UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF FLORIDA

TALLAHASSEE DIVISION

HANOVER INSURANCE COMPANY,

Plaintiff,

v. CASE NO.: 4:20-cv-00148-AW-CAS

FLORIDA COALITION AGAINST 

DOMESTIC VIOLENCE, INC., a 

Florida not-for profit corporation;

FLORIDA COALITION AGAINST 

DOMESTIC VIOLENCE FOUNDATION, INC.,

A Florida not-for profit corporation; 

TIFFANY CARR; SANDRA BARNETT; 

PATRICIA DUARTE; MELODY KEETH; 

LAUREL LYNCH; ANGELA DIAZ-VIDAILLET; 

SHANDRA RIFFEY; DONNA FAGAN; 

THERESA BEACHY; SHERYL SCHWAB; 

LORNA TAYLOR; and PENNY MORRILL,

Defendants.

_______________________________/

DEFENDANT SANDRA BARNETT’S 

MOTION TO DISMISS AND/OR STAY PLAINTIFF’S COMPLAINT 

 

Defendant SANDRA BARNETT, pursuant to Rules 12(b)(1) and 12(b)(6), 

Fed. R. Civ. P., and the inherent authority of the court, requests that the Court 

dismiss the complaint filed by Hanover Insurance Company (“Plaintiff” or 

“Hanover”). Alternatively, Defendant requests that this case be stayed pending 

the disposition of Florida Department of Children and Families v. Florida 

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Coalition Against Domestic Violence, Inc., et. al., Case No. 2020-CA-00431 (filed 

March 4, 2020, pending in the Circuit Court in Leon County (“DCF Lawsuit”).

MEMORANDUM OF LAW 

Defendant is the former Chief Operating Officer of the Florida Coalition 

Against Domestic Violence, Inc. (“FCADV”). She is named as an individual 

defendant in the DCF Lawsuit. Hanover filed the instant case in this Court 

seeking a declaratory judgment with respect to its duty to defend (Counts I and 

II) and duty to indemnify (Count III) the Defendant, among others, in the

underlying DCF Lawsuit.1 Counts I and II of Hanover’s Complaint should be 

dismissed as to Defendant for failure to state a claim under Rule 12(b)(6). Count 

III should also be dismissed as the claim is not ripe. Alternatively, all Counts of 

Hanover’s Complaint should be stayed pending the disposition of the underlying 

DCF lawsuit.

I. Counts I and II Should be Dismissed for Failure to State a Claim as 

to Defendant. 

 

1 Throughout its Complaint, Hanover references two separate lawsuits, 

sometimes collectively referring to both lawsuits as the “State Litigation.” The 

first is the DCF Lawsuit, which names Defendant, along with FCADV, two other 

former employee-officers of FCADV, and nine of the former members of the 

FCADV Board of Directors. The second lawsuit is styled Office of the Attorney 

General, State of Florida, Dep’t of Legal Affairs v. Florida Coalition Against 

Domestic Violence, Inc. Case No. 2020 CA 000437 (filed March 4, 2020) (“AG 

Lawsuit”). Defendant is not a party to the AG Lawsuit.

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In Count I of its Complaint, Hanover seeks a declaratory judgment that it 

has no duty to defend any of the parties named as defendants in either the DCF 

Lawsuit or the AG Lawsuit. Count II of the Complaint is based on Hanover 

prevailing in Count I, and seeks a declaratory judgment that Hanover recoup 

severally from the defendant parties any defense costs paid related to either 

suit.

A. Standard on a Motion to Dismiss for Failure to State a Claim

In order to survive a motion to dismiss, “a complaint must contain 

sufficient factual matter, accepted as true, to “state a claim to relief that is 

plausible on its face.’” Ashcroft v Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell 

Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial 

plausibility when the pleaded factual content allows the court to draw the 

reasonable inference that the defendant is liable for the conduct alleged.” Iqbal, 

566 U.S. at 678. Further, in determining facial plausibility, “where the wellpleaded facts do not permit the court to infer more than the mere possibility of 

misconduct, the complaint has alleged—but it has not ‘show[n]’ - ‘that the 

pleader is entitled to relief.’” Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)). “Where 

a complaint pleads facts that are ‘merely consistent with’ the defendant’s 

liability, it ‘stops short of the line between possibility and plausibility of 

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entitlement to relief.’” Id. at 678 (quoting Twombly, 550 U.S. at 557).

While factual allegations must be accepted as true, the same is not true 

for legal conclusions. Courts are not “bound to accept as true a legal conclusion 

couched as a factual allegation” and “[t]hreadbare recitals of the elements of a 

cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 

566 U.S. at 678. Therefore, this Court should engage in a two-step approach: 

“When there are well-pleaded factual allegations, a court should assume their 

veracity and then determine whether they plausibly give rise to an entitlement to 

relief.” Id. at 679. 

