusions for intentional acts or whether such coverage is against public policy.  Allstate Ins. Co. v. Ginsberg, No. 99-10983 (11th Cir. December 20, 2000).


  Although Florida requires prejudice in order to avoid coverage on the basis of late notice, a presumption of prejudice exists which must be overcome by evidence from the insured that its tardiness, in fact, did not prejudice the insured. National Gypsum Co. v. Travelers Ind. Co., 417 So.2d 254, 256 (Fla. 1982); Tiedtke v. Fidelity & Cas. Co., 222 So.2d 206 (Fla. 1969)(insured failed to overcome presumption of prejudice despite evidence that insurer denied the claim based solely upon review of police report without further investigation); Laster v. U.S.F. & G. Co., 293 So.2d 83 (Fla. App. 1974); City Management Group Corp. v. American Reliance Ins. Co., 528 So.2d 1299 (Fla. App. 1988).

  A policyholder's duty to give notice arises when there has been an occurrence that would lead a reasonable and prudent person to believe that a claim for damages would arise.  Ideal Mut. Ins. Co. v. Waldrep, 400 So.2d 782, 785 (Fla. DCA3 1981).

  In order to prevail in Florida on a coverage defense that the insured breached the cooperation clause in a liability policy, the insurer "must show that it has exercised diligence and good faith in bringing about the cooperation of its insured and must show that it has complied in good faith with the terms of the policy."  Ramos v. Northwestern Mut. Ins. Co., 336 So. 2d 71, 75 (Fla. 1976).  Accord, American Fire & Cas. Co. v. Collura, 163 So. 2d 784, 788 (2d DCA), cert. denied, 171 So. 2d 389 (Fla. 1964). Moreover, the insurer must establish that it has been substantially prejudiced "in defense of the cause" before the insurer will be released of its obligation to indemnify or pay under the liability policy.  E.g., Ramos v. Northwestern Mut. Ins. Co., 336 So. 2d at 75; Bontempo v. State Farm Mut. Auto Ins. Co., 604 So. 2d 28, 29 (Fla. 4th DCA 1992).  See  Rustia v. Prudential Prop. & Cas. Ins. Co., 440 So. 2d 1316, 1317 (3d DCA 1983), review denied, 450 So. 2d 488 (Fla. 1984) (holding that the liability insurer in that case had not demonstrated that it had been substantially prejudiced, as a matter of law, where, although the insurer had not been able to locate the insured and argued that it had therefore not been able to prepare a defense, "there is no evidence that the insurer has attempted to contact, interview, or depose any of the twelve witnesses listed in the parties' pretrial catalogues ... and it cannot be conclusively presumed that the insured will not appear for trial."). 


  Insurers have the burden of proving the applicability of policy exclusions.  Jefferson Ins. Co. v. Sea World of Florida, 586 So.2d 95 (Fla. 5DCA 1991) and Highlands Ins. Co. v. McCutchen, 486 So.2d 4 (Fla. App. 1986).  However, a federal district court ruled in Hudson Ins. Co. v. Double D Management Co., Inc., 768 F.Supp. 1549 (M.D. Fla. 1991) that  an insured has the burden of showing that pollution discharges are "sudden and accidental" where the exclusion otherwise applied.  Similarly, in Safeco Ins. Co. v. Hawkeye Security Ins. Co., 218 So.2d 759 (Fla. 6DCA 1969) that the insured had the burden of demonstrating that the state's Financial Responsibility Act superseded an exclusion.

  Where underlying award included both covered and excluded elements of damages, the Florida Supreme Court held in U.S. Concrete Pipe Co. v. Budd, 437 So.2d 1061 (Fla. 1983) that the burden was on the insurer to allocate the damages.


  For the most part, Florida places the greatest emphasis on the location where the contract was entered into, particularly the place of delivery.  Herndon v. GEICO, 530 So.2d 516 (Fla. App. 1988); Sturiano v. Brooks, 523 So.2d 1126, 1129 (Fla. 1988)(auto policies) and Jemco, Inc. v. United Parcel Service, Inc., 400 So.2d 499, 500 (Fla. App. 1981).  Federal courts have predicted that the Florida Supreme Court would recognize an exception to the general rule of lex loci contractus where a policy insures risks located in several states and a claim arises out of an insured risk in a state other than the one where the policy was issued. Shapiro v. Associated International Ins. Co., 899 F.2d 1116 (11th Cir. 1990).

  Relying on Shapiro, a federal court ruled in LaFarge Corp. v. Travelers Indemnity Co., No. 93-475-CIV-25C (M.D. Fla. February 22, 1996) that the law of Florida should be applied to pollution claims arising out of the insured's operations in Florida, even though the policy was issued in Texas.

