Condominium Insurance Law : Condo Insurance Lawyers & Attorneys : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables & West Palm Beach

"Custom in law is the established pattern of behavior that can be objectively verified within a particular social setting.” Wikipedia. Recently, the Federal Middle District Court in Florida decided a discovery dispute between a condominium association and its insurer, Nationwide, in the case Pepperwood of Naples Condo. Ass’n., Inc. v. Nationwide Mut. Fire Ins. Co., No. 2:10-cv-753, 2011 WL 3841557 (M.D. Fla. August 28, 2011). Discovery disputes arise when one party asks another to produce information, but the other party coes not comply. It is common for insurers to refuse to produce claim file materials, claiming the documents are protected by certain privileges and citing other objections. The Pepperwood case involved a situation where the condominium association sued Nationwide for bad faith damages for not promptly paying all insurance proceeds from the 2004 hurricane damages and forcing it to incur additional expenses in the claim presentation through an appraisal process.

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Almost twelve years ago, Florida’s Third District Court of Appeal published its opinion in U.S. Fid. & Guar. Co. v. Romay, 744 So. 2d 467 (Fla. 3d DCA 1999). As of the writing of this post, Romay has been cited in no less than 44 published court opinions. Most of these cases, like the recent Citizens Prop. Ins. Corp. v. Gutierrez, 59 So. 3d 177 (Fla. 3d DCA 2011), cite the language from Romay which requires that “[t]he insured must comply with all of the policy's post-loss obligations before the appraisal clause is triggered.” Unfortunately, this statement is only half of Romay. This is the half that focuses on the insured’s obligations. There is another side of Romay that focuses on the insurer’s obligations, and although this other side is not often discussed, it recently found its way into a published opinion from the United States District Court for the Southern District of Florida in 200 Leslie Condo. Ass’n, Inc. v. QBE Ins. Corp., No. 10-61984-CIV, 2011 WL 2470344 (S.D. Fla. June 21, 2011).

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In a recent opinion, a federal trial court reviewing Florida law ruled on the issue of whether a Complaint involving a condominium association stated a claim against insurers for breach of a fiduciary duty in adjusting a first-party claim for damages. Grandrimo v. Parkcrest Harbour Island Condo. Assoc., Inc., No. 10-964, 2011 WL 550579 (M.D. Fla. February 9, 2011). The claim involved significant water damage, requiring extensive repairs forcing the Plaintiff, a unit owner within the condominium association, to stay in a hotel. The Plaintiff filed suit against the condominium association and numerous insurer Defendants asserting, among other things, that the insurers breached a fiduciary duty in the handling of the claim.

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Last week on the Property Insurance Coverage Law blog, I wrote about new appeals that had been filed in Florida’s Third District Court of Appeal in Miami regarding insurance appraisals. Since November of 2010, three new cases regarding appraisal had come out of the Third District: Citizens Prop. Ins. Corp. v. Galeria Villas Condo. Ass’n, Inc., 48 So. 3d 188 (Fla. 3d DCA 2010), Citizens Prop. Ins. Corp. v. Maytin, No. 3D10-693, 36 Fla. L. Weekly D51 (Fla. 3d DCA Dec. 29, 2010), and Citizens Prop. Ins. Corp. v. Mango Hill Condo. Ass’n 12, Inc., No. 3D10-2014, 2011 WL 613518 (Fla. 3d DCA Feb. 9, 2011). As of last week’s blog post, four new appeals had been filed by Citizens, which makes a total of seven (7) appraisal appeals filed by Citizens in the Third District alone.

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Anyone who has submitted an insurance claim knows that the investigation can be lengthy. For a condominium association, the investigation can be much more troublesome. Not only must the association investigate potential damage, but the insurance company and its adjusters and consultants will undoubtedly want access as well.

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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.

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Recently, the Florida Fourth District Court of Appeal reversed a trial court decision that denied attorney’s fees for a condominium association after it was successful in getting a suit against it dismissed. In Point East Four Condo. Corp., Inc. v. Zevuloni & Assoc., Inc., No. 4D09-3221, 2010 WL 4962853 (Fla. 4th DCA Dec. 8, 2010), a condominium association signed a contract with a public adjuster to handle its claim under an insurance policy. The contract provided that 10% of the amount recovered would be payable to the public adjuster. The contract also provided that the prevailing party in “any action” would be entitled to attorney’s fees, payable by the losing party.

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In Can a Condo Association Get Out of an Insurance Settlement Agreement? Jeremy Tyler discussed a recent California case involving a homeowner association’s challenge of an insurance settlement agreement. He provided an analysis into the factors an association would need to consider when attempting to challenge an insurance settlement agreement. Challenging such a settlement, even if based upon fraudulent inducement, can be a difficult decision for an association to make since, as Jeremy discussed, they may have to return the payment they did receive from the insurer. The facts in the case of Village Northridge Homeowners Ass’n v. State Farm Fire and Cas. Co., 237 P.3d 598 (Cal. 2010), where the policyholder alleged that the insurance company represented that the policy provided only $4.9 million worth of coverage when it in fact it provided $11.9 million, is very problematic and troubling.

