The Four Corners Rule Strikes Again to Require Defense Not Owed

Careful Pleading Requires Defense When Evidence Does Not

Courts like those in Florida that apply the four corners rule of insurance contract interpretation of the duty to defend allow a plaintiff’s lawyer to skillfully draw a complaint that will require the defendant’s insurer to defend even when it is clear from existing evidence that there is no coverage. Although Florida allows an insurer to bring extrinsic evidence to the court when seeking to defeat an obligation to defend, that ability is severely limited by Florida law.

In Advanced Systems, Inc., etc. v. Gotham Insurance Company, etc., No. 3D18-1744, Third District Court of Appeal State of Florida (April 17, 2019) careful – perhaps devious – pleading was the support used by Advanced Systems, Inc. to obtain review of the trial court’s determination that Gotham Insurance Company had no duty to defend or indemnify Advanced Systems under a commercial general liability policy.


This case arose after a foam fire suppressant system in an aircraft hangar failed and  resulted in damage to several airplanes.  Orion Jet Center LLC, the hangar’s owner, filed suit against Moss & Associates, LLC, the general contractor that constructed the aircraft hangar. Moss brought a third-party complaint against Advanced Systems, the subcontractor that installed the hangar’s fire suppression system. Advanced Systems, in turn, tendered defense to Gotham, its insurer.

Gotham insured Advanced Systems with a commercial general liability policy under its Fire Suppression Insurance Program (the “Policy”). The policy excluded liability for pollution caused damage. The Policy defined “pollutants” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” The Policy did not define “irritant,” “contaminant,” or “chemicals.”

Because Gotham did not respond to the tender of defense, Advanced Systems filed a complaint for declaratory judgment against Gotham. Both filed motions for partial summary judgment on the issue of Gotham’s duty to defend and indemnify.

In support of its motion, Gotham attached the declaration of Christopher Ward, a claims specialist. Mr. Ward attached a copy of the Material Safety Data Sheet (“MSDS”) for Chemguard C2, which Gotham claims is the name of the foam fire suppressant that was released into the aircraft hangar. Based on the MSDS, which details Chemguard C2’s chemical composition, Gotham argued that the fire suppressant foam was a “pollutant” and therefore excluded from coverage under the Policy.

Over Advanced Systems’ objection, Gotham relied on the MSDS submitted with its motion for summary judgment stating the material was discussed on the internet as a pollutant. The trial court entered an order granting Gotham’s motion for summary judgment, specifically relying on the MSDS to conclude that the Total Pollution Exclusion operated as a bar to coverage and any duty to defend because the released foam constituted a “pollutant” within the meaning of the Policy.


Under Florida law, an insurer’s duty to defend is separate and distinct from its duty to indemnify, and it is more extensive. A liability insurer’s obligation, with respect to its duty to defend, is not determined by the insured’s actual liability but rather by whether the alleged basis of the action against the insurer falls within the policy’s coverage. In Florida the court only looks to the allegations in Moss’s third-party complaint against Advanced Systems to determine whether Gotham has a duty to defend. An insurer’s duty to defend a complaint depends solely on the allegations in the complaint filed by a third party against the insured.

The insurer must defend even if the allegations in the complaint are factually incorrect or meritless.  As such, an insurer is obligated to defend a claim even if it is uncertain whether coverage exists under the policy. Once a court finds that there is a duty to defend, the duty will continue even though it is ultimately determined that the alleged cause of action is groundless and no liability is found within the policy provisions defining coverage. Finally, because Gotham relies on an exclusion to deny coverage, it has the burden of demonstrating that the allegations of the complaint are cast solely and entirely within the policy exclusion and are subject to no other reasonable interpretation.

Although Gotham agrees that the general rule in Florida is that an insurer’s duty to defend is determined from the allegations in the complaint, it argues that the trial court properly considered extrinsic evidence of Chemguard C2’s chemical composition because an exception to the general rule applies where an insurer’s claim that there is no duty to defend is based on factual issues that would not normally be alleged in the underlying complaint.

Florida courts have, in “special circumstances,” considered extrinsic facts, such cases are best viewed as exceptional cases in which courts have crafted an equitable remedy when it is manifestly obvious to all involved that the actual facts placed the claim outside the scope of coverage. In exceptionally rare cases, however, where the complaint omits a reference to an uncontroverted fact that, if pled, would have clearly placed the claim outside the scope of coverage, equity may relieve an insurer from its duty to defend.

Regardless of the provisions of the policy, it also contained an exception to the pollution exclusion with specific timing and notice requirements. The court can permit evidence beyond the complaint showing that the insured was unable to satisfy the timing and notice requirements.

Here the extrinsic evidence was not uncontroverted or manifestly obvious to all so as to preclude coverage. The appellate court’s review of the transcript of the summary judgment hearing reveals that Advanced Systems consistently contested the nature and composition of the released fire suppression foam. Similarly, Advanced Systems repeatedly objected to the use of evidence not in the record and beyond the scope to determine whether a duty to defend existed.

The record before the court contained no objective fact that is manifestly obvious to all involved, nor are there uncontroverted facts that simply were not pled in the Underlying Action or in Moss’s third-party complaint.

Therefore, the court concluded that the alleged facts in Moss’s third-party complaint fairly and potentially bring Moss’s suit within policy coverage and that the trial court erred in relying on extrinsic evidence to determine that a duty to defend did not arise below.


It is time that the four corners rule, or the eight corners rule, where the court only reads the complaint and the policy to determine coverage, be removed from any appellate jurisprudence. It creates a disservice to litigants and allows a plaintiff to carefully draft a complaint that will compel coverage where the facts and the law require a finding of no coverage for defense or draw a complaint to punish the defendant by alleging facts that could never be covered by the policy. It is for that reason that many states allow an insurer to use facts extrinsic to the pleading to determine the existence or non-existence of coverage requiring an insurer to defend. To do otherwise is provides a plaintiff with an unfair advantage over a defendant or its insurer.

© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Time to Rescind the Tort of Bad Faith

Insurance and the Law of Unintended Consequences Paperback 

Insurance is, and always will be, a business of the utmost good faith. Time to Rescind the Tort of Bad Faith: Insurance and the Law of Unintended ConsequencesAll parties to the insurance contract agree, in good faith and fair dealing, to do nothing to deprive the other the benefits of the contract. Insurance is, and always be, nothing more than a contract.

The insurer makes a promise to the insured that if a contingent or unknown loss occurs caused by a peril or risk insured against and not excluded, to pay the insured indemnity as promised by the contract up to the limits provided.

The insured promises to truthfully disclose the risks of loss faced by the insured, property owned by the insured, the business of the insured and/or the insured’s liability exposures. The insured also promises to honestly present a claim, prove the claim, and cooperate with the insurer in its investigation. If the parties to the insurance contract deal with each other fairly and in good faith the policy remains viable, claims are paid promptly and to the satisfaction of the insurer and the insured.

Only if a true tort occurs can the insured waive the contract action and sue in tort. Breach of contract, by centuries old tradition, is not a tort and cannot and should not be considered a tort. The Tort of Bad Faith has served its purpose and is now causing more problems than it solves. It is time the courts and state legislatures rescind the tort and return to common law contract damages.


About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
This entry was posted in Zalma on Insurance. Bookmark the permalink.