The United States Court of Appeals for the Eleventh Circuit, applying Florida law, has held that an insurer did not breach its duty to defend or indemnify an insured where the insured’s defense and settlement costs were paid by its contractual indemnitor. MapleWood Partners, L.P. v. Indian Harbor Ins. Co., 2016 WL 3553212 (11th Cir. June 30, 2016).

The insured financial services firm had entered into an advisory services agreement with a company operating a chain of Mexican restaurants. The restaurant chain also agreed to defend and indemnify the insured in any lawsuits because of its association with the chain. When three such lawsuits were filed against the insured, the restaurant chain paid the vast majority of the insured’s defense expenses and settlement costs pursuant to the parties’ contractual indemnity provision. The insured later sued its professional liability insurer for breach of contract for failing to pay the insured’s losses from the three suits. The district court granted summary judgment in favor of the insurer, concluding that allowing the insured to recover under the policy would give it an improper double recovery because the restaurant chain had already paid the insured’s losses.

The Eleventh Circuit affirmed on appeal, holding that the contractual indemnification agreement between the insured and the restaurant chain gave the restaurant chain the “primary obligation” to pay the insured’s losses in the three lawsuits. The court rejected the insured’s argument that the contractual indemnification provision was never intended to cover losses covered by an insurance policy, finding nothing in the provision’s text to support that interpretation. The court observed that the insured was not “left alone as the losses were piling up,” because the restaurant chain had paid the defense and settlement costs.