B. Hanover’s Duty to Defend

“Under Florida law, the issue of a liability insurer’s duty to defend a lawsuit 

against its insured is governed by the terms of the insurance policy and the 

allegations of the complaint.” Colony Ins. Co. v. Barnes, 410 F. Supp. 2d 1137, 

1139 (N.D. Fla. 2005). This is sometimes referred to as the “eight corners” rule, 

as the relevant inquiry concerns only the four corners of the complaint and the 

four corners of the policy. Id. “If the complaint alleges any claim that, if proven, 

might come within the insurer’s indemnity obligation, the insurer must defend 

the entire action. Id. Simply stated, if the underlying complaint alleges multiple 

grounds for liability, so long as at least one of them is within the insurance 

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coverage, the insurer must defend the entire suit. 

The insurer’s duty to defend exists even if the complaint's allegations are 

factually incorrect or meritless and even if part of the allegations fall outside 

policy coverage. Addison Ins. Co. v. 4000 Island Boulevard Condo. Ass'n, 721 F. 

App'x 847, 854 (11th Cir. 2017). Even if the existence of extrinsic facts might 

establish that coverage does not exist, the duty to defend relies on the 

allegations in the underlying complaint, not in any extraneous matters. See Marr 

Invs., Inc. v. Greco, 621 So. 2d 447, 449 (Fla. 4th DCA 1993) (holding that “the 

trial judge erred in considering extraneous matters in resolving the question as 

to the duty to defend.”).2

Any doubts regarding the insurer’s duty to defend arising out of the 

allegations in the underlying complaint are resolved in favor of the insured. 

Colony Ins. Co. v. Barnes, 410 F. Supp. 2d at 1139. Therefore, ambiguous 

2 The Eleventh Circuit has recognized a limited exception to the eight 

corners rule, in which a court may consider extrinsic facts “if those facts are 

undisputed, and, had then been pled in the complaint, they clearly would have 

placed the claims outside the scope of coverage.” Stephens v. Mid-Continent 

Cas. Co., 749 F.3d 1318, 1323 (11th Cir. 2014). This exception, however, is 

limited to “exceptional cases in which courts have crafted an equitable remedy 

when it is manifestly obvious to all involved that the actual facts placed the 

claims outside the scope of coverage.” Id. (quotation omitted). This exception is 

not applicable to the instant case, as the alleged facts relied upon by Hanover 

to assert its exclusions are being disputed by Defendant in this case and in the 

DCF Lawsuit.

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allegations in the underlying complaint “must be construed most favorably to the 

insured to establish the duty to defend.” Baron Oil Co. v. Nationwide Mut. Fire 

Ins. Co., 470 So.2d 810, 816 (Fla. 1st DCA 1985). 

C. Hanover’s Policy and Alleged Exclusions

Hanover admits that the applicable insurance policy was effective 

December 19, 2019, and that Defendant is an insured under the policy. See 

Complaint, ECF No. 1, pp. 1-2 at ¶1. Under the policy, coverage is provided for 

any “Loss which the Insured Individual is legally obligated to pay due to a Claim

first made against the Insured Individual during the Policy Period...” See Hanover 

policy, ECF No. 1-2, p. 21, § I.A (emphasis in original). The definition of Claim 

under the Hanover policy, as applicable to Defendant, includes any:

1. Written demand received by an Insured for monetary or 

nonmonetary relief including injunctive relief;

2. Civil proceeding commenced by the service of a complaint or 

similar pleading;

. . . ..

4. Formal administrative or regulatory proceeding commenced by

the filing of charges, formal investigative order or similar document;

. . . .

against an Insured Individual for a Wrongful Act, including any

appeal therefrom[.]

See id., pp. 21-22, at § III.A.

The Hanover policy defines a covered “Wrongful Act” as, inter alia, “any 

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actual or alleged act, error, omission, misstatement, misleading statement, 

neglect, breach of duty committed or attempted, or allegedly committed or 

attempted by . . . an Insured Individual in his or her capacity as such . . ..” See 

id., p. 24.

Pursuant to Florida Law, “insurance contracts must be construed in 

according with the plain language of the policy.” Swire Pacific Holdings, Inc. v. 

