Middle District of Florida Addresses Split in Authority Regarding Insureds’ Claims for Declaratory Relief

May 4, 2023 / News / Writing and Speaking

By Kelly M. Vogt and Benjamin S. Burnstine

In Vaughan v. Indep. Specialty Ins. Co., the United States District Court for the Middle District of Florida, Orlando Division, denied the insurer’s motion to dismiss the insured’s claim for declaratory relief which the insured pled together with a claim for breach of contract.

In this case, the insured filed a complaint alleging one count for breach of contract (Count I) and one count for declaratory relief (Count II). The insurer moved to dismiss Count II arguing (1) that the insured does not actually have any uncertainty as to the meaning of the policy language as evidenced by the allegations in Count I that the insurer breached the policy, and (2) that Count II is subsumed within, and otherwise duplicative of, Count I.

In rejecting the insurer’s first argument, the Court construed Count II as seeking relief under the Federal Declaratory Judgment Act and found that Count II was sufficiently pled to state a cause of action for declaratory relief because it presented an actual substantial controversy for the Court to resolve, i.e., whether the insurance policy provides coverage for the insured’s claimed damages.

With respect to the insurer’s second argument, the Court recognized a split in authority on this issue between the Middle District of Florida and the Southern District of Florida, but ultimately rejected the insurer’s argument based upon the established precedent out of the Middle District cited to by the insured. However, in doing so, the Court underscored the fact that the insurer never sought leave to file a reply, and, therefore, never addressed the Middle District precedent.

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