In Selective Ins. Co. of the Southeast v. William P. White Racing Stables, Inc. (, the Eleventh Circuit recently ruled that a liability insurer is not required to defend its insured against a claim for spoliation of evidence.  In the underlying case a jockey, James Rivera, was paralyzed in a racing accident when the horse he was riding suddenly collapsed.  Mr. Rivera sued the race track, Mr. Rivera’s employer, and the horse’s veterinarians, claiming that the horse was not fit to be raced due to the negligence of most of the defendants.  His claims against his employer, White Racing Stables, did not assert negligence but alleged that by failing to preserve the horse’s remains, White Racing had violated Florida’s workers compensation law by failing to investigate and pursue Mr. Rivera’s claims against the other defendants.  He also asserted a claim for spoliation.

White Racing’s liability insurer, Selective Insurance Company of the Southeast, refused to defend White Racing because Mr. Rivera did not seek damages arising from “bodily injury by accident.”  White Racing contended, in a declaratory judgment action filed by Selective in the U.S. District Court for the Southern District of Florida, that Selective was obligated to defend White Racing because the factual allegations of the underlying complaint were sufficient to allege a negligence claim, even if Mr. Rivera had not asserted a negligence cause of action against White Racing.  The district court agreed with White Racing and entered a partial judgment requiring Selective to defend White Racing.  On appeal, the Eleventh Circuit reversed, finding that the specific claims brought by Mr. Rivera against White Racing, which were for failure to preserve evidence, did not trigger the Selective policy’s “bodily injury by accident” coverage.  The circuit court refused to impose a duty to defend on the “mere theoretical possibility” that Mr. Rivera could assert a negligence claim against White Racing at a later time.

The Selective Insurance opinion relies on the unremarkable principle that there can be no duty to defend “based upon a theory of liability which has not been pled.”  However, the Eleventh Circuit noted that under Florida law, an insurer’s duty to defend is broader than its duty to indemnify, and that an insurer must defend even if the facts alleged in the underlying complaint are untrue or the legal theories are unsound.  Accordingly, Selective Insurance applies only in circumstances where none of the claims a plaintiff asserts against an insured are covered under a liability policy.