Zurich Ins. Co., 845 So.2d 161, 165 (Fla. 2003) (answering certified questions 

from the United States Court of Appeals for the Eleventh Circuit). Policy 

interpretation is a question of law decided by the court. Where the plain 

language of the policy is susceptible to more than one reasonable interpretation, 

the policy language is considered ambiguous. Auto–Owners Ins. Co. v. Anderson, 

756 So.2d 29, 34 (Fla.2000). “An ambiguous policy must be ‘interpreted 

liberally in favor of the insured and strictly against the drafter who prepared the 

policy.’” Travelers Indem. Co. v. PCR Inc., 326 F.3d 1190, 1193 (11th Cir. 2003) 

(quoting Hyman v. Nationwide Mut. Fire Ins. Co., 304 F.3d 1179, 1186 (11th 

Cir. 2002). “Doubts are resolved in favor of the insured.” Colony Insurance Co., 

410 F. Supp.2d at 113. Where, as here, an insurer seeks to rely on an exclusion 

to deny coverage, the insurer is required to show that the exclusion clearly 

applies to the underlying complaint. See Auto-Owners Ins. Co. v. Am. Bldg. 

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Materials, Inc., 820 F. Supp. 2d 1265, 1269 (M.D. Fla. 2011). An exclusionary 

clause is “construed even more strictly against the insurer than coverage 

clauses.” Travelers Indem. Co., 326 F.3d at 1193, quoting Hyman, 304 F.3d at 

1196.

Hanover has identified six exclusions, along with two legal arguments, that 

it seeks to use to shirk its duty to Defendant to provide defense coverage in the 

DCF Lawsuit. Hanover’s allegations, when examined through the framework of 

the ‘eight corners’ of the underlying allegations in the DCF Lawsuit and the 

Hanover insurance policy, fail to dispel “any doubt” that Hanover should be 

relieved of its duty to defend. Therefore, said doubt “must be resolved in favor 

of the insured” and Hanover should be required to defend.

1. The Prior & Pending Litigation/Demand Exclusion

The Prior & Pending Litigation/Demand Exclusion provides that there is no 

coverage for any claim “[b]ased upon, arising out of or in any way related to any 

litigation, administrative or arbitration proceeding, written demand pending 

against any Insured, or any order, decree or judgment entered prior to or on 

[December 19, 2019].” See Hanover policy, ECF No. 1-2, pp. 24-25, at § IV.A.2. 

Hanover alleges that this exclusion applies based on allegations in the 

DCF Lawsuit that DCF sent correspondence to FCADV prior to December 19, 

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2019. The DCF Lawsuit alleges that on August 27, 2018, DCF sent a letter to 

FCADV notifying them that “DCF Office of the Inspector General (OIG) was 

initiating an investigation of FCADV’s administrative costs and executive 

compensation.’” See Complaint, ECF No. 1, p. 12, ¶ 51 (quoting DCF Lawsuit). 

The DCF Lawsuit further alleges that the August 27, 2018 letter, and subsequent 

correspondence with FCADV, included a request for documentation....” See, id., 

p. 12, at ¶ 52. 

Hanover seeks to transform these pre-policy requests for documentation 

into a “written demand” as that term is used in the Prior & Pending 

Litigation/Demand Exclusion. This is simply not the case. As alleged in the DCF 

Lawsuit, all of the pre-policy correspondence “requested” documentation from 

FCADV. None of the pre-policy correspondence demanded that FCADV turn over 

the documents. The plain meaning of the term “demand” does not support 

Hanover’s position that the pre-policy correspondence with DCF was a “written 

demand”. As defined by the dictionary, demand means “an insistent and 

preemptory request, made as if by right.”3 None of the pre-policy 

correspondence between DCF and FCADV is worded in terms of a final demand, 

which promised negative consequences if not complied with. 

3 https://www.lexico.com/definition/demand

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Further, although the term “written demand” is not defined in the policy, it 

is used in the policy definition of “Claim”, which provides that claims include any 

“[w]ritten demand received by an Insured for monetary or non-monetary relief 

including injunctive relief.” When construing policy terms, pertinent provisions 

should be read in pari materia.” U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So.2d 871, 

877 (Fla. 2007). 

Even if the pre-policy correspondence could in some way be construed to 

have been a “written demand” under the policy, the allegations contained in the 

DCF Lawsuit against Defendant are based on alleged fraudulent actions and/or 

misrepresentations that did not take place until January of 2020, after the policy 

was in place. Thus, no claim had arisen against Defendant until after the 

effective date of the policy, and the Prior & Pending Litigation/Demand Exclusion 

is inapplicable, at least as to Defendant.

It is clear that the requests for documentation from DCF to FCADV were 

not demands for monetary or non-monetary relief including injunctive relief. 

Based on this, the document requests from DCF do not qualify as written 

demands, as that term is used in the Prior & Pending Litigation/Demand 

Exclusions. At the very least, the meaning of the term “written demand” in the 

exclusion is ambiguous. Based on a strict reading of the exclusionary language, 

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and resolving said ambiguity in favor of finding coverage, Hanover has not shown 

that the Prior and Pending Litigation/Demand exclusion relieves it of its duty to 

defend. 

