A recent decision of the U.S. Court of Appeals for the Eleventh Circuit provides some important pointers for insurers and their appellate counsel about appealing decisions in declaratory judgment actions. The key point is that before taking an appeal, the would-be appellant needs to ensure that there is either a final judgment or an order that is enforceable by the contempt power and awards substantive relief to the prevailing party.
In Northfield Insurance Co. v. North Brook Industries, Inc., – F.4th –, 2026 WL 1453206 (11th Cir. May 22, 2026), the insurer, Northfield, brought a declaratory judgment action regarding whether under a commercial general liability insurance policy it had a duty to defend or indemnify its insured, North Brook, a hotel operator, in an underlying case involving sex trafficking. North Brook responded to the suit by filing a motion to dismiss arguing that: (1) the claim relating to the duty to indemnify was not ripe (as it needed to await resolution of the underlying action); and (2) Northfield’s coverage position was incorrect and therefore there was a duty to defend. The district court agreed that a duty to defend existed, granted the motion to dismiss, and retained jurisdiction with respect to the duty to indemnify.
Northfield appealed the district court’s order, asserting that the district court’s order was equivalent to an injunction requiring Northfield to defend the underlying action, and therefore the order was appealable under 28 U.S.C. § 1292(a)(1).
On its own initiative, the Eleventh Circuit questioned whether it had appellate jurisdiction. It explained that “[t]o have the injunctive effect necessary for appeal, the order (1) must be a clear and understandable directive from the district court, (2) must be enforceable through contempt proceedings, and (3) must give some or all of the substantive relief sought.” (Cleaned up.) In another case, James River Insurance Co. v. Ultratec Special Effects Inc., 22 F.4th 1246 (11th Cir. 2022), the court had found appellate jurisdiction because the district court’s order affirmatively granted declaratory relief in favor of the insured, and the order was equivalent to an injunction because if the insurer failed to pay defense costs it would be subject to contempt proceedings. In North Brook, in contrast, the district court only concluded that the insurer’s declaratory relief claim failed to state a claim and did not award relief in favor of the insured. Accordingly, the court of appeals dismissed the appeal for lack of appellate jurisdiction.
The Eleventh Circuit pointed out two ways that an insurer faced with the same situation could ensure that the district court’s order is appealable. First, the insurer could move the district court to enter a Rule 54(b) partial final judgment regarding the duty to defend. Second, the insurer could seek leave to amend the complaint to withdraw the request for declaratory relief on the duty to indemnify. If the second route is chosen, the insurer may need to try to ensure that it is not waiving its right to later litigate the duty to indemnify.