A recent case out of the Middle District of Florida, The Peninsula at St. John’s Center Condominium Association, Inc. v. Amerisure Ins. Co., 2025 WL 1547631 (M.D.Fla. 2025) discusses what a party must do to RIGHTFULLY recover under a Coblentz agreement under Florida law:

“In Florida, a party seeking to recover under a Coblentz agreement must prove: (1) coverage; (2) a wrongful refusal to defend; and (3) that the settlement was objectively reasonable and made in good faith. “Florida law clearly states that liability of an insurer depends upon whether the insured’s claim is within the coverage of the policy. This remains true even when the insurer has unjustifiably failed to defend its insured in the underlying action.”  “A determination of coverage, therefore, is a condition precedent to any recovery against an insurer.”
 
The party seeking recovery has the burden “to allocate the settlement amount between covered and uncovered claims.”  “[A]n insurer faced with a Coblentz action has the right to litigate its contractual duty to indemnify on the actual facts of the underlying litigation just as it would in an action against its insured.”  Once the party seeking to recover under a Coblentz agreement has established coverage and allocated damages amounts between covered and uncovered claims, the burden shifts to the defendant who must then prove that either the Coblentz agreement was unreasonable or was negotiated in bad faith.

Id. At *5 (internal citations omitted).

In this case, an insurer for a contractor denied coverage, and thus, the duty to defend, in a large, complex construction defect coverage lawsuit with multiple parties. The association-claimant entered into a Coblentz agreement with the contractor and then the association, through an assignment of the general contractor’s rights under the contractor’s commercial general liability policy, sued the contractor’s insurer.  The Middle District held that the insurer was not liable to the association under the Coblentz framework. This means the association was collecting nothing from the contractor’s insurer.

First, it was undisputed that the operative complaint in the construction defect lawsuit was a third amendment complaint. Yet, this amended complaint was never presented to the insurer for a coverage position. It should have, regardless of whether the insurer denied its obligations under a previous version of the complaint. Thus, there was never a wrongful denial to defend to trigger the Coblentz framework because the insurer was not given the operative complaint to determine whether it had a duty to defend.

Next, the Middle District found that the insurer was not liable under the Coblentz framework (even if the insurer had been given the operative complaint) because the association-claimant “has not satisfied its burden to allocate between covered and uncovered claims.” The Peninsula at St. John’s Condominium Ass’n, supra, at *11. The claimant has the burden to allocate damages between covered and uncovered claims and the inability to allocate would destroy the Coblentz framework. Id. at *9. (“[T]he Coblentz Agreement is unenforceable because it does not properly allocate between covered and uncovered claims.”).

Moreover, as if the other two bases were not enough, the Middle District further maintained the Coblentz Agreement was not reasonable. In other words, it included unreasonable amounts. “What Coblentz does not do is authorize the insured to indiscriminately load the carrier’s wagon with bricks of damage that no reasonable person would expect as consequences of the underlying claim.” The Peninsula at St. John’s Condominium Ass’n, supra, at *11. The Middle District found the damages amount subject to the Coblentz agreement was not reasonable as it loaded up damages and did not account for other party’s liability or amounts in which it settled with other parties.

There are times considering a Coblentz agreement is 100% worth it. If considering a Coblentz agreement, make sure to draft it correctly to maximize the best arguments you can in pursuing coverage. Do it right!

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.