Case Explained: RLI INSURANCE COMPANY v. JOHN LEHMAN ALICIA LEHMAN

Court: United States Court of Appeals for the Eleventh Circuit Filed: 2026-08-07 Docket: 5:22-cv-00478-JSM-PRL The eleventh-circuit vacated the district court’s grant of summary judgment to the Lehman defendants and remanded the case with instructions to enter summary judgment in favor of RLI Insurance Company. The court held that under Florida law, the Lehmans failed to satisfy the exhaustion requirement of their umbrella insurance policy because they did not fully consume the limits of their underlying Philadelphia Indemnity Insurance policy. The court applied a de novo standard of review and interpreted the insurance contract according to its plain meaning as a Florida Supreme Court would. Relying on dictionary definitions, the court determined that the term “exhaust” denotes the total use or consumption of an object until nothing is left. The RLI policy explicitly required that “policy limits of any and all Underlying Insurance have been exhausted by payment of judgments or settlements.” Because the Lehmans settled their claim with Philadelphia for $50,001 against a $500,000 policy limit, they had not fully consumed the underlying policy’s limits. The court distinguished the Lehmans’ reliance on *Reliance Insurance Co. v. Transamerica Insurance Co.*, noting that case involved a materially different exhaustion clause and did not address the plain meaning of “exhaust” in the context of specific policy limits. As a practical consequence, the district court must now enter summary judgment for RLI, effectively denying coverage under the umbrella policy because the condition precedent of exhausting underlying limits was not met. Do It For The Case Law is a news reporting service. Nothing in this episode constitutes legal advice.