  More recent federal decisions also apply lex loci contractus.  See Trumpet Vine Investments, infra; Sure-Snap Corp. v. Shure, 983 F.2d 1015, 1018 (11th Cir. 1993) (“[t]he law is well settled in Florida that matters bearing on the validity and interpretation of a contract are governed by the law of the state where the contract was made”); Tang How v. Edward J. Gerrits, Inc., 961 F.2d 174 (11th Cir. 1992); Merriman v. Convergent Business Systems, Inc., 1993 U.S. Dist. Lexis 10528, *15-16, 7 Fla. L. Weekly Fed. D. 253 (N.D. Fla. 1993); Matter of Celotex Corp., 152 B.R. 661 (Bankr. M.D. Fla. 1993).


  Where a conflict of interest exists between the parties, the insurer should retain independent counsel that is "mutually agreeable" to both parties. Fl. St. §627.426(2) (1996)  If agreement cannot be reached, the resolution of the issue will be presented to the court.  Continental Ins. Co. v. Miami Beach, 520 S.2d 232, 233 (Fla. App. 1988). 

  The District Court of Appeal has declared that "mutually agreeable" requires full consultation with the insured; the insurer may not unilaterally appoint counsel and assume that the lawyer is agreeable to the insured mainly because the policyholder has not objected.  American Empire Surplus Lines Ins. Co. v. Gold Coast Elevator, Inc., 701 So.2d 904 (Fla. DCA4 1997).

  Under Florida law, an insurer cannot be sued for the acts of counsel inasmuch as it is presumed that the insurer has no right of control over the professional conduct of attorneys.  Aetna Casualty & Surety Company v. Protective National Insurance Company of Omaha,  631 S.2d 305 (Fla. App. 1993), review denied, 641 S.2d 1346 (Fla. 1994).  Likewise, the Florida District Court of Appeal has ruled that an insurer cannot be sued for the  malpractice of the attorney that it hired to represent its policyholder.  The court declared in Marlin v. State Farm Mutual Automobile Ins. Co., No. 4D99-0710 (Fla. App. April 26, 2000) that even though the insurer had retained the attorney, it had no right to supervise or control counsel’s professional conduct and therefore cannot be held responsible for his litigation decisions.


  To date, the Florida Supreme Court has not ruled on whether Superfund clean-up costs are covered "damages."  Federal district court cases considering the issue are divided. See CSX Corp. v. Admiral Ins. Co., 1996 U.S. Dist. LEXIS 17125 (M.D. Fla. November 6, 1996); U.S. v. Pepper's Steel and Alloys, Inc., 823 F.Supp. 1574 (S.D. Fla. 1993); Ranger Ins. Co. v. Perry Lumber Co., Case No. 92-40007-WS (N.D. Fla. May 25, 1993); Hudson Ins. Co. v. Double D Management Co., Inc., 768 F.Supp. 1549 (M.D. Fla. 1991)(coverage required) and W. C. Hayes v. Maryland Cas. Co., 688 F.Supp. 1513 (N.D. Fla. 1988)(no coverage). Older cases had ruled that the costs of complying with injunctive orders are not covered, however.  In Re Celotex Corp., No. 90-10016-8B1 (N.D. Fla. February 23, 1993);  Aetna Cas. Ins. Co. v. Hanna, 224 F.2d 499 (5th Cir. 1955)(cost of comply with order to remove dirt from plaintiff's land not "damages") and Garden Sanctuary, Inc. v. Ins. Co. of North America, 292 So.2d 75 (Fla. App. 1974)(repairs to cemetery).


  The filing of declaratory judgment actions in Florida is controlled by Section 86.011. 

  Under Florida law, factual issues may not be resolved in a declaratory judgment action if those issues are common to the tort and declaratory judgment actions.  Vanguard Ins. Co. v. Townsend, 544 So.2d 1153 (Fla. App. 1989).   Further, where a suit alleges covered and non-covered claims, declaratory judgment actions can generally not be used to determine whether the insurer has a duty to defend.  The District Court of Appeal ruled in Allstate Ins. Co. v. Conde, 595 So.2d 1005 (Fla. App. 1992), however, that this general rule does not apply if the covered and non-covered claims are mutually exclusive and the issue is dispositive of the insurer's coverage obligations. 

  Applying Florida law, the U.S. Court of Appeals for the Fifth Circuit ruled in Duke v. Hoch, 468 F.2d 973 (5th Cir. 1972) that if an insurer is defending a case under a reservation of rights, defense counsel has the obligation to advise the policyholder of the availability of a special verdict as a remedy for resolving the issue of allocation of covered versus non-covered damages.  If the insurer fails to avail itself of this opportunity, it bears the burden of subsequently demonstrating what portion of the verdict against its insured was not covered under its policy.

  An insurer’s request for permissive intervention to pose special interrogatories prior to the entry of a verdict so that damages could be allocated between covered and non-covered causes of action was rejected in Employers Insurance Company of Wausau v. Lavender, 506 S.2d 1166, 1167 (Fla. DCA 1987).

  The Florida Supreme Court has ruled that a declaration in a third-party complaint that an insurer had an obligation to provide a defense to the main action is a final appealable order that may be reviewed without waiting for a final determination of the insured's liability in the main action.  Canal Ins. Co. v. Reed, 666 So.2d 888 (Fla. 1996). 

