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Standing to be sued, but not to fight back? Florida’s Court of Appeals says not so fast

5/21/26

By: Audrey Smith

In Florida, it is undisputed that carriers can file suit seeking a declaratory judgment of  no coverage against insureds and potential third-party beneficiaries before a verdict has been obtained or settlement reached against an insured. However, to what many may see as a philosophical conundrum, it is also undisputed that third-party claimants cannot file suit against carriers under the same circumstances. Florida case law states unequivocally that a third-party claimant’s interests in a policy are insufficient to form the basis of a declaratory action until a verdict is obtained or settlement occurs. Prior to that, case law finds, a cause of action has not properly accrued. With this conundrum in mind, Florida’s Third District Court of Appeal takes up the issue of whether or not a third-party beneficiary being sued by a carrier in a declaratory action has standing to contest a motion for default judgement.

In the case of Lopez v. U-Haul Co. of Fla., No. 3D24-1488, 2026 WL 886035, at *3 (Fla. Dist. Ct. App. Apr. 1, 2026), the carrier sought a declaratory judgment that no coverage existed for a claim, suing both the insured and third-party claimants. When the insured did not make an appearance into the action, the carrier moved for a default judgment against both the insured and the third-party claimants. When the third-party claimants opposed this motion, the carrier argued that, based on Florida’s established case law, the claimants had no standing to fight back. The trial court agreed with the carrier and a default was entered against all defendants. Unsurprisingly, the third-party claimants appealed.

Upon review, the district court overturned the trial court’s ruling. While the Court highlighted this aforementioned anomaly in Florida case law, it intentionally made no opinion as to the appropriateness of the practice. The Court did, however, find that a party cannot be a defendant in an action, be bound by the Court’s rulings, but not have standing to defend itself. Therefore, the Court reversed and remanded.

In highlighting this area of case law, the Court seems to suggest that the case law, as it stands, is in direct conflict with itself. But, the Court notes, it has not been asked to make a determination or provide an opinion as to the correctness of this practice, and for that reason alone, specifically does not do so.  This case underscores the fact that while the practice of only carriers being able to file declaratory actions before a verdict is found or settlement reached is currently supported by case law, this may not be standard practice forever.

For any questions or further clarification, please contact Audrey Smith at audrey.smith@fmglaw.com or your local FMG attorney.

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