Article Courtesy of The Miami
By Beatrice Garcia
Published July 17, 2009
For nearly four years, residents of an Aventura
condominium who saw their balconies and hallways torn apart by Hurricane
Wilma have been waiting for a check from their insurance company to make
badly needed repairs.
Tired of waiting, the residents of the El Dorado
condo association finally took out a $15 million loan to get the work done
-- and have sued the insurer for the repair money.
The El Dorado residents aren't alone: QBE Insurance,
the largest private insurer of condo associations in Florida when Wilma
hit, has been sued 72 times in federal and state courts over claims that
the company has either delayed or denied payment on claims. The lawsuits
cover claims from the eight hurricanes that hit Florida in 2004 and 2005.
Another South Florida condo hit by Wilma, Buckley
Towers in North Miami Beach, won a federal jury verdict against QBE for
about $25 million in February -- but the company has yet to pay. The
association desperately needs the money: It has been told by Miami-Dade
County that its two buildings could be condemned if work isn't completed
in 19 months.
''It's a Catch-22 situation. QBE doesn't pay the
claims, yet condo associations are required to make repairs,'' said Daniel
Rosenbaum, a West Palm Beach lawyer who has handled 30 cases involving QBE.
"But they can't because they are so expensive.''
William S. Berk, an attorney for QBE, says the
company received 1,500 claims on hurricane damage from the eight
hurricanes and that QBE has paid out $275 million so far on claims. Given
that large number of claims, the insurance company doesn't see the
lawsuits as an overwhelming number, he added.
Complaints from 124 different condo associations
have also flooded the Department of Financial Services in Tallahassee.
QBE, part of a large Australian-based insurance
group, says it has settled 46 of the 72 lawsuits, and another 26 remain
open from 2004 and 2005 hurricanes, including Wilma.
These include four lawsuits claiming bad faith on
QBE's part -- an allegation that, under state law, can result in the
damages being tripled if a jury agrees.
Five of the lawsuits have gone to trial in the past
year. In two cases, juries have sided with QBE, agreeing with the insurer
that policyholders inflated their claims. One, the Monaco Beach Club
Condominium Association in Naples, is appealing.
But the company, which insured 1,452 condo
associations at the close of 2008, has faced setbacks in three other
`A CONSTANT STRUGGLE'
The residents at Buckley Towers cheered when the
jury in their case awarded them $18.9 million for repairs on the two
buildings, plus interest on their claim. But QBE appealed last month, so
the association won't collect anytime soon. The insurer believes it
doesn't have to pay the award until all appeals are exhausted.
The condition of the buildings is so dire that the
Miami Dade County Unsafe Structures Board is requiring that residents
evacuate as soon as a hurricane warning is issued.
''It's been a constant struggle,'' said Elaine
Gallo, who moved into Buckley Towers five years ago with her husband,
Christopher. "Both roofs need repairs. We're scared of what might
happen after a bad storm.''
The association got a $1.5 million loan from the
Small Business Administration to make the most-needed repairs, including
some on the roofs and the air conditioning system.
''We tried to get a loan against our [court] award,
but the banks aren't interested in lending because our receivables are so
ugly,'' says Mickey Simon, Buckley Towers' treasurer.
Right now, 183 units aren't paying the monthly
maintenance fees, which average about $400 per unit per month. Some owners
just walked away from their units, Simon said. Others are trying to sell,
but some units have been on the market for more than a year.
Last month, the association levied an emergency
assessment to cover the building's electric bill and its monthly mortgage
Damage claims from condo associations are large,
complex and expensive. Attorneys who have faced QBE in court and across
the settlement table say the company drags its feet to delay paying claims
by playing down damage, challenging costs and using its own experts to
dispute the need for repairs.
Jon Zeder, a Miami attorney who negotiated an $8
million settlement with QBE for a community in Indian River County days
before trial, argues "the law says [insurers] should settle claims
when they have a chance to do so.''
QBE contends that it doesn't have to pay a windstorm
claim until all its legal appeals are exhausted. Yet attorneys say the
wording in the insurance policy indicates it will pay when a final
judgment is entered, as in the Buckley case.
As part of QBE's appeal of an $8 million award to
the Chalfonte Condominium Association in Boca Raton, Rosenbaum, the
attorney representing Chalfonte as well as Buckley, has asked the Florida
Supreme Court to clarify when the insurer has to pay. The question is
still pending before the court.
Bob Reynolds, an attorney with the Merlin Law Group
in Coral Gables who has settled 15 condo cases in legal fights with QBE,
says that when the company's adjusters first review a storm-damage claim,
the company often says the damage falls below an association's deductible.
The company will later ask for all maintenance records, transcripts and
audio files from all board meetings, and all financial records, he said.
That's what 1550 Brickell Apartments, two five-story
rental buildings damaged by Wilma, faced.
The buildings filed a claim for $3.3 million to
replace all glass windows and doors and both roofs, as ordered by the city
of Miami. When QBE failed to pay, the rental complex sued. The case is
In 2007, a review by the Florida Office of Insurance
Regulation cited problems with QBE's adjusted claims, including delays in
responding to policyholders and in paying claims. The office says it is
aware of lawsuits pending against QBE, as well as complaints filed with
the Department of Financial Services' consumer division.
The review resulted in a $150,000 fine against QBE.
The company signed a consent order but maintained that it did not commit
Though lawsuits have continued to be filed during
the two years since the review, regulators say they monitor QBE.
''We have to strike a balance between keeping [a
company] that's one of our largest writers and wanting it to be a good
corporate citizen that abides by its contractual obligations and pays its
claims properly,'' said Kevin McCarty, Florida's insurance commissioner.
If QBE doesn't comply, McCarty says regulators have
two options: additional fines or pulling the company's license to sell
insurance in Florida.
Berk, QBE's attorney, says QBE's goal is "to
fully pay valid claims.''
For residents at many of the condo complexes still
trying to negotiate with QBE, frustration reigns because of the long wait
to restore their communities.
El Dorado's condo association filed a lawsuit
earlier this year to force QBE to finalize its claim.
''I can't believe QBE is allowed to do this. All we
want is QBE to sit down at the table and negotiate with us,'' said El
Dorado president Murray Frank.
The condo says chunks of concrete broke off
balconies as Wilma's winds ripped away railings and screen enclosures.
Interior lobbies and hallways were also damaged.
Since Wilma, living at the condo towers that border
the Turnberry Golf Course has been ''a small nightmare,'' Frank said.
Jackhammers raged for nearly a year to remove the damaged portions on the
concrete slabs for 516 balconies.
''It's not normal for [repairs] to take this long,''
said Lillian Simon, who maneuvered with her walker around construction
equipment near the door to one of the two El Dorado towers.
Simon, who has lived at the complex for 10 years,
said the continued state of disrepair "is bad for the neighborhood
and is bad for the tenants.''