Promissory Estoppel Claim Allowed to Proceed Against Insurer Based on Reversal in Coverage Position

The United States District Court for the Southern District of Florida, applying Florida law, denied an excess insurer’s motion to dismiss an estoppel claim where the insurer reversed its coverage position on which the insured alleged it had detrimentally relied. Scott v. Certain Underwriters at Lloyd’s London Subscribing to Policy No. B0901LI1837279, 2023 WL 4363553 (S.D. Fla. July 6, 2023).

A former employee sought coverage under claims-made directors and officers liability policies issued to his former employer for letters he received from his former employer. The primary carrier denied coverage on the grounds that the letters did not constitute a “claim.” The excess carrier initially took the position that one of the letters was a claim, subject to a reservation of rights, but subsequently advised that its prior conclusion that the letter constituted a claim was erroneous and denied coverage.

The former employee sued both the primary insurer and the excess insurer seeking coverage under the policies. In prior rulings, the court granted the primary insurer’s motion to dismiss, holding that the letters did not constitute a “claim” or “notice of circumstances” under the primary policy. The excess insurer, whose policy had substantially identical definitions of “claim” and “notice of circumstances,” moved to dismiss the claims asserted against it on the same grounds. 

The court granted the excess insurer’s motion to dismiss the breach of contract claim against it for the same reasons as it granted the primary insurer’s motion. However, the court denied the motion to dismiss the promissory estoppel claim. The court rejected the excess insurer’s argument that the estoppel claim was not cognizable because there was a written contract governing the dispute, finding that the existence of an express contract had only been alleged, not proven, at that stage of the litigation. The court also rejected the excess insurer’s argument that its reservation of rights precluded a promissory estoppel claim, finding this argument relied on extrinsic evidence that could not be considered on a motion to dismiss. Finally, the court held that factual issues prevented a legal determination on the question of detrimental reliance on a motion to dismiss.