February 9th, 2018
By, Alex Brockmeyer, Esq.
Generally, Florida requires an insurance carrier assess its duty to defend based on the allegations set forth in the operative complaint and the provisions of the pertinent insurance policy. Jones v. Fla. Ins. Guar. Ass’n, Inc., 908 So. 2d 435, 443 (Fla. 2005). This standard is often referred to as the “eight corners” rule. Certainty regarding a carrier’s defense obligation is, as Judge Zehmer explained in Baron Oil Co. v. Nationwide Mut. Fire Ins. Co., 470 So. 2d 810 (Fla. 1st DCA 1985), the reason why Florida utilizes this standard:
The Florida Supreme Court in National Union Fire Insurance Co. v. Lenox Liquors, Inc., supra, held that if coverage was not indicated by the allegations of the complaint, later stipulations filed in the action which indicate that insurance coverage would apply do not create a duty to defend. We hold that the reverse is also true. The later filings below, which tended to indicate that the damage claims pursued against appellant/insured were not covered by the insurance policy issued by appellee, do not defeat the duty to defend. Were this not the case, the indefiniteness as to whether the insurer should begin or should continue to defend a suit would create another major issue in many insurance lawsuits, placing insurer and insured on opposing sides. We think that result would not well serve either. With a duty to defend set by the initial pleading, each party knows his standing and need not examine every new document filed to determine if the claims may be focusing on noncovered damages.
Id. at 814 (quoting Kings Point West, Inc. v. North River Ins. Co.,412 So. 2d 379, 380 (Fla. 2d DCA 1980)) (emphasis added).
In Higgins v. State Farm Fire and Casualty Company, 894 So. 2d 5 (Fla. 2004), the Florida Supreme Court, among other issues, considered whether an insurer’s duty to defend is determined based on the underlying complaint’s allegations. Id. at 9. Ultimately, the Court reaffirmed the Florida’s commitment to the eight corners rule. Id. at 10.
In doing so, however, Higgins acknowledged that an exception to the eight corners rule might exist that would permit the use of a declaratory action to adjudicate a factual issue upon which an insurer’s duty to defend depended. Id. at 10 n. 2. Importantly, however, Higgins made clear this could only occur in the rare scenario where the “duty to defend is based on factual issues that would not normally be alleged in the underlying complaint.” Id. (emphasis added).
Since Higgins, carriers have attempted to extend this narrow exception beyond that contemplated by the Florida Supreme Court. One of the more recent attempts occurred in Addison Insurance Company v. 4000 Island Boulevard Condominium Association, 2017 WL 6616690 (11th Cir. 2017). In 4000 Island, the carrier attempted to expand the exceptions to the eight corners rule to include instances where the operative complaint’s allegations are “unsupported by evidence….” Id. at *7. According to the carrier, Higgins entitled it to venture outside the eight corners of the operative complaint and turn the duty to defend analysis into a fact-intensive inquiry. Id. The Eleventh Circuit squarely rejected this contention:
In Higgins, the Florida Supreme Court, answering a certified question from a lower state appellate court, held that Florida’s declaratory judgment statutes “authorize declaratory judgments in respect to insurance policy indemnity coverage and defense obligations in cases in which it is necessary to resolve issues of fact in order to decide the declaratory judgment action.” Higgins, 894 So.2d at 15. The Florida Supreme Court concluded, in other words, that a declaratory judgment action does not become unavailable to an insurer merely because some issue of fact is disputed. Id.
Higgins in no way abrogated the normal principles of summary judgment. Nor did it hold, as [carrier] contends, that any time an insurer disputes a fact, the insurer is “entitled to a determination of such facts … particularly where the underlying allegations at issue appear baseless.” To the contrary, Higgins expressly reaffirmed the eight corners rule: “[A]n insurer’s obligation to defend is determined solely by the complaint if suit has been filed.” Id. at 10. And the very next year, the Florida Supreme Court reaffirmed the eight corners rule again in Jones, 908 So.2d at 442-43. We find no reason to disturb the district court’s application of this settled Florida law.
Id. The Eleventh Circuit’s opinion in 4000 Island is an important because it reaffirms Florida’s commitment to the eight corners rule and the certainty the rule promotes.