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Last week, the Florida Fourth District Court of Appeal issued its ruling in Citizens Property Ins. Corp. v. Michigan Condo. Ass'n, No. 4D10-1794, 2010 WL 4226281 (Fla. 4th DCA Oct. 27, 2010). Michigan Condo. involved a condominium association that suffered damage to its property from Hurricane Wilma. The association timely notified its insurance company, Citizens, which investigated and estimated the amount of hurricane damage to be below the association’s insurance deductible. The association relied upon Citizens’ estimation, but later realized that damages were, in fact, in excess of the deductible, and reopened the claim. After Citizens had spent close to a year investigating the claim with no coverage decision, the association filed a Petition to Compel Appraisal in circuit court, based on the appraisal provision in the insurance policy. Citizens, in turn, denied coverage for the claim. Because there was a dispute in the amount of damage, with Citizens estimating the damage below the deductible and the association estimating the damage above the deductible, the circuit court ordered appraisal, and Citizens appealed.

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Although Florida has not seen a major hurricane touch its shores since Hurricane Wilma in 2005, Citizens Property Insurance Corporation may be raising rates on many of its policyholders. Earlier this month, Insurance Commissioner Kevin McCarty approved additional rate increases that will affect thousands of insureds, including many condominium associations.

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Recently, the Third District Court of Appeals issued an opinion reversing a summary judgment that had been entered in favor of an insurer in a case involving a condominium association’s hurricane damage claim. I wanted to write about the case because it is an interesting ruling related to the topic of an insurer’s late notice of a “supplemental” claim defense, which is a topic that Jeremy Tyler and I have written about previously.

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In a recent post on Property Insurance Coverage Law Blog, Jeremy Tyler discussed general issues with the statute of limitations for filing lawsuits. As Jeremy correctly pointed out, the statute of limitations is a legal deadline for filing a lawsuit. If a lawsuit is not filed before the statute of limitations has expired, the lawsuit may be barred, despite the merits of the action. Complying with the statute of limitations is extremely important, and any association that suffered damages from Hurricane Wilma should pay close attention to the status of its claim and immediately make decisions on how to best proceed.

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As I discussed in a previous post, What Is Bad Faith And What Can Be Done About It, most states, including Florida, recognize that every contract contains an inherent obligation that each party will perform with the utmost good faith and fair dealing. While insurance policies may not seem like typical contracts, they are. Therefore, when an insurer performs its contractual duties, i.e., adjusting a loss and making a coverage determination, it has a common law contractual obligation to perform in good faith.

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In Florida, the work of adjusting insurance claims engages the public trust. Policyholders, both commercial and residential, are generally not very sophisticated in insurance issues and therefore must rely on their insurance company to fairly and honestly adjust losses and timely pay the amounts due under the policy.

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The answer to this question is a resounding, it depends. As is often the case in law, the answer to this question depends on such things as the particular language of the policy, the areas of inquiry requested by the insurer, and whether different individuals have knowledge regarding the areas of inquiry.

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The other day, a colleague and I were discussing potential insurance issues that could come up when another major catastrophe hits Florida. The conversation led to the subject of insurance application errors, which reminded me of Corey Harris’ post from June 8 of this year. Corey’s post accurately describes the rule of law in Florida under Florida Statute § 627.409, that any misrepresentation on an insurance application in Florida, whether innocent or intentional, may void coverage.

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Your first impression after reading the title of this article may be: “well that is obvious since there are residents that live within condominium associations.” Condominium claims are sometimes referred to simply as commercial claims when, in fact, they are classified by Florida Statute as “residential.”

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I received several questions on my last post regarding the force place insurance provision that will be removed from Fla. Stat. § 718.111(11) on July 1, 2010. This week, I explain the history of the provision to clarify some of the information I provided two weeks ago.

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There are often disagreements between association board members, unit owners and property managers regarding what constitutes condominium association property for insurance claim purposes. In these situations, there can be confusion between the association’s duty to maintain condominium property and the duty to insure condominium property. The condominium statute, §718.111(11), addresses the association’s duty to provide primary insurance coverage protecting the association.

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(Note: this guest blog is by Jeremy Tyler, an attorney with Merlin Law Group in the Coral Gables office).

I am very excited to have the opportunity to contribute to this blog. Shaun Marker and I will be contributing to the Condominium Insurance Law Blog each Monday. Please check back frequently, as we have a lot to discuss.

For starters, in the recent legislative session, the Florida Legislature made numerous changes to Florida Statute § 718.111, which regulates condominium associations. For this blog, I’ll focus on the changes the Florida Legislature made to § 718.111(11) that deals with condominium insurance.

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In my last blog post, June 1st Is The First Day Of Hurricane Season, I discussed the importance of an association checking to make sure that policies are in effect and contain the proper coverages before disaster strikes. It is equally important to make sure that the information in the insurance application is correct. Otherwise, insurers may attempt to deny even the most obvious of covered losses.

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Our firm has been receiving calls from a large number of Florida condominium associations over the past few days regarding the increasing problems associated with the oil spill that is plaguing the gulf coast. I have a personal connection to this growing crisis. I spent a large portion of my life in Destin, Florida, and part of my family still lives and works in the area. Late last night, I flew to the panhandle to see what our firm could do to help.

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In Florida, discovery in breach of contract actions usually centers around the mystical “claim file” which insurers guard more closely than their first born child. As most who read this blog already know, the “claim file” has been held to be generally protected by Florida courts, and usually undiscoverable in a breach of contract action.

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