Insurance Law Hawaii

No Coverage for Repairs Made Before Suit Filed

    After a hurricane damaged the building the insured was constructing, there was no coverage under the CGL policy for repairs the insured made in the absence of a suit being filed. Planet Construction J2911 LLC. v. Gemini Ins. Co., 2022 U.S. Dist. LEXIS 105468 (W.D. La. June 13, 2022). 

    Planet Construction was a general contractor hired to build a fitness club. On August 27, 2020, Hurricane Laura struck the area. After the storm, a pipe in the sprinkler system broke, allegedly due to faulty materials and workmanship by a subcontractor, S&S Sprinkler. Planet Construction sought coverage under its policy with Gemini as well as under S&S's policy with Zurich. Both insurers denied coverage and Planet Construction filed suit.

    Gemini moved to dismiss. The Court noted coverage would only be triggered if the building owner held Planet Construction liable for the sprinkler failure, but no suit was ever filed. Even though Planet Construction's remediation and repair efforts likely averted a breach of contract claim by the building owner, the court could not expand coverage under the policy to cover proactive measures. 

    Accordingly, Gemini's motion was granted.

Coverage for Named Windstorm Removed by Insured, Terminating Such Coverage

    Over a series of policies, the insured had no coverage for named windstorms when it was removed from the policies in return for a reduced premium. Shiloh Christian Ctr. v. Aspen Sec. Ins. Co. 2022 U.S. Dist. LEXIS 100959 (M. D. Fla. May 9, 2022). 

    Plaintiff had coverage from Aspen from 2014 through at least 2018 under several year-long policies, each of which renewed the prior year's policy. The premium for the 2014-2015 Policy was $50,000. In May 2015, plaintiff asked what the premium would be without hurricane coverage. He was informed this would reduce the premium to $32,000. The insured asked for the change in coverage to eliminate named windstorm coverage and a return premium was issued to the insured for $16,545.

    The 2016-2017 policy was issued for a premium of $22,500. The policy indicated it was a renewal of the prior policy. The revised quote made clear that the policy would exclude coverage for "Named Windstorm." 

    On October 6, 2016, plaintiff's property was struck by Hurricane Matthew, causing extensive damage. Plaintiff submitted a claim on October 11, 2016 under the 2016-12017 policy, reporting the damages as "Water Damage from Roof Hurricane Matthew." After inspection, Aspen denied the claim because no wind damage was observed and the policy excluded Named Windstorm as a covered peril. 

    Another renewal policy was issued for 2017-2018. Thereafter, Hurricane Irma damaged the insured's property on September 10, 2017. On August 4, 2018, the insured submitted a claim under the 2017-2018 policy, listing only "Hurricane Irma" as the cause of loss. This claim was also denied by Aspen because the damage appeared to be the same damage caused by Hurricane Matthew and because of lack of coverage for damage due to a named windstorm. 

    Plaintiff filed suit alleging breach of contract and seeking a declaratory judgment as to coverage under the policies. Both parties filed motions for summary judgment. 

    The court found that named windstorm coverage was excluded from each of the policies from July 2015 forward. At this time, the insured sought to remove named windstorm coverage to save on the premium. Nevertheless, the insured contended that the renewal of the 2015-2016 policy - i.e,, the 2016-2017 policy- did not contain the same exclusions, The record showed the claim was false. The reduced premium earned by dropping named windstorm coverage was carried through to subsequent policies. Thus, the insured continued to receive the benefit of its July 2015 bargain by receiving lower premium in exchange for reduced coverage.

    Therefore, Aspen's motion for summary judgment was granted and the insured's motion was denied. 

Motion in Limine Ruling Allows Evidence of Bad Faith Claims Handling, but Not of Bad Faith Conduct

    Under Florida law, the court granted the insurer's motion in limine to exclude evidence of bad faith until a breach of the policy was established, but denied the motion insofar as it sought to exclude evidence of bad faith claims handling. Monterey at Malibu Bay Condo. Ass'n v. Empire Indem. Ins. Co., 2022 U.S. Dist. LEIXS 68013 (S.D. Fla. April 13, 2022).

    The Condominium Association filed suit for declaratory relief after its property was damaged by Hurricane Irma. The insurer, Empire Indemnity Insurance Company, made a partial payment, but the AOAO alleged Empire breached the contract by failing to fully indemnify the AOAO. Before trial, Empire moved to preclude the AOAO from introducing evidence and testimony alleging bad faith conduct. It also sought to exclude references to its "bad faith" or "good faith" conduct because such references could confuse the jury and unduly prejudice Empire.

