We live in a digital age, where information is stored and transmitted electronically, often with little regard to the science and technology that makes it possible. Digital information is much different than traditional hard copy, print, or other physical information. Electricity, magnetic disks, and fiber optics allow information to be created, modified, transferred, and destroyed in an instant.
In first-party property insurance litigation between a condominium association and its insurance company, the parties are generally required to plead the facts of their allegations and defenses in such a way that the judge or jury could apply them to the law. If the party does not plead in such a way, the allegations or defenses may be stricken, dismissed, or the court may allow for amendment.
Florida Statute § 718.111(4) gives condominium associations the power to make and collect assessments to “lease, maintain, repair, and replace the common elements of association property.” Typically, if common areas owned by condominium associations are damaged or destroyed, the associations may seek to have each of the individual unit owners pay for a portion of the damage. If the loss is one that the association is insured against, the association may still assess unit owners for any costs or liabilities other than what is recovered from the insurance claim.
In condominium associations, where individual owners share a common interest in property and are often within close proximity to each other, it is not uncommon for disputes to arise between individual owners. Resolution of these disputes often turns on how the property relationships are defined by condominium association documents and bylaws, as well as state condominium statutes. In a recent decision from Ohio, the court analyzed the rights and responsibilities between two unit owners when a water leak in a top unit caused damage to a lower unit that was not covered by insurance.
Condominium property is often divided and categorized into association property and unit property. Association property can be further subdivided into common elements and limited common elements. How an area of condominium property is classified may change the respective rights and responsibilities of the association and its members, including whose insurance will cover damage to each type of property.
Is a condominium association responsible for damage to individual condominium units caused by negligent maintenance of common elements? The answer is, “it depends.”
Last week on the Property Insurance Law Blog, I discussed a Florida statute that often requires insurance companies to repair undamaged parts of a property in addition to the damaged parts of the property. As discussed, Florida and federal courts have held that Florida Statute § 626.9744 only applies to homeowners’ policies, and not condominium association policies that are considered “commercial residential” policies. See Ocean View Towers Ass’n, Inc. v. QBE Ins. Corp., 11-60447-CIV, 2011 WL 6754063, *9 (S.D. Fla. Dec. 22, 2011). Despite the statute not covering commercial properties, a commercial residential policy may require an insurance company to repair undamaged property as well.
Last week on the Property Insurance Law Blog, I wrote about a condominium association that sued its insurance company for failing to discover all Hurricane Wilma damage. The association discovered additional damage several years after the storm, and rather than file a supplemental claim for damage, the association filed suit. The insurance company claimed that the association needed to notify it of the newly found damage and submit to a secondary investigation before it could recover benefits. Judge Robert N. Scola, Jr., of the United States District Court for the Southern District of Florida, disagreed, finding that the insurance policy did not require a supplemental claim.
When condominium associations suffer millions of dollars worth of catastrophic damage from a natural disaster, most associations will need to rely on insurance proceeds to start and complete repairs. Indeed, that is why they purchased insurance in the first place. Unfortunately for condominium associations in Florida without millions of dollars in reserves, recent legal opinions may not help when it comes time to make those repairs.
A few years back, several journalists began reporting about a new trend in product packaging: offering less product for the same price. One of these journalists, Michael Brush, dubbed PepsiCo’s subtle repackaging as, “The incredible shrinking Doritos bag.” Most companies cited rising costs as the reason for reducing sizes, but when the result ends up being higher profits and larger market share, those motives could rightfully be challenged. According to Brush and Harvard Business School Professor John Gourville, this strategy works because consumers don’t react to a change in quantity like they do to a change in price. Unfortunately for insurance consumers, this trend is finding its way into the insurance industry.