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Legal Updates for Florida Coverage and Property Litigation

Florida’s Third District Court of Appeal rules insurance carrier had duty to defend.

Fernandez v. Old Republic Nat’l Title Ins. Co., Fla. 3d DCA, No. 3D23-1088, December 4, 2024

December 1, 2024

The Third District Court of Appeals reversed a trial court’s ruling and ordered the insurance carrier, Old Republic National Title Insurance Company, to defend its insureds in an ongoing title dispute suit. The insureds had appealed to the Third District Court after the lower court ruled in favor of Old Republic, finding Old Republic had no duty to defend its insured in an underlying lawsuit. 

The underlying title dispute suit sought to cancel the deed transferring a piece of property from the seller to Old Republic’s insureds based on the argument brought by another buyer, claiming their sale contract was superior and had been interfered with by Old Republic’s insureds. The underlying suit against Old Republic’s insureds also sought damages for tortious interference and civil conspiracy to commit fraud. 

The insurance policy issued by Old Republic to its insureds provided indemnification for the insureds along with imposing a duty to defend them for a large number of “covered risks,” including issues related to a disputed property title. However, when the insureds submitted their written request that Old Republic provide them a defense in the underlying suit, Old Republic notified them it would not provide them with a defense and that it was denying coverage for the tortious interference and conspiracy claims because those specific claims were not the type covered under the policy. 

Old Republic also denied coverage for the title rescission claim, asserting that such a claim was subject to an exclusion under the insurance policy. The exclusion reads as follows:

The following matters are expressly excluded from the coverage of this policy, and [Old Republic] will not pay loss or damage, costs, attorneys’ fees, or expenses that arise by reason of . . . (3) Defects, liens, encumbrances, adverse claims, or other matters . . . (a) created, suffered, assumed, or agreed to by the Insured Claimant[.]

Thus, according to Old Republic, the exclusion applied because the underlying lawsuit alleged the insureds “acted in concert with the seller to interfere with [the buyer’s] claimed superior contract rights.”

The lower court agreed with Old Republic’s argument that it did not have a duty to defend its insureds for the tortious interference and fraud claims because such claims were not “covered risks” under the policy. They also agreed with Old Republic’s argument that it was not obligated to defend its insureds for the title rescission claim because such a claim was excluded by the insurance policy. 

However, while the Third District Court disagreed, they ultimately concluded the lower court’s decision with regard to the tortious interference and fraud claims was correct. However, the Third District Court did not agree with the lower court’s analysis regarding the title rescission claim being subject to the exclusion relied upon by Old Republic. Rather, the Appeals Court found the rescission claim, as pled, did not exclude it from coverage under the insurance policy. As the court explained, at its core, the underlying lawsuit alleged nothing more than that the insureds entered into, and closed on, a backup contract with a seller on terms more favorable to the seller for the sale of a piece of property. The District Court stated, while the underlying lawsuit’s rescission claim was purportedly grounded on fraud allegations, those allegations were supported “by mere buzz words rather than specific factual allegations.” 

Thus, the court found the operative pleading’s mere generalized allegations did not bring it under the ambit of the exclusion relied upon by Old Republic. Consequently, they reversed the lower court’s judgment as to the title rescission claim and ordered Old Republic to defend its insureds. 

 

Legal Update for Florida Coverage & Property Litigation – December 2024 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2024 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.

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