    The court agreed that such testimony should be precluded. In Florida, a bad faith action was not ripe until after the coverage action was resolved. This case was not a bad faith action but a coverage action. Therefore, evidence of bad faith conduct was inadmissible. 

    However, any evidence that was relevant to both the AOAO's breach of contract claim and a potential bad faith claim was admissible. References, testimony, and evidence regarding Empire's handling of the coverage claim that could also be relevant to a bad faith action were admissible.

    Finally, the court agreed that reference, testimony, and evidence of personal opinions regarding insurance companies and why people purchase insurance was inadmissible.

Summary Judgment for Insurer Reversed Based on Expert Opinion

    After the trial court discounted the insured's expert witness and granted summary judgment to the insurer, the Florida District Court of Appeal reversed. Morales v. Citizens Prop. Ins. Corp., 2022 Fla. App. LEXIS 1831 (Fla. Ct. App. March 15, 2022).

    The insureds' property was allegedly damaged by Hurricane Irma in 2017. They filed a claim with Citizens. Citizens sent its adjuster and eventually denied the claim because the policy did not cover damages caused by wear and tear. Further, there was no coverage for loss caused by "rain . . . unless a covered peril first damages the building causing an opening in a roof or wall and the rain . . . enters through this opening."

    The insureds sued and Citizens moved for summary judgment. At the hearing, Citizens' expert, a civil engineer, concluded that there were no storm-created openings in the roof. The insureds engaged a licensed contractor, Steven Delgado, who stated that he found significant damage to the roofing system and water intrusion through the roof. He observed loose shingles which were most likely damaged during Hurricane Irma, allowing for high winds and airborne debris to create small openings permitting water intrusion. 

    The trial court rejected Delgado's testimony, finding he was not qualified to provide expert testimony as to causation. Summary judgment was issued to Citizens.

    The appellate court noted that Citizens, as the party moving for summary judgment, had the burden to demonstrate that the party moved against could not prevail. Here, the genuine issue of material fact was whether hurricane force winds created openings in the roof to allow water to enter the interior, creating damage that was covered by the policy. The insureds' expert provided sufficient evidence to introduce a genuine issue of material fact regarding the cause of the property damage. The trial court appeared to weigh the evidence rather than determine whether a genuine issue of material fact existed. 

    Consequently, the court reversed and remanded for further proceedings.

 

Insurer Not Responsible for Insured's Assignment of Policy Benefits

    The Florida Court of Appeals affirmed the lower court's granting summary judgment to the insurer after failing to abide by an assignment to which it was not a party. Expert Inspections, LLC v. United Property & Cas. Ins. Co., 2022 Fla. App. LEXIS 88 (Fla. Ct. App. Jan. 5, 2022). 

    The insured's property sustained damage from Hurricane Irma resulting in a covered loss. The insured retained Expert Inspections to perform mold-related services. As payment, the insured assigned her policy benefits pursuant to an assignment of benefits agreement. Under the agreement, the insured agreed to cooperate with the assignee to ensure that payments were made by the insurer upon completion of work. The insured gave authority to the assignee to endorse any checks with her name listed on the check. 

    Expert submitted a claim to the insurer with a copy of the assignment agreement and an invoice for $1,995.00. The insurer issued a check for the invoice payable to both Expert and the insured, sending the check to the insured's home address. A year later, Expert filed suit for breach of contract against the insurer. 

    The insurer deposited the fund with the clerk of court. The insurer also noted that it offered to re-issued the check in exchange for Expert's dismissal of the lawsuit. The insurer then answered the complaint with affirmative defenses that Expert was not entitled to attorneys fees because Expert was not forced to initiate litigation.

    The parties filed competing motions for summary judgment. The court granted the insurer's motion for summary judgment and denied Expert's motion. Because there was no dispute as to Expert's entitlement to the $1,995.00, the court found that Expert was entitled to the funds in the court registry. 

    On appeal, Expert argued there was a breach of the insurance policy because the insurer did not abide by the instructions listed in the assignment. The court rejected this argument because the insurer could not reach an agreement to which it had no privity. While the assignment granted Expert the right to enforce the policy, it did not grant Expert the right to enforce against the insurer terms from the assignment that were extraneous to the policy itself. The insured's failure to either forward the check to Expert or to notify the insurer of the insured's disagreement with the manner of payment could not be attributed to the insurer who was not put on notice by its insured of any disagreement regarding the manner of payment.

    Therefore, the trial court was affirmed for property granting summary judgment to the insurer.
    

