The U.S. Eleventh Circuit Court of Appeals, applying Florida law, recently affirmed that an insurer was obligated to defend its insured and not entitled to a jury trial on the veracity of certain factual allegations in the underlying complaint which gave rise to the insurer’s duty to defend. Addison Ins. Co. v. 4000 Island Blvd. Condo. Ass’n, Inc., et al., 2017 WL 6616690 (11th Cir. Dec. 28, 2017).
The insured, a subcontractor, was hired to paint balcony railings for a condominium building. The condominium association sued the insured for breach of express warranty, including allegations that the insured’s defective paint finishes had caused property damage. The insured sought coverage under its CGL policy. The insurer brought an action for declaratory judgment and moved for summary judgment, arguing that it was not obligated to defend because the condominium association had sued the insured for breach of warranty rather than for property damage and that allegations of property damage were unsupported by evidence. The court denied the insurer’s motion for summary judgment. On the insured’s motion for clarification, the district court granted summary judgment on the basis that the underlying complaint clearly alleged facts that brought the claim within coverage under the policy. The insurer appealed.
The Eleventh Circuit affirmed, refusing to recognize the limited exception to the “eight corners rule” in which a court may consider extrinsic facts. The Eleventh Circuit explained that principle was not applicable where there is no manifestly obvious unalleged fact that would place the complaint outside of coverage. Thus, it found that the insurer was required to defend the insured in the underlying lawsuit and was not entitled to a jury trial on the veracity of the factual allegations.