2. The Policy Application Claim Exclusion and the Policy Claim 

Exclusion

As an alternative argument, Hanover seeks to relieve itself of its duty to 

defend based on the Policy Application Claim Exclusion. See Complaint, ECF No. 

1, pp. 21 - 22, at ¶ 106. That exclusion is based on section XI of the policy 

application, which asked whether “the Insured proposed for coverage” is “aware 

of any fact, circumstance, or situation that might reasonably be expected to 

result in a Claim that would fall within the scope of the proposed Liability 

Coverage Parts.” Id., p. 21, at ¶ 102; ECF No. 1-2. This question was answered 

in the negative. Hanover contends that this response was untruthful, based on 

the pre-policy correspondence exchanged between DCF and FCADV. Further, 

although not specifically argued, Hanover implies that the pre-policy 

correspondence between DCF and FCADV was a fact, circumstance, or situation 

that Defendant should have reasonably expected to result in a claim.

Similarly, Hanover also claims that it has no duty to defend based on the 

Policy Claim Exclusion which provides “If the Application contains any 

misrepresentations made with the intent to deceive or contains 

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misrepresentations which materially affect the acceptance of the risk or hazard 

assumed by the Insurer,” then no coverage will be provided for any Claim “based 

upon, arising from, or in consequence of, any such misrepresentation with 

respect to” any Insured “who knew of such misrepresentations (whether or not 

such individual knew such Application contained such misrepresentations).” See 

Complaint, ECF No. 1, p. 22, at ¶ 107. Hanover’s argument regarding this 

exclusion flows from its argument regarding the Policy Application Exclusion, that 

the Application contained a misrepresentation regarding the existence of a 

potential claim, and further, that the misrepresentation was made with the intent 

to deceive or was material to the issuance of the policy. 

Both of these exclusions require prior knowledge on the part of Defendant. 

These types of prior knowledge exclusions “may be triggered under two 

circumstances: (1) if the insured “knew” that a wrongful act might be expected 

to be the basis of a claim; or (2) if the insured “could have reasonably foreseen” 

that a wrongful act might be expected to be the basis of a claim.” Feldman v. 

Imperium Insurance Company, No. 8:14–cv–1637–T–30EAJ, 2015 WL 

5854153, at *6 (M. D. Fla. Oct. 5, 2015). The first prong is subjective, requiring 

an insured to have actual knowledge. Fid. Nat'l Title Ins. Co. v. Houston Cas. Co., 

No. 6:11–cv–1438, 2012 WL 4523666, at *5 (M. D. Fla. Sept. 30, 2012). The 

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second prong, however, has both an objective and subjective component. 

Feldman, 2015 WL 5845153, at *6. What is reasonably foreseen by an insured 

is an objective inquiry, but it must be based on facts subjectively known by the 

insured. Id.

There is no allegation in the DCF Lawsuit that Defendant had actual 

knowledge of any wrongful act prior to the policy effective date of December 19, 

2019. The first allegation that Defendant had actual knowledge of a wrongful 

act is not until after the effective date of the Policy whereinDCF alleges that 

Defendant, along with others, “provided false and incomplete documents...with 

either the intent to, or effect of, purposefully deceiving and misleading DCF....” 

Looking at the “eight corners” applicable to determining Hanover’s duty to 

defend, there are no factual allegations that satisfy the subjective and objective 

components of these two “prior knowledge” exclusions. 

Further, even if the DCF allegations could be construed to show that other 

insureds under the policy had prior knowledge of a potential claim, the plain 

language of the policy itself provides that [n]o statement in the Application, fact 

pertaining to, or knowledge possess by any Insured Individual shall be imputed 

to any other Insured Individual. See Hanover Policy, ECF No. 1-2, p. 30, at § 

XIV.A.2. Since the underlying complaint does not allege any prior knowledge on 

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the part of Defendant of any potential claim, Hanover has failed to show that 

either of these exclusions relieve Hanover of its duty to defend.

3. The Fraud Exclusion

Hanover next seeks to assert a “Fraud” exclusion in order to avoid its duty 

to defend. Said “Fraud” exclusion is based on what the policy refers to as a 

“Conduct exclusion. See Complaint, ECF No. 1, pp. 22-24, at ¶¶ 110–117; 

Hanover policy, ECF No. 1-2, p. 25, at §§IV.A.3.a. and b. 

Per the Conduct exclusion, there is no coverage for any Loss or Claim 

“[b]ased upon, arising out of or in any way related to [a]ny deliberate, dishonest, 

fraudulent act or omission, or willful violation of any statute or regulation by an 

Insured[.]” Hanover’s assertion of the “Fraud” exclusion is based on the 

allegations of fraud found in the DCF Lawsuit. Specifically, three of the four 

counts brought against Defendant in the DCF lawsuit are for “Fraudulent 

Concealment,” “Fraudulent Misrepresentation,” and “Civil Conspiracy.” See 

Complaint, ECF No. 1, p. 23, at ¶ 112. While the DCF Lawsuit does bring 

allegations of fraud against Defendant, an examination of those allegations 

shows that they fail to meet the pleadings requirements of both Florida and 

federal law. 

