Florida law has long held that an insurer’s duty to defend is governed by the “eight corners” rule, so named after the four corners of the insurance policy and the four corners of the complaint against the insured. Under that rule, as long as the allegations within the four corners of the complaint fairly and potentially bring the claims against the insured within the coverage afforded by the four corners of the policy, the insurer has a duty to defend.
Nevertheless, Florida law recognizes an exception to that general rule for facts extrinsic to a complaint that are undisputed and make it “manifestly obvious” that the claims are outside the scope of the policy’s coverage. Courts have consistently held that this exception should only be applied in “extraordinary” circumstances. As some recent decisions demonstrate, however, policyholders and insurers alike both continue to struggle with the question of how extraordinary the circumstances must be before a court will consider extrinsic evidence.
In First Mercury Insurance Company v. First Florida Building Corporation, No. 8:20-cv-1929-CEH-HRM, 2022 U.S. Dist. LEXIS 159264 (M.D. Fla. Sept. 2, 2022), an insurer argued that evidence extrinsic to a complaint demonstrated that the claimant was the insured’s employee, such that an employer’s liability exclusion would apply, even though the complaint alleged he was not working on behalf of the insured at the time of the injury. The insurer argued that the evidence of the claimant’s employment status with the insured was “unassailable” because payroll records, paystubs, and W-2’s all demonstrated that the claimant was paid by the insured, and the president of the company that the claimant alleged was his employer swore that the claimant was not in fact that company’s employee. In response, the claimant pointed to his job application and an OSHA report generated after the incident, both of which identified the other company (i.e., not the insured) as his employer. The First Florida court concluded that it could not rely on the extrinsic evidence put forward by the insurer because whether the claimant was the insured’s employee was not an undisputed fact.
In Advanced Systems, Inc. v. Gotham Insurance Co., 272 So. 3d 523 (Fla. 3d DCA 2019), an insurer argued that it had no duty to defend an insured against claims that a failed foam fire suppressant system in an aircraft hangar resulted in damage to several airplanes because the foam was a “pollutant” and the policy featured an exclusion for loss caused by a “pollutant.” In support, the insurer sought to rely on a publicly-available material safety data sheet indicating that the foam used in that particular brand of suppressant system was a compound that qualified as a “pollutant” under the policy. In response, the insured argued that a single, unauthenticated document, without more, was not the type of extraordinary, undisputed extrinsic evidence that a court could rely on to adjudicate an insurer’s duty to defend. The Advanced Systems court ultimately sided with the insured.
In a case involving similar coverage issues, BBG Design Build, LLC v. Southern Owners Insurance Co., 820 Fed. Appx. 962 (11th Cir. 2020), an insurer argued that claims for bodily injury arising out of exposure to “construction debris” were not covered because evidence extrinsic to the complaint demonstrated that the debris was as a “pollutant” under the policy. The BBG Design court noted that, if it were confined to the allegations of the complaint, the insurer would have a duty to defend because the complaint never identified the “construction debris.” The court nevertheless sided with the insurer because (1) a pre-suit demand package indicated that the claimant was injured after exposure to substances that qualified as pollutants; (2) the claimant’s medical records made clear that her injuries arose out of exposure to pollutants; and, most, significantly, (3) earlier iterations of the complaint made clear that the construction debris included substances that qualified as pollutants.
In Atlantic Casualty Insurance Co. v. Legacy Roofing of FL/Ahead General Contractors & Restoration, LLC, No. 19-22043-Civ-WILLIAMS/TORRES, 2020 U.S. Dist. LEXIS 133700 (S.D. Fla. July 27, 2020), an insurer argued that facts extrinsic to a complaint alleging construction defect claims demonstrated that any property damage caused by the insured’s work occurred after the policy expired and was therefore not covered. Specifically, the insurer pointed out that the insured testified in the underlying case that he had not started work until after the insurer’s policy expired. And while the insured did not dispute that fact, he instead argued that there was still a duty to defend because planning for the construction project commenced during the policy period. The court ultimately sided with the insurer because it was “manifestly obvious” that the actual facts placed the claims outside the scope of the policy’s coverage.
As these recent cases demonstrate, courts mean what they say when they hold that undisputed evidence extrinsic to a pleading may be considered under Florida’s eight corners rule only in extraordinary circumstances. In BBG Design, the extraordinary circumstances were the earlier iterations of the complaint, which expressly identified facts, supported by other competent evidence, that squarely brought the claims within a policy exclusion. In Legacy Roofing, the extraordinary circumstances were the insured’s prior testimony that placed the claims outside the policy’s coverage.
With that said, First Florida demonstrates that the extrinsic evidence must be on a fact that is truly undisputable. Even overwhelming evidence of a particular fact—in that case, that the claimant was an employee—cannot be considered by a court in analyzing an insurer’s duty to defend if there is any competent evidence that puts the fact in dispute. Similarly, Advanced Systems demonstrates the need for the extrinsic evidence to be overwhelmingly persuasive such that it is “manifestly obvious” that the claims are not covered. A single unauthenticated document, even if not meaningfully disputed by the insured, may not be enough to trigger’s Florida’s exception to the four corners rule.
