Toll Free: 1-877-449-4700
Law360: QBE Settles Spat Over Hurricane Condo Damage
By Mike Cherney
September 15, 2009
QBE Insurance Corp. has settled an insurance dispute with a Florida condominium association that alleged the insurance company acted in bad faith when it failed to fully cover damage from Hurricane Wilma in 2005.
Judge Adalberto Jordan of the U.S. District Court for the Southern District of Florida dismissed the case on Monday after QBE and Dorset House Condominium Association Inc. settled the case through mediation. The terms of the settlement were not disclosed.
The storm damaged a 26-story condo building in North Miami, Fla., that was owned by the condo association, said Amy Boggs, its attorney.
"We've seen a trend with Florida courts not allowing bad faith claims following an appraisal," she said. "So in this case, the federal court judge allowed us to proceed, and that was pretty significant."
"My clients certainly feel like justice was done and that they got paid back for what QBE put them through," she added.
Boggs declined to immediately reveal the terms of the settlement on Tuesday.
Attorneys for QBE could not be reached for comment Tuesday.
The suit is not the only Hurricane Wilma case to be filed against QBE. In December 2007, Chalfonte Condominium Apartment Association Inc., another condo association, was awarded more than $7 million after it accused QBE of breach of contract and failing to cover a claim, though an appeal is still pending.
In the Dorset House case, QBE prepared a preliminary estimate of the loss that called for payment of about $112,000 for temporary repairs, the condo association said in its amended complaint. But QBE withheld payment for four months and then paid only $100,000.
In December 2006, QBE paid Dorset House another $100,000, though Dorset House said QBE failed to provide any sort of explanation of what it was and was not covering. When QBE had still failed to explain its coverage position by April 2007, Dorset House sued the company for breach of contract in state circuit court.
The case was removed to federal court, and the parties agreed to have the damage appraised, according to Dorset House's amended complaint. In June 2008, an appraisal award was issued in favor of Dorset House for more than $1 million, subject to certain deductions.
Ultimately, QBE was forced to pay an additional $643,000 following the appraisal to fully cover the claim. But Dorset House said it was entitled to additional damages because of the insurer's bad practices.
Specifically, Dorset House accused QBE of failing to promptly investigate the claim, seeking to avoid or delay covering the loss, creating a hostile and unprofessional investigation and adjustment of the claim and misrepresenting facts relating to the coverage to illegitimately delay the claim.
"Defendant implemented a claims handling program that was designed to encourage defendant's adjusters, investigators and employees to delay and deny claims and to pay less than the claim," the amended complaint said. "Defendant's conduct was designed to obtain an unfair advantage over the competition."
Boggs said the condo association spent $1.3 million on repairs, and that it would have been able to better tailor its repairs to what was covered by the insurance policy had QBE worked more closely with the association.
In the Chalfonte case, the U.S. Court of Appeals for Eleventh Circuit sent the issue to the Florida Supreme Court in March, asking it to determine the legitimacy of a suit brought by an insured against an insurer for failing to investigate a claim within a reasonable period of time. No ruling has been issued yet.
QBE is represented in the Dorset House matter by Berk Merchant & Sims PLC.
Dorset House is represented by The Merlin Law Group.
The case is Dorset House Condominium Association Inc. v. QBE Insurance Corp., case number 07-21324, in the U.S. District Court for the Southern District of Florida.
--Additional reporting by Anne Urda
September 15, 2009
QBE Insurance Corp. has settled an insurance dispute with a Florida condominium association that alleged the insurance company acted in bad faith when it failed to fully cover damage from Hurricane Wilma in 2005.
Judge Adalberto Jordan of the U.S. District Court for the Southern District of Florida dismissed the case on Monday after QBE and Dorset House Condominium Association Inc. settled the case through mediation. The terms of the settlement were not disclosed.
The storm damaged a 26-story condo building in North Miami, Fla., that was owned by the condo association, said Amy Boggs, its attorney.
"We've seen a trend with Florida courts not allowing bad faith claims following an appraisal," she said. "So in this case, the federal court judge allowed us to proceed, and that was pretty significant."
"My clients certainly feel like justice was done and that they got paid back for what QBE put them through," she added.
Boggs declined to immediately reveal the terms of the settlement on Tuesday.
Attorneys for QBE could not be reached for comment Tuesday.
The suit is not the only Hurricane Wilma case to be filed against QBE. In December 2007, Chalfonte Condominium Apartment Association Inc., another condo association, was awarded more than $7 million after it accused QBE of breach of contract and failing to cover a claim, though an appeal is still pending.
In the Dorset House case, QBE prepared a preliminary estimate of the loss that called for payment of about $112,000 for temporary repairs, the condo association said in its amended complaint. But QBE withheld payment for four months and then paid only $100,000.
In December 2006, QBE paid Dorset House another $100,000, though Dorset House said QBE failed to provide any sort of explanation of what it was and was not covering. When QBE had still failed to explain its coverage position by April 2007, Dorset House sued the company for breach of contract in state circuit court.
The case was removed to federal court, and the parties agreed to have the damage appraised, according to Dorset House's amended complaint. In June 2008, an appraisal award was issued in favor of Dorset House for more than $1 million, subject to certain deductions.
Ultimately, QBE was forced to pay an additional $643,000 following the appraisal to fully cover the claim. But Dorset House said it was entitled to additional damages because of the insurer's bad practices.
Specifically, Dorset House accused QBE of failing to promptly investigate the claim, seeking to avoid or delay covering the loss, creating a hostile and unprofessional investigation and adjustment of the claim and misrepresenting facts relating to the coverage to illegitimately delay the claim.
"Defendant implemented a claims handling program that was designed to encourage defendant's adjusters, investigators and employees to delay and deny claims and to pay less than the claim," the amended complaint said. "Defendant's conduct was designed to obtain an unfair advantage over the competition."
Boggs said the condo association spent $1.3 million on repairs, and that it would have been able to better tailor its repairs to what was covered by the insurance policy had QBE worked more closely with the association.
In the Chalfonte case, the U.S. Court of Appeals for Eleventh Circuit sent the issue to the Florida Supreme Court in March, asking it to determine the legitimacy of a suit brought by an insured against an insurer for failing to investigate a claim within a reasonable period of time. No ruling has been issued yet.
QBE is represented in the Dorset House matter by Berk Merchant & Sims PLC.
Dorset House is represented by The Merlin Law Group.
The case is Dorset House Condominium Association Inc. v. QBE Insurance Corp., case number 07-21324, in the U.S. District Court for the Southern District of Florida.
--Additional reporting by Anne Urda
