Nationwide Mut. Fire Ins. Co. v. Keen, 94-0293
| Decision Date | 19 July 1995 |
| Docket Number | No. 94-0293,94-0293 |
| Citation | 658 So.2d 1101 |
| Parties | 20 Fla. L. Weekly D1667 NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Appellant, v. Michael KEEN and Charleen Keen, his Wife, Appellees. |
| Court | Florida District Court of Appeals |
Michael B. Davis of Paxton, Crow, Bragg, Smith & Keyser, P.A., West Palm Beach, for appellant.
Philip M. Burlington of Caruso, Burlington, Bohn & Campiani, P.A., and Schuler, Wilkerson, Halvorson & Williams, P.A., West Palm Beach, for appellee.
This appeal presents the issue whether a liability insurance carrier breaches a duty to defend its insured in pending litigation which does not allege a claim covered by the policy and where its insured had unequivocally disclosed facts to the carrier before suit was filed that negated any possible coverage. We conclude that Nationwide did not breach its duty to defend.
Before suit was filed in this case, the insured conceded to his carrier that on the occasion in question he operated the water craft with a 40-hp engine. Everyone agrees that this fact places any claim arising from the occurrence outside the coverage afforded by the policy. The question is whether there is any reason why a carrier must defend an insured who concedes a critical fact against his monetary interest that places a claim beyond the carrier's obligation to pay.
Appellee argues that the covenant to defend is broader than the covenant of coverage. That is one of those widely accepted legal shorthands that if accepted uncritically is calculated to mislead. It is true that the carrier's duty to defend an insured against a claim may extend to a claim as to which it is ultimately determined that there is no coverage. That circumstance arises when coverage depends on an ultimate, usually nonobjective, fact as to which the parties are in dispute but which is not resolved until a jury or a judge decides the issue. For example, when the plaintiff alleges that an insured acted negligently (for which the policy provides coverage), but the jury finds the act intentional (for which there is no coverage), the carrier may have to defend the insured at least until the critical fact is settled.
The covenant to defend in a liability policy is concededly an instrumental part of the indemnity package. Does that mean that the covenant to defend is broader than coverage? Or is it merely that it is different? Perhaps it is neither. In the hypothetical circumstance posed, the duty of defense--though relating to the coverage--is simply too unsettled to let the carrier walk away and leave its insured unprotected against the onslaught. To do so would rob the insured of a critical part of the policy and could even render the coverage impotent. What the shorthand really wants to convey is that the carrier must defend a claim that may ultimately be covered until it is certain that it is not covered. In that sense, the duty to defend combines with the duty of coverage: the covenant of coverage informs the duty to defend.
We have the following pertinent circumstances in this case. The insured conceded to the carrier shortly after the incident that a critical and objective fact placed any claim beyond coverage, i.e. that he operated the craft with an engine more powerful than the coverage afforded. That concession was backed up by corroborative evidence.
The complaint filed by the third party claimant does not allege anything about the horsepower of the craft. Nor did the claimant ever assert the existence of evidence tending to show that the horsepower of the engine was within coverage. In fact, the tack used by the claimant was...
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