Pursuant to Federal and Florida Rules of Civil Procedure, fraud must be 

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pled with particularity. See Fed. R. Civ. P. 9(b); Fla. R. Civ. P. 1.120(b). To state 

an action for fraud in Florida, the complaint must specifically identify a 

misrepresentation of fact, and also must identify when, where or the manner in 

which it was made. Robertson v. PHF Life Ins. Co., 702 So.2d 555, 556 (Fla. 1st 

DCA 1997) (“Florida Rule of Civil Procedure 1.120(b) requires that allegations of 

fraud be pled with specificity” and must identify the time, place or manner in 

which the representations were made). The allegations contained in the DCF 

Lawsuit do not meet this standard, as they do not identify when alleged 

misrepresentations were made by Defendant, where the misrepresentations 

occurred, or the manner in which the misrepresentations came about.

Even if the allegations in the DCF Lawsuit were sufficient to state a cause 

of action for fraud, Hanover conveniently ignores the fourth count brought 

against the Defendant by DCF, for negligent misrepresentation. As noted above, 

if “the complaint alleges any claim that, if proven, might come within the 

insurer’s indemnity obligation, the insurer must defend the entire action. Colony 

Ins. Co. v. Barnes, 410 F. Supp. 2d 1137, 1139 (N.D. Fla. 2005). Therefore, 

because Hanover is obligated to defend the negligence claim against Defendant, 

it is also obligated to defend all of the other claims in the DCF Lawsuit. See, e.g.,

Century Sur. Co. v. Kid’s Club Preschool, Inc., No. 4:10CV539-RH/WCS, 2011 

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WL 13118599, at *2 (N.D. Fla. May 28, 2011) (holding that where complaint 

alleges both negligence and intentional tort, insurer must defend entire lawsuit, 

notwithstanding exclusion for intentional acts).

Finally, per the plain language of the policy itself, the assertion of this 

Conduct Exclusion to relieve Hanover of its duty to defend is premature. In 

reference to the Conduct Exclusion, the policy provides:

[T]his exclusion shall not apply to Defense Expenses unless and 

until a final, non-appealable judgment or adjudication in any 

underlying proceeding or action establishes that an Insured 

committed such an act or omission, violation of statute or regulation 

or gained such profit, remuneration or advantage to which the 

Insured was not legally entitled.

As there has been no judgment or adjudication in the DCF Lawsuit, the 

assertion of the Conduct exclusion by Hanover is premature and should be 

disregarded. 

4. The Profit Exclusion

Like the “Fraud” exclusion above, Hanover also asserts what it labels as 

the “Profit” exclusion based on the Conduct exclusion found in the policy. This 

second Conduct exclusion provides that there is no coverage for any claim 

involving “[a]n Insured gaining any profit, remuneration or advantage to which 

such Insured was not legally entitled[.]” See Hanover policy, ECF No. 1-2, p. 25, 

at § III.A.3.b.

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To the extent that Hanover relies on allegations in the AG Lawsuit to assert 

this exclusion, those allegations are inapplicable to the Defendant and should 

be ignored. As explained above, Defendant is not a party to the AG Lawsuit, and 

therefore any allegations contained within said suit do not fall within the “eight 

corners” determination of whether or not Hanover has a duty to defend.

Hanover also relies on allegations in the DCF Lawsuit to make the “Profit” 

exclusion applicable to Defendant. An examination of these allegations show 

that they fail to meet the pleading standards of Ashcroft v. Iqbal and Bell Atlantic 

Corp. v. Twombly, meaning they cannot form the basis of a denial of Hanover’s 

duty to defend. Those cases require complaints to contain factual allegations 

that are facially plausible and not just threadbare recitations of elements and 

legal conclusions. Iqbal, 566 U.S. at 678-79. And “where the well-pleaded facts 

do not permit the court to infer more than the mere possibility of misconduct, 

the complaint has alleged—but it has not ‘show[n]’—'that the pleader is entitled 

to relief.’” Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)) (emphasis added).

As to Defendant, Paragraph 35 of the DCF Lawsuit alleges, “Upon 

information and belief [Defendant]...received a number of personal benefits, 

including, but not limited to, increased compensation and enhanced PTO.” 

