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Florida court hits the brakes: Insurer does not owe duty to defend in Fojon v. Ascendant

9/9/24

By: Catherine M. Carson-Freymann

On August 28, 2024, the Florida Third District Court of Appeal ruled an insurer did not have a duty to defend in Elizabeth Fojon, Appellant, v. Ascendant Commercial Ins. Co., 3D23-1400, 2024 WL 3956889, at *1 (Fla. 3d DCA Aug. 28, 2024). In Fojon, nonparty Kelbert Ferdinand was driving a 2010 Ford Crown Victoria as a taxi-for-hire for USA Taxi and Taxi Runner, Inc. USA Taxi had a commercial auto policy with Ascendant Commercial Insurance. However, Ferdinand was not listed as a driver on the policy, and the Crown Victoria was not listed as a covered vehicle. 

While driving the unlisted vehicle for USA Taxi, Ferdinand was involved in an accident with the plaintiff, Fojon. Fojon subsequently sued Ferdinand and USA Taxi for bodily injuries. Ascendant denied coverage and issued a reservation of rights letter, which it noted in its insurance disclosure response provided pursuant to Florida Statute section 627.426, the Claims Administration Statute. 

Fojon and USA Taxi later entered into a Coblentz Agreement, allowing Fojon to pursue a claim directly against Ascendant for coverage. Fojon then sued Ascendant, seeking a declaration of coverage and alleging violations of the Claims Administration Statute, which mandates timely notice by insurers if they intend to deny coverage. 

The central issue was whether Ascendant had a duty to defend and indemnify. The court held that an insurer’s duty to defend is broader than its duty to indemnify. However, since the vehicle and driver were not covered by the policy, Ascendant had no obligation to provide a defense. The appellate court upheld the trial court’s summary judgment in favor of Ascendant, emphasizing that the duty to defend is contingent upon the policy’s coverage. Since Ferdinand and the vehicle were not covered under the policy, Ascendant had no duty to defend or indemnify in the underlying lawsuit. 

Fojon also alleged violations of the Claims Administration Statute. The court clarified that the Statute only applies to coverage defenses not policy defenses. The Statute affects how insurers handle claims but does not alter the fundamental issue of whether coverage exists under the policy. The court defined a coverage defense as involving “forfeiture of insurance coverage that otherwise exists,” and a policy defense as “an assertion that the terms of the insurance contract do not provide for coverage.”  Since Ascendant’s denial was based on the policy’s coverage the Claims Administration Statute was inapplicable.  

The ruling reaffirms that an insurer’s duty to defend and indemnify is strictly tied to the specifics of the insurance policy and clarifies the distinction between coverage and policy defenses under Florida law. This decision provides important guidance for insurers and insured parties in understanding their rights and obligations. 

For more information, please contact Catherine M. Carson-Freymann at cathi.carson@fmglaw.com or your local FMG attorney.