  In 1993, the Florida legislature enacted Section 627.4136 which bars the plaintiff from including an alleged tortfeasor's insurance carrier as a party in the suit against the alleged tortfeasor.

  Attorneys fees may be awarded to insureds and their assignees who prevail in coverage suits under Section 627.428.  However, the District Court of Appeal held that a primary insurer could not recover its fees from an excess insurer in AEGIS v. Ranger Ins. Co., 560 So.2d 242 (Fla.3dCA 1990).  More recently, the Florida Supreme Court has held that such fees include the cost of those aspect of the proceeding involving the computation of the fees to which it is entitled.  State Farm Fire & Cas. Co. v. Palma, 629 So.2d 830 (Fla. 1993).  However, the recovery of contingent fees under Section 627.428 may not exceed the multiplier range of 1-2.5 that the Florida Supreme Court established in 1990 in the Quangstrom case. 

  Although an insured may be entitled to an award of attorneys' fees for prosecuting a coverage claim against a liability insurer, this rule is not absolute and may be modified where the insured obtains only a partial recovery.  See Harborside Refrigerated Services, Inc. v. IARW Ins. Co., Ltd., 759 F.2d 829, 831 (11th Cir. 1985) (reversing award of attorneys' fees where the major part of the judgment for the insured on the merits had been reversed).  See also Massachusetts Casualty Ins. Co. v. Forman, 516 F.2d 425 (5th Cir. 1975). 


  Florida permits direct action claims by tort claimants against liability insurers.

  Claimants may also pursue claims based upon an assignment of rights pursuant to a consent judgment/settlement with the insured.  However, there are limitations to such claims. In Steil v. Florida Physician's Ins. Co. Reciprocal, 448 So.2d 589, 592 (Fla. DCA. 1984), the District Court of Appeals declared that "the conduct of the insured can hardly be characterized as fraudulent simply because he stipulates to a large settlement figure in order to obtain his release from liability.  He has little or nothing to lose because he will never be obligated to pay.  As a consequence, the settlement of liability and damages may have very little relationship to the strength of the plaintiff's claim.  Due to this problem, the ordinary standard of collusion or fraud is inappropriate.  Thus, we hold that a settlement may not be enforced against the carrier if it is unreasonable in amount or tainted by bad faith. 


   --Claims Manuals

  Such discovery has been held to have no probative value in determining the mutual intent of the parties as reflected in the insurance contracts. Atlantic Wood Indus., Inc. v. Reliance Ins. Co., No. CA-X89-3934-4 (Ga. Super. June 24, 1991)

   --Drafting History

   –Insured’s Documents

 The Florida District Court of Appeal has ruled that a lower court erred in ruling that liability insurers were entitled to compel disclosure of counsel communications to the insured concerning underlying environmental liability matters.  In Eastern Airlines, Inc.  v.  USAA, No. 98-842 (Fla.  DCA 3 August 26, 1998), the court ruled that the “cooperation clause” did not supercede the attorney client privilege nor had the insured waived the attorney client privilege by putting these claims “at issue” by suing its insurers.  Further, the court declared that the insured’s failure to prepare an adequate privilege log should not have resulted in the sanction of stripping away the attorney client privilege. 

   --Other Policyholder Claims

   --Reinsurance Information



  An insurers' duty to defend is determined solely by the allegations of the complaint against the insured, not by the actual facts, nor the insured's version of the facts.  Trizec Properties, Inc. v. Biltmore Construction Co., 767 F.2d 810, 811-12 (11th Cir. 1985); Marr Investors, Inc. v. Gerco, 621 S.2d 447, 449 (Fla. DCA4 1993); Reliance Ins. Co. v. Royal Motor Car Corp., 534 S.2d 922, 923 (Fla. DCA4 1988).  This is true even if the underlying allegations are patently structured so as to create coverage.  Sunshine Birds and Supplies, Inc. v. USF&G, 696 So.2d 907 (Fla. DCA3 1997).

  However, extrinsic facts may sometimes be considered.  In Nateman v. Hartford Cas. Co., 544 So.2d 1026 (Fla. App. DCA3 1989), rev. denied, 553 So.2d 1166 (Fla. 1989) the Third District Court of Appeal ruled that a liability insurer had no duty to defend a doctor that was not employed by its insured (and thus an additional insured) merely because the underlying suit alleged an employment relationship.  The court ruled that "the mere allegations of the plaintiff's petition may not create an obligation of the part of the insurer to defend where no such obligation previously existed."

  Even if an insurer has no duty to defend at the outset of litigation, a duty may arise as the result of subsequent amendments to the complaint.  Baron Oil Co. v. Nationwide Mutual Fire Ins. Co., 470 S.2d 810, 814 (Fla. 1st DCA 1985).  However, the insurer will only have a duty to defend if the new allegations are called to its attention.  Hagen v. Aetna Casualty & Surety Co., 675 So.2d 963 (Fla. DCA5 1996). 