Motion to Strike Insurer's New Argument Granted

    The court granted a motion to strike the insurer's new argument that the insured had made misrepresentations in its application for the policy. Great Lakes Ins. v. Gray Group Inves., LLC, 2021 U,S. Dist. LEXIS 243929 (E.D. La Dec. 22, 2021).

    Gray Group sought coverage for its yacht, HELLO DOLLY VI, from Great Lakes The application stated that the "primary mooring location" would be the Orleans Marina. The form also stated that the vessel's purchase price was $1,900,000. The application noted that "any misrepresentation in this application for insurance may render insurance coverage null and void from inception." 

    The policy was issued with coverage up to $1,900,000 and a $228,000 named-insured deductible. The policy stated that the "contract is null and void in the event of non-disclosure or misrepresentation of a fact or circumstances material to our acceptance or continuance of this insurance."

    In the spring of 2020 HELLO DOLLY VI was moved from the Orleans Marina to Fort Lauderdale, Floria. Only July 19, 2020, the vessel was moved to Pensacola, Florida, at the home of a member of Gray Group. On September 15, 2020, Hurricane Sally struck Pensacola. The vessel was damaged and sank at its mooring in Pensacola. 

    Gray Group filed a claim with Great Lakes, claiming a total loss of the vessel. Great Lakes denied coverage on the grounds that Gray Group had breached certain warranties under the policy.

    Great Lakes filed suit seeking a declaratory judgment that the policy covering HELLO DOLLY VI was void. Great Lakes alleged Gray Group breached certain warranties contained in a Hurricane Questionnaire/Plan, because the vessel (i) was not moored at the Orleans Marina, (ii) was not fully manned, (iii) was not evacuated to safe harbor, and (iv) did not have its anchor deployed. Gray Group filed cross-claims, seeking coverage under the policy.

    The parties cross-moved for summary judgment. In opposing Gray Group's motion, Great Lakes argued the policy was void because of misrepresentations in the Application Form. Specifically, it asserted that Gray Group (i) misrepresented the vessel's "primary mooring location" because the vessel was never moored at the Orleans Mariana during the 2020 hurricane season, and (ii) misrepresented the vessel's purchase price. Great Lakes also alleged the misrepresentation it is reply in support of its own motion for summary judgment.

    Gray Group moved to strike Great Lakes' claim that Gray Group made material misrepresentations in its Application Form. Gray Group argued that Great Lakes did not allege misrepresentation in its reservation of rights letter, denial of coverage letter, its two complaints, its motion for summary judgment or its statements of disputed or undisputed facts.

    The court granted Gray Group's motion to strike. The newly raised misrepresentation claims were not properly before the court. Great Lakes knew from discovery that the vessel was never at its "primary mooring location," but failed to move to amend its complaint to add the misrepresentation claim. Email correspondence indicated that Great Lakes' underwriters had concerns about the vessel's reported valuation as early as four days after the loss of the vessel, and well before the filing of the lawsuit. Again, Great Lakes did not bother to amend its complaint. 

 

Prejudice to Insurer After Late Notice of Hurricane Damage Raises Issue of Fact

    The court denied the insurer's motion for summary judgment on admittedly late notice because prejudice to the insured remained an issue of fact. Guzman v. Scottsdale Ins. Co., 2021 U.S. Dist. LEXIS 219625 (S.D. Fla. Nov. 15, 2021).

    The insured first noticed water leaking into his kitchen from the roof during Hurricane Irma on September 10, 2017. Various attempts were made by the insured to fix the leak, but none were successful. After the hurricane, the roof continued to leak whenever it rained. Notice was finally given to Scottsdale, the insurer, on April 19, 2020. 

    Scottsdale retained structural engineer Nazario Ramirez, who inspected the property twice. He also had photographs of the rapids. Ramirez denied being prejudiced during his inspections. Based on the pictures aerial photography and weather research, he determined that the damage was caused by underlayment failing, which could have resulted from age and deterioration or poor construction. When Scottsdale's corporate representative was deposed, he testified that Ramirez was able to determine the cause of the damage to the roof. 

    The insured claimed roof damage amounted to $244,141.09. Scottsdale determined the hurricane only caused damage to some roof tiles. The insured sued and Scottsdale moved for summary judgment, arguing the late notice had caused prejudice and barred the claim.