(emphasis added). This conclusory allegation lacks any sort of factual support in 

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the complaint. Paragraph 36 alleges, again without any shred of factual support 

that, “Upon information and belief...[Defendant]. . . received a number of 

personal benefits, including, but not limited to, increased compensation and 

enhanced PTO.” This is another conclusory allegation, unsupported by facts, that 

fails to meet the standards set out in Iqbal and Twombly. Finally, Paragraph 37 

makes yet another conclusory allegation that Defendant, among others, acted 

as part of “a scheme and conspiracy whereby board members who supported 

Ms. Carr’s astronomical compensation received more funding from FCADV for 

their own centers, and in turn, the Defendants received higher executive salaries 

from their own boards.” This allegation does not appear to apply to Defendant, 

as she was not a board member nor did she run her own center. Even if this 

allegation could be construed to apply, once again there is not a single fact 

alleged in the complaint to support this allegation. 

The allegations in the DCF Lawsuit, devoid of any factual support, show 

only “the mere possibility of misconduct.” As such, said allegations cannot form 

the basis for asserting the “Profit Exclusion” and Hanover’s arguments regarding 

it should be ignored.

Also, as with the previous “Fraud Exclusion”, the terms of the policy 

provide that this Conduct exclusion is premature and that it shall not apply until 

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there is a final non-appealable judgment or adjudication in the underling 

proceeding. As there has been no judgment or adjudication in the DCF Lawsuit, 

the assertion of this “Profit Exclusion” is premature and should also be

disregarded.

5. The Contract Exclusion

The Contract Exclusion applies only to FCADV. See Complaint, ECF No. 1, 

pp. 24-25, at ¶¶118-19. Thus, this exclusion does not apply to Defendant and 

is not addressed in this Motion.

6. Loss Uninsurable as a Matter of Law

Hanover next asserts that because the policy does not cover “any amount 

deemed uninsurable by law” that it is somehow relieved of its duty to defend. 

Hanover states in support of this argument that the “State Litigation seeks 

recovery solely of amounts that are restitution, disgorgement and/or the return 

of ill-gotten gains of improperly paid wages, bonuses and PTO” and that these 

losses are uninsurable under Florida law. Hanover provides no authority for its 

argument, nor is the argument supported by the allegations in the underlying 

complaint. The DCF Lawsuit does not seek “restitution, disgorgement, and/or 

the return of ill-gotten gains” from Defendant. Instead, all of DCF’s request for 

relief against Defendant seek an “[a]ward of damages in an amount greater than 

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$30,000 [and] such other relief as this Court deems just and proper.” Included 

in the claims against Defendant is a count for negligence, which is clearly 

covered by the policy. As such, Hanover’s argument that the alleged loss is 

uninsurable is inapplicable to Defendant and does not absolve Hanover of its 

duty to defend.

7. The Known Loss Doctrine

The Known Loss Doctrine is based on the premise that the basic purpose 

of insurance is to protect against fortuitous events and not against known 

certainties. In Florida “an agreement to assume a known loss is not insurance.” 

Normandy Ins. Co. v. Sorto, 276 So. 3d 337, 340 (Fla. 1st DCA 2018). 

Agreements to insure a known loss in Florida are void as a matter of public policy. 

I.T.N. Consolidators, Inc. v. Northern Marine Underwriters, Ltd., 699 F. App’x 

880, 885 (11th Cir. 2017). Hanover alleges that this doctrine should apply 

because Defendant, and the other insureds, knew or should have reasonable 

known that a claim or injury had already occurred at the time that the policy was 

entered into. Hanover Complaint, ECF No. 1, pp. 25 - 26, at ¶ 123.

Hanover’s argument, without any citation to authority, to apply the Known

Loss Doctrine cannot and does not relieve it of its duty to defend. The assertion 

of this doctrine relies on Defendant’s knowledge of the allegations contained in 

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the DCF Lawsuit, prior to the effective date of the policy at issue. What 

Defendant knew or reasonably should have known, and when she acquired the 

actual knowledge, is one of the main issues in the DCF Lawsuit that has yet to 

be determined. 

The DCF Lawsuit alleges that Defendant both “knew” or “should have 

known” about alleged misrepresentations regarding executive compensation. 

See DCF Complaint, ECF No. 1-3, at ¶¶ 103, 120, and 127. What Defendant 

knew about a claim or potential claim, and when she knew about it, is a question 

of fact. See Boran Craig Barber Homes, Inc. v. Mid-Continent Cas. Co., 2009 WL

20670850 (M.D. Fla. Feb. 19, 2009) (denying summary judgment application 

of the known loss doctrine, concluding whether the insured “had actual 

knowledge of a loss or [whether] there was a substantial probability the loss 

would occur[,]” prior to the date of the insurance application was a question of 

fact to be determined at trial). Examining the “eight corners” relative to 

determining Hanover’s duty to defend, the allegations in the DCF Lawsuit do not 

demonstrate that Defendant knew of a claim prior to the effective date of the 

policy. Until and unless the DCF Lawsuit results in such a finding, the assertion 

of the Known Loss Doctrine to absolve Hanover of its duty to defend is 

premature, and should be disregarded by this Court.