  Where a complaint alleges facts that are partially covered and partially not covered, the insurer has a duty to defend the entire action.  Grissom v. Commercial Union Ins. Co., 610 S.2d 1299, 1307 (Fla. DCA1 1992) and Sunshine Birds and Supplies, Inc. v. USF&G, 696 So.2d 907 (Fla. DCA3 1997).  In Irvine v. Prudential Prop. & Cas. Co., 630 So.2d 579 (Fla. App. 1993) the court noted that the insurer's remedy was to bring a DJ that would be binding on the insured and the underlying plaintiff.

  An insurer that agrees to defend a suit has no right to claim contribution for the costs of defense from other insurers whose policies might apply.  Continental Cas. Co. v. United Pacific Ins. Co., 637 So.2d 270 (Fla. App. 1994);  Argonaut Ins. Co. v. Maryland Cas. Co., 372 So.2d 960 (Fla.3d DCA 1979)(rejecting "equitable subrogation" claims).

  Where an insurer wrongfully refuses to defend, the insured may enter into a reasonable settlement even without the insurer's consent.  Steil v. Florida Physicians Insurance Reciprocal, 448 S.2d 589 (Fla. DCA2 1984).  This is true even in cases where the insurer is defending under a reservation of rights but has failed to comply with statutory requirements for the designation of independent counsel.  American Empire Surplus Lines Ins. Co. v. Gold Coast Elevator, Inc., 701 So.2d 904 (Fla. DCA 1997).  Such settlements may not be enforced against the insurer, however, if they are unreasonable in amount or tainted by bad faith.

  Nevertheless, the District Court of Appeals has ruled that a liability insurer is not bound by a stipulation of judgment that entered into by its insured without the carrier’s consent.  In American Reliance Insurance Co.  v. Perez, No.  96-1096(Fla.DCA3 June 24, 1998), the Third District declared that, whereas policy holders are free to enter into consent judgments to protect their interests in cases where the insurer has refused to provide a defense, the same rule does not apply where the insurer is defending under reservation of rights.  Accordingly, the court declared that the insured had breached the duty to cooperate by stipulating to liability and assigning its rights of action against the insurer.

  An action for negligent failure to settle within the policy limits was permitted in North American Van Lines, Inc. v. Lexington Ins. Co., 678 S.2d 1325 (Fla. App. 1996), even though the insured was able to settle the claim, despite the refusal of its umbrella and excess liability insurers, for an amount within the combined aggregate limits.  The District Court of Appeal distinguished cases that might involve a wrongful refusal to defend.

     The duty to defend was held to encompass a duty to appeal an adverse verdict in Aetna Ins. Co. v. Borrell-Bigby Electric Co., 541 So.2d 129 (Fla. App.2dCA 1989).

  A state trial court has ruled in CSX Transportation, Inc. v. Admiral Insurance Company, Duval No. 96-00415-CA (Fla. Cir. Ct. December 21, 2000) that various excess liability insurers whose policies expressly exclude legal costs from the definition of insured “loss” had no obligation to contribute to the defense of numerous underlying toxic tort claims against the insured railroad.  Judge Davis rejected the insured’s contention that this language was merely intended to confirm that defense costs do not erode policy limits.  Further, the court declared that those policies restricting the payment of defense costs to sums that were incurred with the consent of the insurer were not waived by the insurers’ coverage positions.

  Federal district court ruled that a PRP letter was not a "suit" in Racal-Datacom, Inc. v. INA, No. 95-1749 (S.D. Fla. February 11, 1998).


  Section 627.426(2) provides that an insurer that wishes to deny coverage based upon a particular defense must assert it in a written reservation of rights sent by registered or certified mail no later than thirty days after it knew or should have known of a coverage defense.  Furthermore, no later than sixty days after issuing the reservation of rights letter or receiving a summons and complaint naming its insured as a defendant, whichever is later, but in no case later than thirty days before trial, the insurer must either (1) notify the insured by registered or certified mail that it will not agree to provide a defense; (2) obtain a nonwaiver agreement from the insured following full disclosure of the specific facts and defenses; or (3) retain independent counsel which is "mutually agreeable" to the parties. 

  Recent Florida cases have found that Section 627.46 only applies to policies issued in Florida and only creates an estoppel as to policy conditions and other questions of "forfeiture." See AIG Ins. Co. v. Block Marina Investment, Inc., 544 So.2d 998 (Fla. 1989)(Florida legislature did not intend by Section 627.426(2) "to create coverage under a liability insurance policy that never provided that coverage"); National Union Fire Ins. Co. of Pittsburgh v. Goldman, 548 So.2d 790 (Fla. App. 1989) and Sheehan v. Lumbermens Mut. Cas. Co., 504 So.2d 776 (Fla. App. 1987), further review denied, 518 So.2d 1278 (Fla. 1987).

