Opinion
CASE NO. 20-60921-CIV-SMITH
2021-07-08
BELLE TERRE CONDO ASSOCIATION, Plaintiff, v. WESTCHESTER SURPLUS LINES INSURANCE COMPANY, Defendant.
Nicholas Peter Ciani, Schirmer Law LLC, Fort Lauderdale, FL, for Plaintiff. Janice Carole Buchman, John Vincent Garaffa, Butler Weihmuller Katz Craig, LLP, Tampa, FL, for Defendant.
Nicholas Peter Ciani, Schirmer Law LLC, Fort Lauderdale, FL, for Plaintiff.
Janice Carole Buchman, John Vincent Garaffa, Butler Weihmuller Katz Craig, LLP, Tampa, FL, for Defendant.
ORDER DENYING MOTIONS FOR SUMMARY JUDGMENT
RODNEY SMITH, UNITED STATES DISTRICT JUDGE
This cause is before the Court on Plaintiff's Motion for Partial Summary Judgment [DE 24], Defendant's Response in Opposition [DE 27], and Plaintiff's Reply [DE 29]. Also, before the Court is Defendant's Motion for Summary Judgment [DE 26], Plaintiff's Response [DE 28], and Defendant's Reply [DE 30]. This case arises from an unpaid insurance claim Plaintiff made under an insurance policy issued by Defendant. Plaintiff seeks partial summary judgment on the issue of coverage. Defendant seeks summary judgment in its favor because Plaintiff violated policy provisions. Because there are genuine issues of material fact, both motions are denied.
Where the facts are undisputed, the Court has omitted citations to the record.
Background Facts
Defendant issued commercial property insurance policy number D37440838-002 (the "Policy") to Plaintiff. The Policy covered the period from September 13, 2016 to September 13, 2017 and insured commercial property located at 3000 N. University Drive, Coral Springs, Florida. On September 19, 2017, Plaintiff reported a claim to Defendant for roof damage and ensuing water damage resulting from Hurricane Irma, which occurred on September 10, 2017. (Pl. Resp. to Interrog. [DE 26-2] ¶ 12.)
On December 14, 2017, Defendant's independent adjuster issued a report ("Report") that concluded that:
Hurricane Irma caused water intrusion small buildingBitumen felt roof lifting on small building10% of concrete shingles cracked or broke off mansardTwo small trees damagedParking canvas canopy ripped
(McLarens Rpt. [DE 25-1] at 1-2.) Under "Nature of Loss," the Report states:
Hurricane Irma brought intense winds and flooding to the insured's area. Wind driven rain damaged the bitumen roof of the small building causing resultant rainwater damage in office spaces below. Some mansard concrete tiles were cracked. Two small trees were damaged.
(McLarens Rpt. at 3.) The Report also states "[w]e request [Insurer's] review and confirmation of coverage and any specific sub-limits that may apply to the current Named Storm claim." (Id. ) On May 9, 2018, Defendant's independent adjuster sent a letter to Plaintiff stating that the damages that occurred from Hurricane Irma did not breach the Named Storm Deductible of the Policy and, therefore, no payment for the claim would issue. (May 9, 2018 Ltr. [DE 26-3].) The May 9, 2018 letter also stated: "Should you have any information indicating damages in excess of your deductible, we request that you forward this to our attention as soon as possible." (Id. )
As a result of the roof damages, Plaintiff hired Best Roofing to make repairs to the roof. (Urquia Dep. [DE 26-4] 11:6-22.) Best Roofing assessed the roof and recommended the repairs to be done, which Plaintiff then approved. (Id. 13:17-14:3.) Best Roofing made the repairs in May 2018. (Id. 20:15-23.) Prior to Hurricane Irma, Plaintiff was not aware of any issues with the roof tiles. (Id. 56:7-57:1.)
Nora Urquia, Plaintiff's President, was deposed as the Plaintiff's corporate representative.
On May 20, 2018, Plaintiff made a police report stating that "in August of 2017 unknown suspects walked on the roof damaging 30% of the tiles." (Police Report [DE 26-6].) According to Plaintiff, the police report was filed at the suggestion of Plaintiff's public adjuster. (Urquia Dep. 60:9-61:3.) Plaintiff, however, did not actually know how the tiles were damaged. (Id. 63:19-64:7.) Plaintiff also made a claim on the Policy for vandalism damage that included the roof tiles, despite not knowing how the roof tiles were actually damaged. (Id. 68:6-69:24.) Plaintiff made the claim based on vandalism because the hurricane claim had been rejected. (Id. 122:10-21.) Thereafter, Plaintiff sought to reopen the hurricane damage claim in 2020.
