Recently, the United States Court of Appeals for the Eleventh Circuit issued a reminder of the limits of the jurisdictional power granted to courts of appeal. Northfield Ins. Co. v. N. Brook Indus., Inc., No. 24-13333, 2026 WL 1453206, — F.4th —- (11th Cir. May 22, 2026).
An alleged sex trafficking victim filed a lawsuit against a hotel operator alleging claims for negligence and based on the hotel operator’s alleged violation of the Trafficking Victims Protections Reauthorization Act. The hotel operator had a commercial liability policy that generally provided coverage for “bodily injury” (Coverage A) and “personal and advertising injury” (Coverage B). But, endorsements to the policy included a sublimit on claims arising from an “assault or battery offense” and exclusions for “abuse or molestation” and “assault or battery offenses” the insured “knowingly allowed to happen.”
The insurer filed a declaratory judgment action against the insured and the underlying plaintiff in the United States District Court for the Northern District of Georgia seeking a declaration regarding its duties to defend and indemnify the insured in the underlying lawsuit. Namely, it sought declarations the underlying claims did not constitute personal and advertising under Coverage B, and the endorsements exclude coverage. The insured and the underlying plaintiff filed a motion to dismiss for failure to state a claim as to the former duty and ripeness as to the latter.
The district court held the underlying complaint asserted claims for “bodily injury” under Coverage A and “personal and advertising injury” under Coverage B, but the insurer failed to show the endorsements unambiguously barred or limited coverage. It granted the insured’s motion to dismiss as to the duty to defend but denied as to the duty to indemnify, finding that issue was not ripe pending resolution of the underlying lawsuit and staying the indemnity issue (rather than dismissing) in the interest of efficiency. Northfield Ins. Co. v. Northbrook Indus., Inc., 749 F. Supp. 3d 1325 (N.D. Ga. 2024). The insurer appealed the dismissal.
Although the insured did not raise jurisdictional arguments, the United States Court of Appeals for the Eleventh Circuit ordered the parties to address the threshold issue of whether it had jurisdiction over the appeal. Because the district court’s order was nonfinal, the issue was whether the order effectively grants injunctive relief. “To 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.’”
The court found its decision in James River Ins. Co. v. Ultratec Special Effects Inc, 22 F.4th 1246 (11th Cir. 2022) instructive. There, the insurer sought a declaration it had no duty to defend or indemnify, and the insured sought a filed a counterclaim seeking a declaration the insurer owed a duty to defend and moved for summary judgment on that issue. The court granted summary judgment for the insured, and the insurer appealed. The court decided the summary-judgment order was “akin to an injunction” because it “effectively” required the insurer to pay defense costs, and a failure to pay would subject the insurer to contempt proceedings. The insureds also expressly sought injunctive relief.
Unlike in Ultratech, the Eleventh Circuit found the partial dismissal order for failure to state a claim did not grant affirmative relief, was not enforceable through contempt proceedings, and did not award substantive relief. The court held the order was not appealable and dismissed the appeal for a lack of jurisdiction.
Courts of appeal have jurisdiction over final judgments and certain interlocutory orders, including injunctions. The United States Supreme Court interprets that jurisdiction as extending to orders effectively granting injunctions, but Northfield serves as a reminder “[t]hat flexibility, though, is not boundless.” Jurisdictional issues can be difficult to navigate. But, the Insurance Coverage Group at LGWM is experienced in dealing with these issues, including those arising in the context of insurance coverage litigation, and is available to answer your questions about this complex but foundational area of the law.