  Florida courts recognize that waiver and estoppel cannot be used as a basis for expanding the scope of coverage to include risks that were not insured to begin with. See Doe v. Allstate Ins. Co., 653 So.2d 371 (Fla. 1995); Spencer v. Assurance Co. of America, 39 F.3d 1146 (11th Cir. 1994); Raymond v. Halifax Hospital Medical Center, 466 So.2d 253 (Fla. App. 1985); Unijax, Inc. v. Factory Ins. Ass'n, 328 So.2d 448 (Fla. App. 1976).  In certain instances, however, liability insurance has been found to exist by estoppel where the insured relied to his detriment on the insurer's express assurances that he was covered. See generally, Peninsular Life Ins. Co. v. Wade, 425 So.2d 1181 (Fla. App. 1983); Prudential Ins. Co. v. Clark, 456 F.2d 932 (5th Cir. 1972).  Further, in Doe, supra, the court ruled that its decision in AIG was not intended to overrule the principle that an insurer might be barred from raising defenses to indemnity if, by defending its insured without raising coverage defenses of which it was aware, it caused prejudice to the insured.

  The failure of a liability insurer to specifically make reference to a policy exclusion in its denial letter did not estop the insurer from later raising the exclusion as an additional basis for limiting coverage.  Aetna Casualty & Surety Co. of America v. Deluxe Systems, Inc., 1998 WL 26475 (Fla. DCA 4 May 27, 1998). 

  In U.S. Fire Ins.  Co.  v.  Fleekop, 682 S.2d 620 (Fla.  DCA 1996), the District Court of Appeal ruled that an insurer had waived its right to contest the sufficiency of an insured’s notice where it was silent for ten months and did not request additional information or otherwise question the notice provided until after it had already been sued.  Unlike waiver, the doctrine of estoppel requires detrimental reliance.  American States Ins.  Co.  v.  McGuire, 510 So.2d 1227, 1229 (Fla.  DCA 1987). 


  A cause of action for failing to settle a claim within the policy limits does not arise until such time as all underlying appeals have been concluded.  Lexington Ins. Co. v. Royal Ins. Co., 1995 WL 21323 (N.D. Fla. February 24, 1995).

  A primary insurer owes the same duty to exercise good faith to an excess insurer as it does to an insured.  RLI Ins. Co. v. Scottsdale Ins. Co.,  691 So.2d 1095 (Fla. DCA4  1997).  In RLI, the District Court of Appeal had that an actual excess judgment need not have been issued for an excess insurer to bring a common law bad faith action against a primary insurer for failure to settle within limits. 

  A excess policy condition requiring the insured to maintain stated underlying limits was upheld by the Third District Court of Appeal in Travelers Ind. Co. v. Overseas Ace Hardware, Inc., 550 So.2d 12 (Fla.3dCA 1989), rev. denied, 557 So.2d 867 (Fla. 1990).

  Federal district court ruled in CSX Corp. v. Admiral Ins. Co., 1996 U.S. Dist. LEXIS 17125 (M.D. Fla. November 6, 1996) that excess insurers were not relieved of an obligation to reimburse defense costs despite "ultimate net loss" language not stating that the policies would not pay "litigation expenses."  the court ruled that this language was inconsistent with the general promise to pay "expenses" in the policies.  Further, the court ruled that certain excess policies that required the consent of the insurer before defense costs were owed need not be complied with as the insurers had waived any right to insist upon such language. 

  Subsequently, however, a state trial court ruled in CSX Transportation, Inc. v. Admiral Ins.Co, Duval No. 96-00415-CA (Fla. Cir. Ct. December 21, 2000) that various excess liability insurers whose policies expressly exclude legal costs from the definition of insured “loss” had no obligation to contribute to the defense of numerous underlying toxic tort claims against the insured railroad.  Judge Davis rejected the insured’s contention that this language was merely intended to confirm that defense costs do not erode policy limits.  Further, the court declared that those policies restricting the payment of defense costs to sums that were incurred with the consent of the insurer were not waived by the insurers’ coverage positions.


  Florida has adopted the "cause" test, albeit it with contradictory results.  In American Indemnity Co. v. McQuaig, 435 So.2d 414 (Fla. App. 1983), the insured struck police officers with three successive shotgun blasts; each shot was held to be a separate "occurrence." Similarly, in Liberty Mutual Ins. Co. v. Rawls, 404 F.2d 880 (5th Cir. 1968), a car that struck two other cars gave rise to separate "occurrences."  By contrast, in Southern International Corp. v. Poly-Urethane Ind., Inc., 353 So.2d 646 (Fla. App. 1977), the negligent application of a particular roof sealing product to numerous buildings was a single "occurrence."

  In early 2001, the Florida Supreme Court was asked to determine whether injuries caused by firing of two gunshots in rapid succession qualify as one or multiple “occurrences” under a homeowner’s  policy.  In Koikos v. Travelers Ins. Co., No. 00-11611 (11th Cir. February 7, 2001), the Eleventh Circuit concluded that although the federal District Court had considered the overall incident as involving a single “occurrence,” it was unclear whether the policy’s definition of “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions" was sufficient to distinguish this case from McQuaig, where, in the absence of a definition of “occurrence,”  the District Court of Appeal ruled that each separate gunshot was a new “occurrence.” 