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8. Severability of Exclusions

To the extent Hanover’s assertions of policy exclusion relies in any way on 

alleged actions or inactions of any individual or entity other than Defendant 

personally, they cannot sever as basis for upholding any policy exclusions. 

Section V of the Policy, entitled SEVERABILITY OF EXCLUSIONS, provides: 

No conduct pertaining to any Insured Individual shall be impute to 

any other Insured Individual for the purpose of determining the 

applicability of these exclusions. Any conduct pertaining to any past, 

present or future Executive of an Insured Entity shall be imputed to 

such Insured Entity and its Subsidiaries. 

Therefore, to the extent any allegations against Defendant are based on 

the alleged actions or inactions of the CEO, CFO or the board members, they may 

not be imputed to Defendant.

II. Alternatively, Counts I and II of Hanover’s Complaint Should Be 

Stayed Pending Disposition of the Underlying DCF Lawsuit 

 

Counts I and II of Hanover’s complaint should be dismissed for failure to 

state a claim for relief. Even in the event that the Court determines that Counts 

I and II should not be dismissed, then these counts should be stayed based on 

the court’s inherent authority and broad discretion in deciding whether to hear 

declaratory judgment actions under the Declaratory Judgment Act, 28 U.S.C. 

§2201.

A federal district court is afforded “broad discretion” in determining 

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whether to stay an action in the interests of justice, in control of its own docket, 

or “to avoid duplicating a proceeding already pending in another [] court.” I.A. 

Durbin, Inc. v. Jefferson Nat’l Bank, 793 F.2d 1541, 1552 & n.13 (11th Cir. 

1986). This discretion is particularly applicable in determining whether to 

entertain a declaratory judgment action. The Declaratory Judgment Act is “an 

enabling act, conferring discretion on courts than an absolute right upon the 

litigant.” Ameritas Variable Life Ins. Co. v. Roach, 411 F.3d 1328 (11th Cir. 

2005). As the Supreme Court has explained:

Since its inception, the Declaratory Judgment Act has been 

understood to confer on federal courts unique and substantial 

discretion in deciding whether to declare the rights of litigants.... The 

statute’s textual commitment to discretion, and the breadth of 

leeway we have always understood it to suggest, distinguish the 

declaratory judgment context from other areas of the law in which 

concepts of discretion surface.

Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995). 

In cases where there is concurrent state litigation on identical issues, as 

there appears to be here, federal courts should be hesitant to consider 

declaratory judgment actions. The Supreme Court has held that:

Ordinarily it would be uneconomical as well as vexatious for a 

federal court to proceed in a declaratory judgment suit where 

another suit is pending in a state court presenting the same issues, 

not governed by federal law, between the same parties. Gratuitous 

interference with the orderly and comprehensive disposition of a 

state court litigation should be avoided.

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Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 495, 62 S. Ct. 1173, 1175-76, 

86 L.Ed. 1620 (1942).

The DCF Lawsuit is already being litigated in state court. Many of the same 

factual issues presented by Hanover with respect to its alleged exclusions will 

also be issues of fact determined by the state court proceeding. Further, 

Defendant has moved to dismiss the complaint in the DCF Lawsuit.4 Thus, it is 

possible that the DCF Lawsuit may be dismissed as to Defendant, or that the 

complaint in the DCF Lawsuit may be amended. Under these circumstances, 

even if the Court held that Count I and Count II should not be dismissed, the 

Court should stay those Counts pending disposition of the DCF Lawsuit. See 

Southern-Owners Ins. Co. v. Wallace Sprinkler & Supply, Inc., 2014 WL 

11511679 (N.D. Fla. Aug. 28, 2014) (Court found that it was appropriate for it 

to exercise its discretion to hear an insurer’s declaratory judgment action while 

the state court action remained pending, and dismissed the case).

Further, FCADV has recently filed its own lawsuit in state court, naming, 

among others, Hanover, Traveler’s Casualty and Surety Company of America 

(FCADV’s prior directors and officer’s insurance carrier), and Defendant as 

4 A copy of Defendant’s Motion to Dismiss the DCF Lawsuit is attached as 

Exhibit A.

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parties to that action.5 In this recently filed suit, FCADV brings counts for 

declaratory relief and for breach of contract against Hanover, as well as against 

Traveler’s. The factual allegations at issue in the suit brought by FCADV against 

its insurers mirror the issues to be determined in the instant suit. In the interest 

of judicial efficiency, this Court should use its inherent authority to exercise 

discretion to stay the instant case until the state court litigation has been 

resolved.

