In 2005, owners of Ocean Beach Resort Condominium began entering into negotiations with a development company for the sale of their individual units. When Hurricane Wilma struck in October of that year, approximately 45 owners had already agreed to sell. The other 21 owners agreed to sell shortly after the storm occurred. In 2006, the developer took possession of all of the units as well as the association.
There is a lot of litigation from Hurricane Wilma still proceeding in Florida state and federal courts. Much of that litigation has concerned whether the policyholders have complied with their post-loss duties to submit information, documentation and appear for examination under oath. During the last year or so, probably the heaviest litigated issue concerns whether the policyholder gave adequate notice of the loss to the insurer as required by policy terms. Insurers that raise such a defense are looking for a judgment on a technicality, and request the court to declare that they have no responsibility for any damages because the policyholder breached their duty to notify them of the loss.
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.
The fact pattern is simple and quite common. An association suffered damages from Hurricane Wilma on October 24, 2005, and immediately notified its insurance carrier that the loss had occurred. The insurance carrier, in turn, retained an adjuster to investigate the loss and determine what was owed under the policy. After a brief inspection, the adjuster determines that the damages do not exceed the large hurricane deductible contained in the policy and denies payment.
Last week in Can Insurers, Through Written Statements, Waive A Statute Of Limitations Defense?, I wrote about how Florida’s five-year statute of limitations applicable to the 2004 and 2005 hurricanes can be difficult to determine because it begins on the date an insurer breaches an insurance contract. Last week’s post discussed how the U.S. District Court for the Middle District of Florida held that the statute of limitations defense can be waived by insurers through written statements. The Southern District recently analyzed whether a claim for declaratory relief related to a statute of limitations issue in a Hurricane Wilma case was ripe for determination.
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.
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.
The story goes like this: A condominium association in South Florida incurred damage during Hurricane Wilma. The association called its insurer, which sent an insurance adjuster to inspect the damage. The adjuster determined that the damages were below the deductible. The association’s board of directors considered re-opening the claim while there is still time. Based on unit owner complaint, the Board recently discussed hiring insurance professionals to determine whether the condominium sustained more extensive damage than that found by the insurance company’s investigation. Unit owners within the association have expressed their feelings that it is imperative to conduct this investigation before it is too late. The unit owners have even threatened to sue the board for its inaction if the appropriate steps are not taken.
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.
While most people don’t pay close attention to the hurricane forecasts each year, in my business, one would be foolish not to. Yes, the forecasts for the past few years have suggested that the Atlantic hurricane seasons would be very active. And yes, these reports have turned out to be incorrect. So why do I take the time to check these predictions? The answer is simple, it helps me advise clients on the risks associated with hurricanes and helps me to motivate people to check their coverage.