After a year of litigation, however, Homeowners Choice filed suit against Ms. Hurchalla, Lake Point, SFWMD, and Martin County, seeking a determination that Ms. Hurchalla's policy did not provide coverage for the claims asserted against her for "intentional acts" but covered only bodily injury or property damage.

Ms. Hurchalla filed an answer and denied the allegations regarding lack of coverage and also raised affirmative defenses of laches, estoppel, waiver, failure to state a cause of action, and breach of the duty of good faith and fair dealing.

The trial court denied Homeowners Choice's motion for summary judgment, finding disputed issues of fact regarding waiver, estoppel, and laches.

After the Lake Point litigation resulted in a verdict against Ms. Hurchalla, Homeowners Choice filed a renewed motion for summary judgment, arguing that because the jury found against Ms. Hurchalla on an intentional tort, there were no disputed issues of material fact. Homeowners argued that under the policy, coverage was excluded for intentional torts.

Ms. Hurchalla opposed the motion, arguing both that Homeowners Choice had not negated her affirmative defenses and that she had not received a reservation of rights letter required by Florida Statutes Section 627.426(2).

The trial court granted Homeowners Choice's motion, determining that the claim and verdict were based on an intentional tort and that Ms. Hurchalla had no coverage under the Homeowners Choice insurance policy.

In rejecting Ms. Hurchalla's estoppel defense, the trial court relied on Doe v. Allstate Insurance Co., 653 So. 2d 371 (Fla. 1995). The court interpreted Doe as holding that the fact that an insurance company assumed representation of an insured did not mean that an event that was not covered under the policy was covered and that coverage under a policy could not be extended by the doctrine of estoppel.

Ms. Hurchalla and Lake Point appealed.

The Appellate Court's Decision

The appellate court reversed.

In its decision, the appellate court explained that Ms. Hurchalla raised five affirmative defenses, including estoppel, but that Homeowners Choice's renewed motion for summary judgment failed to address any of them and the trial court granted summary judgment without addressing those defenses. According to the appellate court, "[t]his was error."

The appellate court stated that the trial court may have presumed that the affirmative defenses were legally insufficient by citing to Doe, but the appellate court ruled that Doe did not support summary judgment in this case.

The appellate court explained that, in Doe, an insured was sued for an intentional tort. Allstate initially provided the insured a defense but did not send a written reservation of rights to the insured regarding coverage, as required by Section 627.426(2). Subsequently, Allstate filed an action for declaratory relief in federal court asking the court to determine that the policy did not afford coverage to the insured. The district court agreed that there was no coverage and granted summary judgment to Allstate. Upon an appeal to the Eleventh Circuit, the court certified an issue to the Florida Supreme Court. The minor's parents argued that summary judgment should not have been granted because Allstate was estopped to deny coverage because it had not complied with Section 627.426(2). In resolving the issue, the Florida Supreme Court held:

[W]hen the insurer undertakes the defense of a claim on behalf of one claiming to be an insured, we have recognized substantial duties on the part of both the insurer and the insured. If an insurer erroneously begins to carry out these duties, and the insured, as required, relies upon the insurer to the insured's detriment, then the insurer should not be able to deny the coverage which it earlier acknowledged. However, we clearly state that the insured must demonstrate that the insurer's assumption of the insured's defense has prejudiced the insured. It is the fact that the insured has been prejudiced which estops the insurer from denying the indemnity obligation of the insurance policy.

Thus, the appellate court reasoned, under Doe, an insurance company may be estopped from denying coverage, even where the policy did not cover the claim, where the insured had been prejudiced by the insurer's assumption of the insured's defense.

Here, the appellate court pointed out, Ms. Hurchalla alleged equitable estoppel as an affirmative defense. The appellate court ruled that Ms. Hurchalla's claim was legally sufficient, and Homeowners Choice did not negate it factually. Therefore, the trial court erred by granting summary judgment.

The appellate court then noted that, as to the remaining affirmative defenses, none were addressed in the motion for summary judgment nor in anything filed with the trial court, and the trial court did not address them. Whether they were legally sufficient should be addressed in further proceedings, the appellate court concluded.

The case is Hurchalla v. Homeowners Choice Property and Casualty Ins. Co., Nos. 4D18-2740, 4D18-2935 (Fla. Ct. App. Oct. 16, 2019). Attorneys involved include: Virginia P. Sherlock and Howard K. Heims of Littman, Sherlock & Heims, P.A., Stuart, for appellants Margaret Hurchalla and James Hurchalla. Ethan J. Loeb, Jon P. Tasso and Michael J. Labbee of Smolker, Bartlett, Loeb, Hinds & Thompson, P.A., Tampa, for appellants Lake Point Phase I, LLC, and Lake Point Phase II, LLC. Robert Alden Swift of Cole, Scott & Kissane, P.A., Orlando, for appellee.