  Various suits and class action claims against a law firm for giving inaccurate advice and making false statements concerning certain securities all arose out of the “same or related wrongful acts” and that CNA’s indemnity obligation was therefore restricted to a single “claim” limit.  Even though the insured’s course of conduct involved different types of acts, the court ruled in Continental Cas. Co. v. Wendt, No. 99-12520  (9th Cir. March 7, 2000)  that “these acts were tied together because all were aimed at a singular particular goal.” The fact that they injured different persons did not render the acts “unrelated.” 


  The Florida Supreme Court ruled 4-3 on July 1, 1993 that the pollution exclusion is unambiguous and precludes coverage for pollution that results from discharges that are not abrupt or which occur intentionally. Dimmitt Chevrolet v. Southeastern Fidelity Ins. Group, 636 So.2d 700 (Fla. 1993).  In so doing, the court withdrew an earlier 4-3 decision in the same case in which it had found that "sudden" was susceptible of more than one meaning and therefore cannot be interpreted to bar coverage for gradually-occurring pollution.  In both rulings, the court held that the exclusion has a distinct meaning from "occurrence" and does bar coverage for intended discharges, even if the insured did not intend to cause property damage. 
  Despite this split, the Florida Supreme Court reaffirmed Dimmitt II in 1994, vacating a District Court of Appeal ruling that had held the pollution exclusion to be ambiguous based on Dimmitt I. Liberty Mut. Ins. Co. v. Lone Star Industries, Inc., 648 So.2d 114 (Fla. 1994).  On remand, the Third District Court of Appeal ruled in Liberty Mut. Ins. Co. v. Lone Star Industries, Inc., 661 So.2d 1218 (Fla. App. 1995) that the drippage of chemicals from treated wood onto soil, leaking chemical storage containers and the overflow of chemical collection pits were not "sudden and accidental."  the court also refused to find that the subsequent migration of such discharges was within an exception in Liberty Mutual's exclusion for "underground seepage of which the insured is unaware," holding that the focus of the exclusion is on the initial discharge of pollutants into the environment and that any "secondary discharges" or subsequent movement or migration thereafter is irrelevant.

  Earlier cases had split on this issue. In Industrial Indemnity Ins. Co. v. Crown Auto Dealerships, Inc., 731 F.Supp. 1517 (M.D. Fla. 1990), aff'd, 24 F.3d 151 (11th Cir. 1994)(which resulted in the 11th Circuit's certified question to the Florida Supreme Court); W. C. Hayes v. Maryland Cas. Co., 688 F.Supp. 1513 (N.D. Fla. 1988) and Hudson Ins. Co. v. Double D Management Co., Inc., 768 F.Supp. 1549 (M.D. Fla. 1991), the courts ruled that pollution that is "gradual, continued over a long period of time, and was a normal result of the crop sprayer's regular business practices" is neither sudden nor accidental.  Earlier decisions had ruled that the exclusion should only apply to "active polluters." See Payne v. USF&G, 625 F.Supp. 1189 (S.D. Fla 1985) and Pepper's Steel & Alloys, Inc v. USF&G, 668 F.Supp. 1541 (S.D. Fla. 1987). Accord Safe Harbor Enterprises, Inc. v. USF&G, Monroe County Circuit Court No. 90-1099-CA-03 (Fla. May 13, 1991).  More recently, a federal district court ruled in Consolidated American Ins. Co. v. Ivey's Steel Erector's, Inc., Case No. 90-205 (M.D. Fla. March 12, 1991) that the exclusion does not apply to claims arising out of toxins in the workplace.  But see American Home Assur. Co. v. Devcon International, Inc., Case No. 92-6764 (S.D. Fla. September 27, 1993), aff'd mem., 28 F.3d 118 (11th Cir. 1994)(quarry dust)(depublished by request of court).

  The Eleventh Circuit has ruled that it is the initial disposal of pollutants that is the focus of the exclusion, not subsequent discharges or releases of contaminants that may occur thereafter. See LaFarge Corp. v. Travelers Ind. Co., 118 F.3d 1511 (11th Cir. 1997)(rejecting argument that "secondary discharges" were accidental).  As a consequence, however, initially abrupt sources of pollution do not cease to be sudden just because the leaks persist for a period of time.  Southern Solvents, Inc. v. New Hampshire Ins. Co., 91 F.3d 102 (11th Cir. 1996).  The Eleventh Circuit reversed a lower court's ruling that a dry cleaner could not obtain coverage for discrete "sudden" spills of TCE because of its failure to take prompt steps to correct this pollution.  The Eleventh Circuit found that the District Court's public policy argument of forcing the insured to "face the calamity" before demanding insurance coverage was not appropriate.

  Most of these cases have focused on the meaning of "sudden."  Dimmitt would support a finding that intentional releases are not "accidental" even if the resulting injuries were unintended.  Relying on Dimmitt I, for instance, the Devcon court ruled that the dispersal of mineral dust at a quarry were a known by-product of the insured's operations and could not therefore have been an "accidental" discharge. 

  In Celotex Corp. v. AIU Ins. Co., 175 B.R. 98 (Bkrptcy M.D. Fla. 1994), Judge Baynes opined that indoor releases of asbestos fibers are a discharge of pollutants "into the atmosphere."