Terms of the Policy
The Policy contains a provision titled "Concealment, Misrepresentation or Fraud," which states:
This Coverage Part is void in any case of fraud by you as it relates to the Coverage Part at any time. It is also void if you or any other insured, at any time, intentionally conceal or misrepresent a material fact concerning:
1. This Coverage Part;
2. The Covered Property;
3. Your interest in the Covered Property; or
4. A claim under the Coverage Part.
(Policy [DE 26-1] at 10, ¶ A.) The Policy also contains a provision titled "Duties In The Event Of Loss Or Damage," which states:
You must see that the following are done in the event of loss or damage to Covered Property:
* * *
(2) Give us prompt notice of the loss or damage. Include a description of the property involved.
(3) As soon as possible, give us a description of how, when and where the loss or damage occurred.
(4) Take all reasonable steps to protect the Covered Property from further damage, and keep a record of your expenses necessary to protect the Covered Property, for consideration in the settlement of the claim. This will not increase the Limit of Insurance. However, we will not pay for any subsequent loss or damage resulting from a cause of loss that is not a Covered Cause of Loss. Also, if feasible, set the damaged property aside and in the best possible order for examination.
(5) At our request, give us complete inventories of the damaged and undamaged
property. Include quantities, costs, values and amount of loss claimed.
(6) As often as may be reasonably required, permit us to inspect the property proving the loss or damage and examine your books and records. Also, permit us to take samples of damaged and undamaged property for inspection, testing and analysis, and permit us to make copies from your books and records.
(7) Send us a signed, sworn proof of loss containing the information we request to investigate the claim. You must do this within 60 days after our request. We will supply you with the necessary forms.
(8) Cooperate with us in the investigation or settlement of the claim.
(Policy at 22, ¶ 3.)
II. SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate when "the pleadings ... show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; HCA Health Servs. of Ga., Inc. v. Employers Health Ins. Co. , 240 F.3d 982, 991 (11th Cir. 2001). Once the moving party demonstrates the absence of a genuine issue of material fact, the non-moving party must "come forward with ‘specific facts showing that there is a genuine issue for trial.’ " Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting Fed. R. Civ. P. 56(e) ). The Court must view the record and all factual inferences therefrom in the light most favorable to the non-moving party and decide whether " ‘the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.’ " Allen v. Tyson Foods, Inc. , 121 F.3d 642, 646 (11th Cir. 1997) (quoting Anderson , 477 U.S. at 251-52, 106 S.Ct. 2505 ).
In opposing a motion for summary judgment, the non-moving party may not rely solely on the pleadings, but must show by affidavits, depositions, answers to interrogatories, and admissions that specific facts exist demonstrating a genuine issue for trial. See Fed. R. Civ. P. 56(c), (e) ; see also Celotex Corp. v. Catrett , 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A mere "scintilla" of evidence supporting the opposing party's position will not suffice; instead, there must be a sufficient showing that the jury could reasonably find for that party. Anderson , 477 U.S. at 252, 106 S.Ct. 2505 ; see also Walker v. Darby , 911 F.2d 1573, 1577 (11th Cir. 1990).
III. DISCUSSION
Defendant seeks summary judgment on Plaintiff's claim because Plaintiff intentionally misrepresented material facts, which voids coverage under the Policy, and Plaintiff violated the Policy's Duties in the Event of Loss or Damage provision by not producing requested documentation in support of Plaintiff's claim. Plaintiff responds that Defendant waived any affirmative defense based on misrepresentation or fraud, that Defendant has not established that any alleged fraud was intentional, and Plaintiff complied with its duties under the Policy. In its motion for partial summary judgment, Plaintiff seeks summary judgment based on the "mend the hold" doctrine, which Plaintiff maintains prevents Defendant from denying coverage after previously admitting it.
