Cigarette Racing Team, Inc. v. Parliament Ins. Co.

• Decision Date: 25 March 1981
• Docket Number: No. 80-388,80-388
• Citation: 395 So.2d 1238
• Parties: CIGARETTE RACING TEAM, INC., Appellant, v. PARLIAMENT INSURANCE COMPANY, Appellee.
• Court: Florida District Court of Appeals

Page 1238

395 So.2d 1238

CIGARETTE RACING TEAM, INC., Appellant, v. PARLIAMENT INSURANCE COMPANY, Appellee.

No. 80-388.

District Court of Appeal of Florida, Fourth District.

March 25, 1981.

Cynthia L. Augustyn, of Mershon, Sawyer, Johnston, Dunwody & Cole, Miami, for appellant.

Anthony Reinert, of Underwood, Gillis, Karcher, Reinert & Valle, P. A., Miami, for appellee.

DOWNEY, Judge.

Appellant, Cigarette Racing Team, Inc., seeks review of an order granting a summary judgment in favor of appellee, Parliament Insurance Company.

The factual background of the case appears to be that Cigarette manufactured and sold to Cowan a boat which was damaged when it fell from a davit into the water during a storm. The mishap occurred on September 15, 1976, when a stern-lift eye ring broke and the stern of the boat plunged into the water and became submerged. Upon learning of the incident Cigarette notified its insurance agent and was assured by the agent that Parliament would investigate the matter. Thereafter, Parliament did handle the matter for some sixteen months.

On February 18, 1977, Cowan demanded that Cigarette pay for his damages. Cigarette, in turn, referred the matter to Parliament, which accepted the claim and proceeded to handle it without any reservation of rights or other notice that it denied coverage. In July, 1977, Cowan filed suit against Cigarette and Parliament proceeded to defend that suit. However, on January 3, 1978, Parliament notified Cigarette it was withdrawing its defense on the grounds that its policy did not cover the type of loss involved. Consequently, Cigarette secured private counsel to defend itself in the suit against Cowan and to file a third party complaint against Parliament.

Parliament maintained as a defense that it was not liable on the policy as coverage did not extend to the circumstances involved herein. Cigarette asserted that Parliament was estopped to raise the coverage defense because of the insurer's actions in representing Cigarette on the claim for a sixteen month period and to now allow a withdrawal by Parliament at this late date would substantially prejudice the rights of Cigarette.

The issue on appeal is whether this case is controlled by the general rule that insurance coverage cannot be extended by waiver or estoppel or the exception to the rule that, when an insurance company assumes the defense of an action with knowledge of the lack of coverage, it may be estopped to raise the coverage defense.

Admittedly, the general rule is that the doctrines of waiver and estoppel will not operate to create coverage in an insurance policy where none originally existed. Six L's Packing v. Florida Farm Bureau Mutual Insurance Co., 268 So.2d 560 (Fla. 4th DCA 1972), cert. discharged, 276 So.2d 37 (Fla.1973). There is an exception to the rule, however, which provides that "when an insurance company assumes the defense of an action, with knowledge, actual or presumed, of facts...