Courtesy of The Palm Beach Post
By Jane Musgrave
June 5, 2006
WEST PALM BEACH — For nearly two years, Christopher
Horn's life has been on hold.
The few belongings he was able to salvage after hurricanes
in 2004 tore through his 30th-floor unit in the 1515 Tower are in storage. At
48, he is living with his parents in Palm Beach.
"I never felt at this point in my life I'd be living
with mommy and daddy," he said. "My life has been turned totally
Like many of his former neighbors in the 119-unit condo
along the Intracoastal Waterway near downtown West Palm Beach, Horn blames QBE
Insurance Corp., part of Australia-based QBE Insurance Group, which hasn't paid
the association a dime for the estimated $30 million in damage the tower
"I think what the insurance company has done is
deplorable," he said. "They've ruined 119 lives."
Unless something unforeseen happens, most expect that by
June 29 a company headed by Palm Beach resident Thanos Papalexis will have the
power to buy the vacant and plywood-covered high-rise that was touted as the
tallest residential building in South Florida when it opened in 1974. Already
more than 50 owners have signed contracts to sell their units to Papalexis. He
needs to control 90 units to buy the building.
Horn said he doesn't understand how the situation could
have spiraled so out of control that people feel forced to sell their homes.
"It's just unbelievable to me that the insurance
commissioner of the state of Florida doesn't step in," he said.
Bob Lotane, communications director for the Florida
Department of Insurance, said the agency monitors complaints and lawsuits
against companies and acts against those who are violating state rules. He
declined to say whether QBE is under investigation, claiming such information is
State records show that since the devastating 2004
hurricane season, 10 condominium associations have sued QBE, asking courts to
force the insurer to pay millions in damages.
In addition, the Florida Department of Financial Services
has logged 34 civil remedy notices against the company. The notices, also known
as bad faith claims, alert the state of the dispute and give the insurer 60 days
to negotiate a settlement with the consumer. If no settlement is reached, the
consumer can file a lawsuit and eventually seek punitive damages.
Becker & Poliakoff, a Fort Lauderdale-based firm
that specializes in condominium law, has filed roughly a half-dozen lawsuits and
civil remedy notices against QBE, said Daniel Rosenbaum, who works in the firm's
West Palm Beach office.
"By far we've filed more claims against QBE than any
other carrier," he said.
Citizens Property Insurance Corp., the state-subsidized
insurer of last resort, insures four times as many condo associations as QBE.
However, QBE insures the big ones.
The 1,807 condos QBE covers have an insured valued of $33
billion — more than any other insurer in Florida, state records show.
Citizens, by comparison, insures 7,300 condos, but its exposure is $27 billion.
QBE, in fact, drove up rates for Citizen's policyholders.
When the state this year approved an average 37 percent rate hike for QBE condo
association policies, Citizens got the OK for an average 20 percent boost.
Because Citizens is state-subsidized, by law it must charge more than private
Rosenbaum said the frustration of dealing with QBE is the
enormous silence that has greeted homeowners associations that have called the
company after their roofs blew off and windows shattered.
"The problem we've had on most of our cases is the
failure to adjust the claim at all," he said.
David Avellar Neblett, a Miami attorney who represents El
Dorado Towers in Aventura, which sustained an estimated $38 million in damage
last fall in Hurricane Wilma, offered a similar view.
"The insurance company hasn't come up with an
estimate because if it gives us an estimate, it has to pay that amount," he
In the meantime, he said, about 10 units are
uninhabitable, residents are unable to use their balconies, the air conditioning
units aren't functioning properly and many people are selling their homes at a
loss just so they can move on with their lives.
Rather than file a lawsuit, which he fears will further
delay a settlement of the claim, he has recommended that residents of the
northern Miami-Dade condo smother the state with complaints by filing bad faith
"I'd be happy to sue, but my clients just want to
live in their apartments," he said.
Jeff Eisen, president of the Sunrise-based firm that
represents QBE in Florida, said the company has settled scores of hurricane
claims quickly and amicably.
"For every one where there's a problem, there's 100
that get settled without incident," said Eisen, president of Florida
Intracoastal Underwriters. "It's just the nature of the claim — those
that are complicated take more time to sort out."
Although he declined to discuss any specific claim, he
said some condominium associations have blamed hurricanes for problems that
existed well before Hurricane Frances roared ashore in September 2004.
"When it comes to insurance, there's a little larceny
in everyone," he said, quoting a time-honored maxim of the insurance
Fourteen years ago, after Hurricane Andrew, residents of a
Miami-Dade County condo pushed two huge planters off the roof onto a deck that
had been plagued by cracks, he said. They claimed the deck was damaged in the
When a worker reported what really had happened, the
condominium's entire claim was rejected.
"If we uncover fraud, you will get zip," Eisen
In responses to lawsuits filed by the 1515 Tower and other
condos, QBE attorneys have accused the homeowners associations of fraud.
William "Chip" Merlin, who is representing 1515
in its lawsuit against QBE, said such accusations, part of a laundry list of
alleged sins used to deny claims, are designed to scare associations. Insurers
are supposed to protect homeowners, not intimidate them, he said.
In a trial that is to begin in August, he plans to seek
roughly $32 million for the condominium.
C. Deborah Bain, a North Palm Beach attorney who
represents QBE, didn't return phone calls for comment. However, Larry Alexander,
who is representing Papalexis in his efforts to purchase 1515, said QBE
officials told them they plan to pay nothing toward rebuilding the high-rise.
Horn said he and other 1515 unit owners need the state's
"How can an individual fight against something like
this?" Horn asked.
Lotane, spokesman for the state insurance department, said
the agency will step in if it discovers wrongdoing.
In May, it ordered $2 million in refunds to customers of
American Mercury Insurance Company and Mercury Insurance Company of Florida for
a variety of violations, including improperly denying claims. The companies were
also ordered to pay $1 million in fines and administrative fees.
However, most 1515 residents said they are tired of
fighting. As part of their deal with Papalexis, most have agreed to give up any
future claim they might have to an insurance settlement.
Daryl Cramer, an attorney who is gathering information
about the proposed sale for the association, said Papalexis has offered to pay
$47 million for the building without the insurance claim and an extra $10
million if residents give up their stake.
Horn realizes he may soon be forced to sell.
I'm very upset by the whole thing," he said. "I loved my unit. I loved
living there. It's outrageous that an insurance company can do this."