In The Yacht Club on the Intracoastal Condo. Ass’n. v. Lexington Ins. Co., – Fed.Appx. –, 2015 WL 106862, 2015 U.S. App. LEXIS 293 (11h Cir., Jan. 8, 2015), a unanimous panel of the Eleventh Circuit recently held that a Florida condominium association’s multi-million claim for extensive Hurricane Wilma damage was barred because the insured failed to give notice of loss for fully 55 months. The policyholder’s arguments that it was initially unaware that the damage exceeded the deductible and that it had created an issue of fact with respect to whether the presumption of prejudice had been rebutted because both parties were ultimately able to put up expert evidence of causation were unavailing.
The Yacht Club had 380 units in some 16 buildings, and its property was damaged by Hurricane Wilma on October 24, 2005. It had a $5,000,000 property policy with Lexington, but the Club’s board was initially of the opinion that the repairs would not exceed the policy’s $100,000 deductible and decided not to make a claim, though they subsequently imposed a $150,000 special assessment on residents to pay for the hurricane damage. Over the next year, however, residents complained of a host of problems with roofs, stucco siding, windows, and sliding glass doors, and that led the Club to hire an engineer in late 2006; his report attributed the roof damage to Wilma.
In late 2009, the Club finally secured a public adjuster, and he advised that the property had suffered significant damage from the storm and recommended making an insurance claim. Formal notice of loss was duly sent to Lexington on July 27, 2010, four years and seven months after the hurricane, and suit was filed three months later. The Club sought $6,208,910 from its insurer.
Lexington denied on the basis of late notice and failure to provide a timely proof of loss, and its motion for summary judgment on the late notice defense was granted by the district court. Earlier this month, an Eleventh Circuit panel affirmed. The opinion was written by Judge Steve C. Jones of the Middle District of Georgia, sitting by designation.
The Court of Appeals noted that a denial based on untimely notice implicates a two-step analysis. As Judge Jones explained, the first step is to determine whether the insured provided timely notice. If notice was untimely, then prejudice to the insurer is presumed, and the court must then determine whether that presumption has been rebutted. With respect to the first prong, the panel held that there was no dispute of fact. As the opinion explained:
The insurance policy here required The Yacht Club to give “prompt notice of the loss or damage.” The Yacht Club’s contention that its notice was prompt because it was within the five year limitation period set forth in the policy is inapposite. The limitation period in the policy does not define the contours of “prompt” notice. Rather, under Florida law, “prompt,” “as soon as practicable,” “immediate,” or comparable phrases have been interpreted to mean that notice should be given “with reasonable dispatch and within a reasonable time in view of all of the facts and circumstances of the particular case.”
While Florida has no “bright-line” rule, the Eleventh Circuit noted that Florida courts afford the insured relatively little leeway “when damage is caused by a known event, such as a hurricane, or when the insured was on-site when readily apparent problems developed.” In addition, prompt notice is not excused “because an insured might not be aware of the full extent of damage or that damage would exceed the deductible.” In this case, the panel looked to the facts that the Club had budgeted more than the deductible for repairs in 2005 and was advised in both 2006 and 2009 that Hurricane Wilma had damaged the premises but still waited until July of 2010 to advise its insurer.
With respect to prejudice, the Appellate Court also rejected the Club’s contention that there was any material dispute of fact. As the decision explained:
The only information The Yacht Club proffers to rebut the presumption of prejudice is that both parties’ experts gave opinions, albeit varying, as to causation. . . . . The ability to offer testimony as to causation alone does not satisfy the purpose of prompt notice and therefore cannot vitiate the prejudice suffered by Lexington due to delayed investigation and mitigation. Here, even The Yacht Club’s own expert acknowledged that the structure sustained additional damage because repairs were not made immediately after Hurricane Wilma. . . . This is evidence of the prejudicial effect of the passage of time. . . . Moreover, The Yacht Club undertook certain repairs before filing a claim with Lexington. Lexington was prejudiced by not being able to investigate prior to those repairs and by not participating in the repair of those damages.
Finally, the panel also affirmed an award of attorney’s fees to Lexington under Florida’s offer of judgment statute.