A. Plaintiff's Misrepresentation
Defendant argues that an intentional misrepresentation made after a loss falls within the Concealment, Misrepresentation or Fraud provision of the Policy ("Concealment Provision") and, thus, the Policy is void. Defendant argues that Plaintiff made conflicting claims for the roof damage. First, Plaintiff filed a claim alleging hurricane damage to the roof. After Plaintiff was advised that the hurricane damage fell below the Policy's deductible, Plaintiff made a claim alleging vandalism damage to the roof. Then, Plaintiff sought to reopen the hurricane damage claim and subsequently filed this lawsuit alleging hurricane damage to the roof. Plaintiff's corporate representative testified that she had no idea how the roof was damaged. Based on this series of events, Defendant maintains that the Policy is void under the Concealment Provision.
In response, Plaintiff argues that Defendant has waived this argument by failing to raise fraud as an affirmative defense. While Defendant has not explicitly pled fraud in its Affirmative Defenses, Defendant's Fifth Affirmative Defense sets out the conflicting roof claims and alleges that Plaintiff's "conflicting assertions concerning how, when and where the loss or damage occurred and failure to provide documentation concerning the loss violated the insured's duties after loss." (Ans. & Aff. Defenses [DE 1-7].) Thus, Plaintiff was on notice that its conflicting claims as to how the roof was damaged was an issue. However, nothing in Defendant's Fifth Affirmative Defense indicates that Defendant intended to claim that Plaintiff made misrepresentations or fraudulent statements to Defendant, which would void the Policy under the Concealment Provision; instead, the Fifth Affirmative Defense alleges that Plaintiff violated the Duties in the Event of Loss or Damage Provision of the Policy.
"[T]he general rule is that failure to plead an affirmative defense constitutes waiver" and fraud is one of the defenses specifically listed in Federal Rule of Civil Procedure 8(c). First Nat'l Bank of Oneida, N.A. v. Brandt , 851 Fed.Appx. 904, 907 (11th Cir. 2021). The Eleventh Circuit, however, has stated that: "[w]hen a plaintiff has notice that an affirmative defense will be raised at trial, the defendant's failure to comply with Rule 8(c) does not cause the plaintiff any prejudice [a]nd ... it is not error for the trial court to hear evidence on the issue." Hassan v. U.S. Postal Serv. , 842 F.2d 260, 263 (11th Cir. 1988).
While Defendant did plead the underlying facts giving rise to the defense and did question Plaintiff's representative about the issue, Defendant never raised the issue that the Plaintiff's actions violated the Concealment Provision and, thereby, voided the Policy. Thus, to raise the Concealment Provision at the summary judgment stage is prejudicial to Plaintiff. Moreover, Defendant has not presented sufficient evidence to establish that Plaintiff's alleged misrepresentation was "intentional," as required by the Concealment Provision. Thus, summary judgment based on the Concealment Provision is denied. Defendant, however, may raise this defense at trial because Plaintiff has been put on notice as to the defense and has time to prepare to address it prior to the scheduled trial.
B. Plaintiff's Failure to Comply with its Duties under the Policy
Defendant also argues that it is entitled to summary judgment because Plaintiff violated the Duties in the Event of Loss or Damage provision of the Policy by failing to produce requested documentation in support of Plaintiff's claim. Specifically, Defendant maintains that Plaintiff did not provide Defendant with invoices and photographs from a licensed roofer taken shortly after Hurricane Irma. According to Defendant, these invoices and photographs show the damage to the roofs, set out the necessary repairs, and indicate that the roofer believed that the damage was due to wear and tear and construction defects, not Hurricane Irma. Defendant contends that Plaintiff intentionally withheld these documents from Defendant and, instead, when Plaintiff sought to reopen the claim in 2020, provided Defendant with documentation created in 2020, years after Hurricane Irma. In response, Plaintiff argues that it substantially complied with its duties under the Duties in the Event of Loss or Damage Provision.
In Florida:
[a] total failure to comply with policy provisions made a prerequisite to suit under the policy may constitute a breach precluding recovery from the insurer as a matter of law. If, however, the insured cooperates to some degree or provides an explanation for its noncompliance, a fact question is presented for resolution by a jury.
Haiman v. Fed. Ins. Co., 798 So. 2d 811, 812 (Fla. 4th DCA 2001) (citations omitted). Here, Plaintiff has cooperated to some degree. Thus, whether Plaintiff's failure to produce the roofer's invoices constitutes a material breach of the Duties in the Event of Loss or Damage Provision is a question of fact for the jury. See id. (holding that whether a failure to produce some, but not all, documents was a material breach of the policy would be a question of fact for the jury).
