Insurer of Naples condo damaged by Wilma wins Florida Supreme Court ruling

Article Courtesy of The Naples News

By Tracy X. Miguel

Published August 22, 2012


NAPLES After Hurricane Wilma battered the Monaco Beach Club condominium in Naples, one of the largest insurance companies in the world paid nothing when it accused the condo association of inflating its claim and won its case.

Now, the state Supreme Court has ruled in another case in favor of the major insurer QBE Insurance by concluding it didn't act in bad faith when it failed to quickly respond to Hurricane Wilma claims in 2005 for an east coast condo.

Australian-based QBE originally had been ordered to pay $8.1 million to the Chalfonte Condominium Apartment Association in Boca Raton, most of it for actual damages and part of it for a bad-faith claim. The Supreme Court ruling reversed that lower court decision.

Donna Berger, a Fort Lauderdale attorney who specializes in condominium law, said the east coast case is significant in arguing if there's a breach of contract.

"It will have an impact on any association with policies that are trying to claim breach of contract for failure to comply with the statutory requirements," said Berger, who works with Katzman Garfinkel & Berger, a statewide association law firm that has offices in Naples, Fort Myers and Orlando.

Former Supreme Court Justice Raoul Cantero, now a partner with the White & Case firm that represented QBE, said the decision has broad implications for insurers doing business in Florida beyond QBE.

"Essentially, the court ruled that there is no penalty for an insurance company that violates a provision of Florida law requiring hurricane policies to include warnings of large deductibles in oversize type," Cantero said in a statement.

While the QBE court case with Monaco Beach Club is over in Collier, the fallout from Wilma-related damage at the condo hasn't ended.

Still working its way through the court system is a class-action lawsuit filed in Collier Circuit Court in 2011 by Monaco Beach Club condo owners, seeking damages for the QBE insurance claim gone wrong.

The lawsuit, filed in Collier Circuit Court, is against the condo association and those members of its board of directors who were in office when the insurance claim for hurricane damages was made with QBE.

Every owner at the time when Hurricane Wilma hit in 2005 whether they had damage or not to their condo ended up with an assessment of more than $100,000 to pay for repairs to the 18-story, Gulf-front building off Gulf Shore Boulevard in Naples.

Four owners at Monaco Beach Club filed the lawsuit on behalf of others who they say have been similarly hurt by the then-directors. The plaintiffs are Stefaan Bultinck, Bruce Tennyson, Roger DeMontravel and Mary Ellen Boyer.

"We are still pursuing it and we are still in the early stages of litigation," said David Bierman, an insurance attorney with The Law Office of Russel Lazega in Miami, which represents the plaintiffs.

Bierman declined to elaborate, but said they are willing to negotiate a settlement. The opposing attorney said the civil case should be thrown out of court.

"The lawsuit is baseless and misguided," Naples attorney Edward Cheffy said in an email.

"The individual defendants served voluntarily and without pay as members of the board of the association. In processing the insurance claim, they acted on the advice of legal counsel and various experts including a general contractor, an engineer, and individuals with specialized knowledge about glass and carpet. It makes no sense that volunteer board members relying upon experts should be sued because a jury in another case decided to reject the claim against the insurance company."

QBE Insurance, the building's insurer, paid nothing after it accused the condominium association of inflating its claim, which originally came in at more than $20 million. After a long legal battle in Collier Circuit Court, a jury sided with QBE.

Earlier this year, Cheffy said, the former directors filed a motion to dismiss the class-action case, which a judge granted. The suit was revised and refiled, however.

"We are optimistic that they will be dismissed again when our pending motion to dismiss is heard," Cheffy said.

The former directors named in the suit are Ronald Klein, Thomas Thompson, Robert Borgstrom, Kenneth Jagger, Henry Beckman, John Sanders, James Riddle, Barbara Weiss and Nicholas Cullen. They either declined to comment or couldn't be reached.

On April 23, a proposal for settlement was filed by board members, according to court records. Most recently, the sides have been gathering evidence.

"In the meantime, one of the ironies in this case is that the association is required to indemnify our clients, so all unit owners, including the handful who have filed this suit, will end up paying the legal fees of the people who have been sued," Cheffy said. "To make matters worse, the lawsuit has the effect of depressing property values in the building, so all unit owners are being negatively impacted by this misguided lawsuit."

Paula Symons, a communications consultant for QBE in Wisconsin, said she couldn't discuss specific claims and had no additional information to share on the Monaco Beach Club case, nor the frequency of fraud in claims against QBE.

"QBE has been in business for more than 100 years, and we have a reputation for prompt, fair and courteous claims service," Symons said.