  In Florida Farm Bureau Ins. Co. v. Birge, 659 So.2d 310 (Fla. App. 1994), review denied (Fla. 1995) a divided panel of the Court of Appeal ruled that a first party pollution exclusion was ambiguous insofar as it failed to precisely define "pollutants or contaminants" so as to encompass raw sewage that backed up into the insured's premises.
  The term "arising out of" has been defined in other contexts as having a broader meaning than "caused by" and means "originating from," "having its origin in,"  "growing out of," "flowing from," "incident to" or "having a connection with."  Hagen v. Aetna Casualty & Surety Co., 675 So.2d 963 (Fla. DCA5 1996). 

  The absolute exclusion has been given broad effect by the Florida Supreme Court.  In Deni Associates of Florida, Inc. v. State Farm Fire & Casualty Ins. Co., 711 So.2d 1135 (Fla. 1998) the court ruled that the exclusion defeated coverage for personal injury claims that respectively involved a spill of copying fluid inside the insured's offices and the spraying of insecticide by the insured on its fruit grove. Nor would it agree to restrict the scope of the exclusion to "environmental or industrial pollution."  the court further rejected any effort to interject ambiguity on the basis of the alleged drafting history of the exclusion.  Rather, it concluded that the meaning of the words "irritant" and "contaminant" were plain and clearly extended to "ammonia."  Justices Weld and Overton dissented in the Deni case, contending that the court's analysis was overly broad and allowed the exclusion to "swallow the coverage." 

  A few months after Deni, the Eleventh Circuit declared in  Technical Coating Applicators, Inc. v. USF&G, 157 F.3d 843 (11th Cir. 1998) that the absolute pollution exclusion barred coverage for personal injury claims by students and school employees who were exposed to fumes from polyurethane foam that a roofing contractor was applying.  The court declined to distinguish Deni on the basis that TC was a  contractor, nor did it find that the exclusion was inapplicable because the underlying claim was that the applied a useful product negligently.   Further, the Eleventh Circuit denied that its holding turned the policy into a nullity, as coverage still existed for a wide range of other potential losses that could occur in the course of roofing work that did not involve toxic fumes.  See also Auto Owners Insurance Company v. City of Tampa Housing Authority, 231 F.3d 1298 (11th Cir. 2000)(TPE precludes coverage for lead paint claims against municipal landlord).

  The exclusion was also upheld in City of Del Ray Beach v. Agricultural Ins. Co., 85 F.3d 1527 (11th Cir. 1996)(claims by abutting property owners against city for causing water pollution).  A federal district court also ruled in City of St. Petersburg v. USF&G, Case No. 92-1224-CIV-T-23C (M.D. Fla. August 15, 1994) that the exclusion precluded coverage for toxic tort claims arising out of the insured's former coal gas facility.  The Court of Appeal has also upheld the application of the exclusion to a crop duster in State of Florida Dept. of Environmental Regulation v. Chemairspray, Inc., 667 So.2d 816 (Fla. App. 1995).  See also International Recovery Corp. v. National Union Fire Ins. Co., No. 93-16803 (Fla. Cir. Ct. June 7, 1995)(bodily injuries caused by an accidental discharge of lye) and West American Ins. Co. v. Band and Desenberg, 925 F.Supp. 758 (M.D. Fla. 1996), aff'd 138 F.3d 1428 (11th Cir. 1998)(sick building claims).

  The Florida District Court of Appeal has reversed a lower court’s finding that an automobile accident resulting from a field that was being burned by the insured was subject to the absolute pollution exclusion.  In Florida Farm Bureau General Insurance Company v. Insurance Company of North America, 2000 Fla. App. LEXIS 7031 (5th Dist. June 9, 2000), the court declared that a motion to dismiss with prejudice should not have been granted owing to remaining questions of fact with respect to whether the claims were subject to the “hostile fire” exception in the exclusion. 

  In response to these rulings, the Florida Senate Banking and Insurance Committee voted on March 20, 2001 to approve Senate Bill 1094 which would declare that pollution exclusions “may exclude from coverage only incidents and hazards that ‘involve long term environmental degradation or an environment-wide exposure.’” As initially drafted, the bill had excluded “incidents and hazards that are traditionally associated with environmental pollution” which the sponsors eventually agreed was too vague to be useful.  A similar bill (HB1445) has not yet been acted on by the House Natural Resources and Environmental Protection Committee.


  A policy requiring physical injury to tangible property did not cover an ice rink operator's suit for lost profits since the insured contractor's failure to properly freeze the rink surface resulted in "economic loss" only and did not allege property damage beyond the insured's own product or work.  Transcontinental Ins. Co. v. Ice Systems of America, Inc., No. 93-1378 (M.D. Fla. March 29, 1994). 


  It is against public policy to permit insurance coverage for the consequences of intentional misconduct.  Ranger Ins. Co. v. Bal Harbour Club, Inc., 549 So.2d 1005, 1007 (Fla. 1995)(racial discrimination) and Mason v. Florida Sheriff's Self-Insurance Fund, 699 So.2d 268 (Fla.  DCA 1997)(rape). 