III. Count III of Hanover’s Complaint Should Be Dismissed or Stayed 

Pending Resolution of the Underlying DCF Lawsuit 

An insurer’s duty to indemnify is “triggered when the insured becomes 

legally obligated to pay damages covered by the policy, that is, when there has 

been a final resolution of the underlying claims, whether by settlement or entry 

of a final judgment.” Morette Co. v. S-Owners Ins. Co., 301 F. Supp. 3d 1175, 

1187 (N.D. Fla. 2017); see also J.B.D. Const., Inc. v. Mid- Continent Cas. Co., 

571 F. App’x. 918, 927 (11th Cir. 2014) (“duty to indemnify is dependent upon 

the entry of a final judgment, settlement, or a final resolution of the underlying 

claims.”). Thus, “whereas the duty to defend is measured by the allegations of 

5 See Florida Coalition Against Domestic Violence v. Hanover Insurance 

Company, et. al., Case No. 2020-CA-001044, filed June 3, 2020, pending in the 

Circuit Court in Leon County.

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the underlying complaint, the duty to indemnify is measured by the facts as they 

unfold at trial or are inherent in the settlement agreement.” Northland Cas. Co. 

v. HBE Corp., 160 F.Supp.2d 1348, 1360 (M.D. Fla. 2001). Since the insurer’s 

duty to indemnify is dependent on the outcome of a case, any declaration as to 

the duty to indemnify is premature unless there has been a resolution of the 

underlying claim.” Id. Further, as noted above, parties do not have an absolute 

right to a declaratory judgment. “The Declaratory Judgment Act is ‘an enabling 

Act, which confers discretion on courts rather than an absolute right upon the 

litigant.’” Ameritas v. Variable Life Ins. Co., 411 F.3d 1328, 1330 (11th Cir. 

2005) (per curiam) (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 287 

(1995)).

The underlying case, the DCF Lawsuit, is still in its infancy. There has been 

no judgment entered against Defendant, nor has there been any settlement 

agreement in that case. Hanover’s duty to indemnify Defendant is unripe 

pending resolution of the underlying state court litigation. Should the Court find 

that Counts I and II are due to be dismissed, then the Court should also exercise 

its discretion to dismiss Count III. 

However, if Counts I and II are not dismissed, then Count III should be 

stayed pending resolution of the DCF Lawsuit. “Where a premature request for 

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declaratory relief regarding the duty to indemnify is joined to a ripe request for 

declaratory relief regarding the duty to defend, a well-accepted practice is to 

retain jurisdiction over the latter request and stay, but not dismiss, the 

premature request.” Hartford Fire Ins. Co. v. Weathertrol Maint. Corp., No. 16–

24509–CIV, 2017 WL 5643298, at *5 (S.D. Fla. Feb. 21, 2017); see also United 

Specialty Ins. Co. v. Tzadik Acquisitions, LLC, 2019 WL 5110836, at *2 (M.D. 

Fla. Aug. 12, 2019) (staying insurer’s request for declaratory relief as to its duty 

to indemnify insured pending the resolution of the underlying state court 

lawsuit); Mid-Continent Casualty Company v. Gozzo Development, Inc., 2017 WL 

3578846 (S.D. Fla. Aug. 19, 2017) (same). Accordingly, this Court should stay 

Hanover’s request for a declaratory judgment that it is not required to indemnify 

Defendant until such time as the underlying DCF lawsuit is resolved.

IV. Adoption of Arguments of Other Defendants 

Defendant adopts any applicable arguments raised in the other 

defendants’ motions to dismiss. 

V. Conclusion 

Based on the foregoing, Defendant requests that Count I and II of the 

complaint be dismissed and that Count III be stayed until the DCF Lawsuit is 

resolved. Alternatively, Defendant requests that the entire action be stayed 

pending disposition of the DCF Lawsuit.

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Respectfully submitted this 8th day of June 2020.

COPPINS MONROE, P.A. 

 By: /s/ Zackery A. Scharlepp 

Zackery A. Scharlepp, FBN: 0058374

John J. Van Hise III, FBN 125151

1319 Thomaswood Drive 

Tallahassee, Florida 32308

Telephone: (850) 422-2420

Facsimile: (850) 422-2730

zascharlepp@coppinsmonroe.com

jvanhise@coppinsmonroe.com

jclark@coppinsmonroe.com

ATTORNEYS FOR DEFENDANT

SANDRA BARNETT

CERTIFICATE OF SERVICE 

Pursuant to Federal Rule of Civil Procedure 5(b)(3) and N.D. Florida Local 

Rule 5.1, this document is being filed electronically and service shall be through 

the Court's transmission facilities on all persons appearing before this Court.

s/ Zackery A. Scharlepp 

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