Duty To Defend – Extrinsic Facts: 11th Cir. Refuses To Publish Opinion Permitting Insurer To Use Extrinsic Facts to Deny Coverageshoke2013
The United States Court of Appeals for the 11th Circuit, applying Florida law, denied Continental Insurance Company’s motion requesting publication of the Court’s March 20, 2014 opinion, which applied an exception to the general rule that requires a court to only refer to the underlying complaint and compare the facts within it to the language of the insurance policy at issue to determine whether the insurer has a duty to defend, sometimes referred to the 4 or 8 corners rule.
In its March 20th opinion, the 11th Circuit affirmed the district court’s summary judgment ruling finding the insurers had no duty to defend. The parties agreed that the underlying claims fell within the pollution exclusion of the commercial general liability policies at issue; however, the insured argued that the policies’ Pollution Buy Back Endorsement created an obligation for the insurer to defend. The Pollution Buy Back Endorsement provided an exception to the pollution exclusion when five conditions were met, one of which being that the occurrence must be reported in writing to the insurance company within 30 days after having become known to the insured. The insured argued that the broad duty to defend applied in the case because the complaint was silent as to when the insured provided written notice to the insurer which created the possibility of coverage. The court disagreed, citing a Florida Supreme Court ruling that found an exception to the general rule where an insurer’s reason for denying coverage is based on factual issues that would not normally be alleged in the complaint. See Higgins v. State Farm Fire and Cas. Co. 894 S.2d 5, 10 n.2 (Fla. 2005). The court then considered the tender letter to the insurer in addition to the facts in the underlying complaint and the policy language, finding that the insurer did not have a duty to defend. The court also rejected the insured’s contention that the insurer must file a declaratory judgment action in order to rely on facts outside of the underlying complaint as a basis for denial of a duty to defend.
The 11th Circuit did not provide any detail or insight into its decision not to publish the March 20th opinion, but it may have decided to deny the motion because it applied established Florida state law. Alternatively, the appellate court also may not have wanted to create precedent that would disrupt the long-established principle that courts look only to the complaint and the policy to determine whether an insurer has a duty to defend. Composite Structures, Inc. v. Continental Ins. Co., No. 12-15866 (11th Cir. June 5, 2014).