Florida Southern District Grants Summary Judgment Against QBE, Finding Coverage For Association's Windows And Sliding Doors Damaged By Hurricane Wilma

The Southern District Court of Florida entered summary judgment in favor of the Royal Bahamian Condominium Association and found coverage for the windows and sliding doors damaged during Hurricane Wilma in 2005. Royal Bahamian Association, Inc. v. QBE Insurance Corporation, No. 10-21511 (S.D. Fla. October 28, 2010). It is an important ruling, since a majority of the damage claimed by the association from Hurricane Wilma was to the windows and sliding doors. QBE took the position that the windows and doors were not covered because those items are the individual unit owners’ responsibility to maintain under the condominium declarations. The association board members operated under the mistaken belief for several years after the loss that the unit owners were responsible for repairing and replacing the windows and doors damaged during the hurricane. The board sent out notices advising the unit owners of its interpretation of the condominium declarations and quoting the pertinent sections of the declarations related to unit owner responsibility to maintain the windows and doors. Once the association retained counsel and a team of experts experienced in first-party property insurance, it submitted a Proof of Loss to QBE for over $8 million in damages caused by Hurricane Wilma in 2009.

The association and QBE actually filed competing Motions for Summary Judgment interpreting the same policy provisions in different ways. QBE sought a judicial ruling that the policy provided no coverage for the windows and sliding doors, while the association sought a judicial interpretation of coverage for these items. The Court used a two part analysis to resolve the issue. First, the Court analyzed whether the association’s condominium declarations obligated the association to insure the windows and sliding glass doors for hurricane damage. QBE asserted that the declarations (under maintenance) require the unit owners to perform all necessary repairs and replacements to windows and doors at the unit owner’s sole expense. Royal Bahamian’s counsel distinguished the maintenance obligation from the insurance obligation; each is in a distinct provision within the declarations.

The Court looked at two administrative decisions by the Florida Department of Business and Professional Regulation Division of Florida Land Sales, Condominiums, and Mobile Homes, which specifically identify an association as the party responsible for insuring windows and sliding glass doors. One of the decisions specifically held that, despite a paragraph in a condominium declaration that made it the unit owners’ responsibility to maintain, repair, and replace screens, windows, entrance doors, and all other doors, the association was obligated to insure and pay for repair and replacement of those items due to hurricane damage. In re Petition for Declaratory Statement Molokai Villas Condo. Ass'n, Inc., DS 2006-028, Docket No. 2006035317, ¶ 35 (Aug. 28, 2006). The Division stated that Florida Statute §718.111(11) controls any provision to the contrary in a declaration of condominium and is deemed to apply to every residential condominium in the state, regardless of the date of its declaration. So the Court found that the association had a clear obligation to insure the windows and sliding glass doors from hurricane damage. The Court was most persuaded by the Division’s administrative decisions providing clarity on the topic since the Division has special expertise in regulating condominiums and interpreting the condominium statute.

Second, the Court analyzed whether the windows and sliding glass doors were classified as some “other portion” of condominium property and covered by the policy provision providing coverage for “Any other portion of the condominium property, if your Condominium Association Agreement requires you to insure it.” The Court found that the association is required under its general obligation to insure the ‘building ... including all of the units and common elements.” The Court applied a standard to construe the policy provision in light of the skill and experience of an ordinary person in concluding that the doors and windows are a portion of the condominium property, and surely an ordinary person would understand that construction. QBE had argued that the notices circulated by the association’s board after Wilma revealed that they understood that the unit owners were required to repair and replace these components under the policy provision. The Court was not influenced by that argument and it ruled in favor of the association and coverage for the windows and sliding glass doors under the policy and declaration language.

The Royal Bahamian ruling on this summary judgment is important and provides clarity for the distinction between an association’s obligation to insure items from hurricane damage which are typically within an individual unit owner’s maintenance responsibility, absent a hurricane catastrophe. Royal Bahamian went on to trial by jury and obtained a favorable verdict.

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