    Under Florida law, when notice was untimely, prejudice to the insurer was presumed, but the presumption was rebuttable. The insured argued that a genuine issue of material fact remained as to prejudice. The court agreed. Ramirez denied being prejudiced during his two inspections. He was retained to opine on the cause of damage as well as the scope of damage. He was able to reach a final conclusion based on pictures, aerial photography, and weather research. He determined that Hurricane Irma did not damage the roof except for three missing rake cap tiles and any water intrusion resulted from a failed underlayment, which resulted from age or poor construction. Summary judgment was inappropriate.  

 

Late Notice Kills Insured's Claim for Damage Due to Hurricane

    The insurer's motion for summary judgment was granted based upon the insured's late notice nearly two years after a hurricane caused property damage. Ramirez v. Scottsdale Ins. Co., 2021 U.S. Dist. LEXIS 209716 (S.D. Fla. Oct. 29, 2021).

    Plaintiff alleged he suffered property loss due to wind and water damage from Hurricane Irma on September 10, 2017. The roof, exterior, and interior of the home were damaged. 

    On May 20, 2019, twenty months after the hurricane, plaintiff first notified Scottsdale of his claim for damages. An adjuster inspected and observed wind, wear and tear, and deterioration damage to the roof tile, as well as interior water damage to portions of the home. The claim was denied based upon wind, wear and tear, and deterioration exclusions in the policy.

    Plaintiff filed suit. Scottsdale moved for summary judgment because plaintiff failed to provide "prompt notice" as required by the policy. Plaintiff conceded the notice was untimely, but argued Scottsdale suffered no prejudice because it was able to inspect the property. 

    The court disagreed with plaintiff's argument. Under Florida law, where the policy required notice "as soon as practicable," the clause is breached by a failure to notify the insurer for a period of more than one year. When the undisputed factual record establishes notice is so late that no reasonable juror could find it timely, Florida courts will deem the notice untimely as a matter of law. 

    Plaintiff argued Scottsdale was not prejudiced because it had the opportunity to inspect the property. This at least created an issued of fact for the factfinder. But plaintiff failed to point to anything in the record to support this argument. 

    Therefore, Scottsdale's motion was granted.

   

Law Firm's Business Income, Civil Authority Claim Due to Hurricanes Survives Insurer's Motion for Summary Judgment

    The insurer was unsuccessful in moving for summary judgment on the insured's claim for loss of business income and civil authority coverage due to losses caused by two hurricanes. Townsley v. Ohio Security Ins. Co., 2021 U.S. Dist. LEXIS 202698 (W.D. La. Oct. 20, 2021).

    Hurricane Laura struck southeast Louisiana on August 27, 2020 and Hurricane Delta made landfall in the same area on October 9, 2020. Both hurricanes caused property damage and an interruption of business for the insured law firm. Power outages and mandatory evacuation orders caused by both storms created a loss of income for the law firm. Ohio Security denied coverage under the business income, extra expense, and civil authority provisions. 

    The law firm sued and Ohio Security moved for summary judgment. From the undisputed facts, the court could not determine the law firm's entitlement to business income and extra expense coverage, so the motion was denied for these claims. 

    The law firm argued that the mandatory evacuation orders for both storms meant it was entitled to coverage under Civil Authority provisions. The coverage began 72 hours after the Civil Authority action was imposed. The law firm was entitled to Civil Authority Coverage for Hurricane Laura because the August 27, 2020 order was extended until September 11, 2020. The orders for Hurricane Delta, however, did not meet the 72 hour requirement because there was no extension issued. 

    

Forum Selection Provision Not Binding in Louisiana

    The insurer's motion to dismiss based upon the policy's forum selection provision was denied. Oak Haven Mgmt., LLC v. Starr Surplus Lines Ins. Co., 2021 U.S. Dist. LEXIS 171611 (W.D. La. Sept. 9, 2021).

    The insured retirement home suffered property damage from Hurricane Laura and Hurricane Delta. After disagreements with Starr over the amount of the damage, the insured filed suit in the federal district court in Louisiana. Starr moved to dismiss, seeking to enforce the forum selection clause which required suits to be filed in New York. 

    The insured argued the clause violated a strong public policy expressed in a Louisiana statute, which forbid forum selection clauses and arbitration clauses in insurance policies. The statute was amended in 2020, resulting in a clear limitation on forum selection clauses. Starr argued that the prior version of the statute applied, rather than retroactively applying the amended statute.   

    The Louisiana Supreme Court had held, however, that laws prohibiting forum selection clauses were procedural in nature and could be retroactively applied to causes of action accruing before their effective date. Moreover, the Louisiana legislature's prohibition against forum selection clauses in insurance policies reflected a strong public interest in having disputes over policies covering Louisiana residents or property decided locally. Accordingly, the forum selection clause was unenforceable in this matter.