Defendant also maintains that Plaintiff's change in the claimed cause of the roof damage and Plaintiff's admission that it does not actually know how the loss occurred constitute a violation of the Duties in the Event of Loss or Damage Provision. First, the Court notes that Defendant does not state exactly what subsection of the Duties in the Event of Loss or Damage Provision these actions violate. It appears that Plaintiff may have violated the subsection requiring Plaintiff to provide Defendant "[a]s soon as possible, ... a description of how, when and where the loss or damage occurred." Plaintiff did provide Defendant with the how, when, and where of the loss; however, Plaintiff may not have provided accurate information. Thus, the Court finds that there is a genuine issue of material fact as to whether Plaintiff's statements as to the cause of the roof damage violate this provision. Consequently, Defendant's motion for summary judgment is denied.
C. The Mend the Hold Doctrine
Plaintiff seeks summary judgment in its favor on the issue of coverage. Plaintiff argues that Defendant's First, Second, Fifth, and Sixth Affirmative Defenses negate coverage; however, under the "mend the hold" doctrine, Defendant is prevented from denying coverage after having admitted coverage pre-suit in the May 9, 2018 letter from Defendant's independent adjuster, which stated that the damages that occurred from Hurricane Irma did not breach the Named Storm Deductible of the Policy and, therefore, no payment for the claim would issue. Defendant responds that the "mend the hold" doctrine is inapplicable to the facts of this case.
Defendant's First Affirmative Defense alleges that the roof damage is not covered under the Policy because it is due to wear and tear and deterioration, all of which are excluded by the Policy. The Second Affirmative Defense alleges that Plaintiff's losses are excluded under the Policy because they are the result of faulty, inadequate, or defective repairs. Defendant's Fifth Affirmative Defense alleges that Plaintiff's conflicting assertions concerning how the roof was damaged violate the Duties in the Event of Loss or Damage Provision and thereby void the Policy. Defendant's Sixth Affirmative Defense alleges that, because Plaintiff failed to comply with all provisions of the Policy, the terms of the Policy prohibit Plaintiff from bringing suit.
In Ohio & M.R. Co. v. McCarthy , 96 U.S. 258, 24 L.Ed. 693 (1877), the Supreme Court stated that "[w]here a party gives a reason for his conduct and decision touching any thing involved in a controversy, he cannot, after litigation has begun, change his ground, and put his conduct upon another and a different consideration." Id. at 267. The doctrine is based on estoppel. Id. at 268. Thus, "[t]he basic tenet of the doctrine is that a party to a contract cannot change its defenses to performance of the contract in the middle of the litigation." Baquero v. Lancet Indem. Risk Retention Grp., Inc. , No. 12-24105-CIV, 2013 WL 5237740, at *6 (S.D. Fla. Sept. 17, 2013) (citing Harbor Ins. Co. v. Continental Bank Corp., 922 F.2d 357, 362–65 (7th Cir. 1990) ). Further, courts "have found that ‘Mend the Hold’ will operate to bar a new defense only where the insurer had sufficient information at the time of the initial denial of coverage to have waived the additional defenses presented." Baquero , 2013 WL 5237740, at *6 (internal quotation and citation omitted).
Here, Defendant did not change its defense in the middle of litigation. Defendant raised its Affirmative Defenses in its Answer and Affirmative Defenses. Further, there is no record evidence that, at the time Defendant initially declined to make any payments under the Policy, Defendant had sufficient information to have waived its Fifth and Sixth Affirmative Defenses. Thus, the Court finds that the mend the hold doctrine would not bar Defendant's Fifth and Sixth Affirmative Defenses.
Moreover, even if the doctrine does apply, the Court finds there are genuine issues of material fact as to whether Defendant made a coverage determination pre-suit, as Plaintiff contends. Plaintiff argues that the Report and letter from Defendant's independent adjuster made a coverage determination. However, in the Report the independent adjuster requested that Defendant review and confirm coverage and any specific sub-limits that may apply to the current Named Storm claim. Thus, it is not clear that Defendant made a coverage determination. Consequently, Plaintiff's motion for partial summary judgment is denied.
Accordingly, it is
ORDERED that:
1. Plaintiff's Motion for Partial Summary Judgment [DE 24] is DENIED.
2. Defendant's Motion for Summary Judgment [DE 26] is DENIED.
DONE and ORDERED in Fort Lauderdale, Florida, this 8th day of July, 2021.