 The general rule is that punitive damages are uninsurable as a matter of public policy.  Northwestern Cas. Co. v. McNulty, 307 F.2d 432, 440 (5th Cir. 1962); Country Manors Assoc. v. Master Antenna Systems, 534 So.2d 1187 (Fla. App. 1988) and Travelers Ins. Co. v. Wilson, 261 So.2d 545, 549 (Fla. 1972).  Coverage is allowed, however, if the punitive award is because of the conduct of others (vicarious liability) and not because of the insured's own actions.  Schwab v. First Appalachian Ins Co., 58 F.R.D. 615, 620 (S.D. Fla. 1973); U.S. Concrete Pipe Co. v. Bould, 437 So.2d 1061 (Fla. 1983); Employers Ins. of Wausau v. Lavender, 506 So.2d 1166 (Fla. App. 1987).


  On a certified question from the District Court of Appeal, the Florida Supreme Court declared in Deni Associates of Florida, Inc. v. State Farm Fire & Casualty Ins. Co.,  711 So.2d 1135 (Fla. 1998) that it would not adopt the doctrine of reasonable expectations, particularly in the absence of any ambiguity in the policy wordings. 

  Under Florida law, an ambiguous policy term will be construed in favor of the policyholder and against the insurer.  Gas Kwick, Inc. v. United Pacific Insurance Company, 58 F.3d 1536, 1539 (11th Cir. 1995).  However, “ambiguity” is not invariably present when a contract requires interpretation.  Id.  Furthermore, “the mere failure to provide a definition for a term involving coverage does not necessarily render the term ambiguous.”  State Farm Fire & Casualty Company v. Metropolitan Dade County, 639 S.2d 63 (Fla. App. 1994). 

  Insurance policies are to be interpreted according to their written terms without resort to extrinsic evidence.  Lee v. Montgomery, 624 So.2d 850 (Fla. App. 1993).  Complexity alone is not an excuse for finding ambiguity.

  Policies may not be reformed without evidence of mutual mistake.  Golden Door Jewelry Creations, Inc. v. Lloyd's Underwriters Non-Marine Association, No. 91-5223 (11th Cir. December 6, 1993).

  Under Florida law, an ambiguity may arise where a grant of insurance is in conflict with endorsements providing greater coverage.  In such circumstances, the clause affording greater coverage will prevail.  GEICO v. Burak, 373 So.2d 89 (Fla. DCA3 1979) and Steuart Petroleum Co. v. Certain Underwriters at Lloyd's, 1997 Fla. App. LEXIS 4003 (Fla. DCA1 April 18, 1997). 


  To date, Florida courts have rejected all theories of alternative liability.  Celotex v. Copeland, 471 So.2d 533 (Fla. 1985)(rejecting market share for asbestos claims) and Morton v. Abbott Laboratories, 538 F.Supp. 593 (M.D. Fla. 1982)(rejecting all theories as regards DES).  However, the Florida legislature enacted a statute in 1994 permitting market share liability for suits against cigarette manufacturers.


  There is relatively little Florida case law on this subject.  Non-environmental cases suggest that Florida law would adopt an "injury in fact" theory.  See Trizec Properties v. Biltmore Constr. Co., 767 F.2d 810 (11th Cir. 1985)(coverage for negligent installation of decks at shopping mall "triggered" when damage was actually sustained even though problem was not discovered until after policy expired).  Similarly, the state District Court of Appeals has ruled that damage arising out of a ruptured pipeline was triggered as of the date that the pipeline exploded, not early periods of time when the insured contractors may have been negligent in its construction or maintenance.  Hardaway Co.  v.  USF&G, No.  97-01848 (Fla.  App.  November 6,1998) (Georgia law).  The court rejected the insured’s reliance on the Eljer installation trigger theory.

  In Young v. Ins. Co. of North America, 870 F.2d 610 (11th Cir. 1989), the same court, applying New York law, held in a case involving the negligent installation of a gas grill during policy period, that there was no coverage for an explosion that occurred after the policy expired.  However, the court suggested that a different rule might apply for claims involving exposure to harmful chemicals, where the exposure itself might be deemed to be the injury, notwithstanding the fact that harm would not be discovered for years thereafter.  Judge Baynes declared in In Re Celotex Corp., No. 90-10016-8B1 (N.D. Fla. February 23, 1993) that these cases were not a reliable source of Florida law but did predict that Florida would not adopt a "triple trigger" for asbestos or pollution claims.

  A federal district court applied a “manifestation” trigger to whitening” claims suffered by plaintiffs whose properties had been coated with the insured’s “water sealant product.”  In  Harris Specialty Chemicals, Inc. v. U.S. Fire Insurance Company, No. 3:98-CV-351 (M.D. Fla. July 7, 2000), Judge Schlessinger ruled that the trigger of coverage for such claims was the date on which the whitening appeared, not the date when the product was applied or incorporated into the structure.

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