11th Circuit Affirms Condo Tower Hurricane Damage Award That Disappointed Both Sides

By Jim Sams | July 22, 2021

The 11th Circuit Court of Appeals affirmed a jury verdict that found an insurer liable for $2.6 million in damages to a Miami condominium tower caused by Hurricane Irma, rejecting arguments made in appeals filed by parties on both sides of the dispute.

The panel refused the insurance carrier’s request to overturn a magistrate judge’s decision barring testimony by its expert, who had failed to make himself available for a deposition during the period set by the US District Court’s scheduling order.

But the panel also rejected an argument by the condominium association that a deductible set at 3% of the value of the building was invalid because it conflicted with a state statute. It refused to overturn the jury’s finding that a portion of the damages claimed by the association existed prior to the hurricane.

“After extensive litigation, we put this case to bed,” says the 11th Circuit ruling, released Tuesday.

Neither the St. Louis Condominium Association or State Auto’s Rockhill Insurance Co. were happy after a District Court jury in Miami returned a $2.6 million damage award to the condo association.

St. Louis claimed Hurricane Irma caused $16 million in damages to its 31-story waterfront building when it struck on Sept. 10, 2017. The insurer argued that most of the claimed damages were preexisting, caused by years of exposure to wind and rain, and the amount needed for legitimate hurricane damage repairs fell well below the deductible amount of 3% of the value of the building, or $945,342.

The jury found that the association suffered $3,673,303.67 in covered losses. The jury also found that $359,578 of the claimed damages were preexisting.

Rockhill appealed the trial court decision and St. Louis filed a cross-appeal. Each party asked the 11th Circuit to overturn the jury verdict because of the magistrate judge’s decisions on motions that were made both before and after trial.

Before trial, the association had moved to exclude or strike testimony by some of Rockhill’s experts. The magistrate judge agreed that one expert should be removed: Brian Warner, Rockhill’s expert on sliding windows and doors. The magistrate judge noted that Warner had canceled a scheduled deposition and Rockhill had refused to offer a single date on which me would be available before the deadline set by the scheduling order.

Rockhill filed a similar motion to bar testimony from St. Louis’ experts, alleging their training was inadequate and their methodology in estimating damages was unreliable. The magistrate judge denied the motion.

After trial, the association filed a motion to strike the jury’s finding about preexisting damage and asked the trail court to refrain from applying the deductible. The magistrate judge denied both requests.

On appeal, the condo association argued that the trial court erred by applying the deductible because Florida Statute Section 627.701(2)(b) states that deductibles cannot be based on a percentage rather than a specific dollar amount unless the Florida Office of Insurance Regulation determines that the deductible provision is clear and unambiguous.

The association also asked the appellate court to overturn the jury finding that that $359,578 of the claimed damages were preexisting.

The 11th Circuit panel refused on both points.

The condo association was hoping to increase the amount of the award by about a third by throwing out a deductible that it says is specifically prohibited by state law.

The opinion says that the Florida Supreme Court ruled in QBE Ins. Corp. v. Chalfonte Condo. Apartment Ass’n (2012) that the statute that requires regulatory approval for percentage-based deductibles does not create any penalty for violations. Voiding the deductible would amount to a “severe penalty” that was not created by the legislature, the panel concluded.

The court also upheld the jury’s finding about pre-existing damage. The opinion notes that minutes of the condo association’s board of directors meetings shows that the amount that jury found to be pre-existing damages matched exactly the cost of a repair estimate that was provided to the board for a proposal to waterproof and caulk windows and doors.

Rockhill was also unable to persuade the appellate panel to alter the trial court decision. The insurer rejected arguments that the association’s experts were incompetent and unreliable.

What’s more, the appellate panel refused to accept Rockhill’s argument that jury had failed to factor into its damage calculation that the board of directors was considering spending $1.2 million for painting and waterproofing balconies attached to the condo tower. The insurer asserted that those “pre-existing damages” should also have been deducted from the award.

The 11th Circuit said to overturn that finding, the insurer needed to show that the amount awarded was not “legally sufficient.”

“The number found by the jury was not pulled out of a hat—it was within the range shown by the evidence at trial,” the opinion says.

About the photo: The St. Louis Condominiums on Bricknell Key in Miami are shown. Photo courtesy of MiamiResidence.com.

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