As we have indicated in prior blog posts on the Soronson, Slominski, and 1500 Coral Towers cases, late notice issues have been cropping up consistently in Florida in the context of Hurricane Wilma claims being reported years after the storm. Although the above-cases were decided by Florida appellate courts, the latest case to address Florida law on late notice comes from the Southern District of Florida.
In The Yacht Club on the Intracostal Condominium Association, Inc. v. Lexington Ins. Co., 2013 U.S. Dist. LEXIS 67004 (S.D. Fla. May 10, 2013), the insured condominium association, composed of some 380 units, sought compensation for damage caused by Hurricane Wilma, which struck Florida on October 24, 2005. Although Plaintiff’s officers were aware of damage to the complex after Wilma came ashore, they did not believe that the damage was severe enough to report to their insurer Lexington. It was only after numerous problems, including worsening roof damage, interior leaks, and drywall cracking, began to appear that the Yacht Club hired an expert, who determined that Wilma was responsible for the increasingly severe damage. The Yacht Club notified Lexington of its claimed losses on May 21, 2010, and filed a notice of loss on July 27, 2010, more than four years and nine months after Wilma. The Yacht Club filed suit on October 12, 2010, before it provided Lexington with a proof of loss. Lexington moved for summary judgment, advancing two primary arguments.
The district court rejected Lexington’s argument that, by filing suit before submitting a proof of loss, the Yacht Club was barred from submitting a claim. The court found that the time period for providing a proof of loss in the policy, which required that the Yacht Club provide Lexington with a proof of loss within sixty days after Lexington’s request, was only triggered by Lexington’s request, and not tied to the initiation of suit. The court distinguished the policy language from language in other cases that required that a proof of loss be submitted a certain number of days “prior to suit.” Because there was no evidence that the Yacht Club failed to provide a proof of loss within sixty days of Lexington’s request, the suit was not barred.
Lexington next argued that the Yacht Club failed to comply with the “Prompt Notice” requirement of the policy, which required that “You must see that the following are done in the event of loss or damage to Covered Property….Give us prompt notice of the loss or damage.” The court noted that, under Florida law, prejudice to an insurer is presumed upon the breach of a notice provision, but that such prejudice may be rebutted by a showing that the insurer has not been prejudiced by the lack of notice.
The court rejected the Yacht Club’s contentions that the delay of more than fifty-five months in providing notice was reasonable because the full extent of the damage was not immediately apparent. Citing 1500 Coral Towers, the court noted that “an insured is obligated to notify the insurer of the potential for a claim when some damage is obvious even if its full extent is unknown.” An insured’s good faith belief that the damage is trivial or not covered is not sufficient to justify non-compliance with a policy’s notice provision. The court determined that the Yacht Club’s late notice was not prompt as a matter of law.
The court then addressed whether the Yacht Club had successfully rebutted the presumption of prejudice to Lexington. The purpose behind the presumption, according to the court, was that the prompt notice of damage permits an insurer and an insurer’s experts to more accurately determine the cause and extent of the damage, and well as permit the insurer the opportunity to monitor repairs. The court rejected the Yacht Club’s argument that Lexington had not been prejudiced because Lexington’s experts were able to draw some conclusions regarding the claimed damages; had Lexington been notified promptly, the court reasoned, the experts might have been able to reach more reliable conclusions. Similarly, Lexington’s apparent lack of internal protocol concerning the importance of timely expert investigation did not support the Yacht Club’s argument that Lexington was not prejudiced – internal protocol or not, the court found it intrinsically understandable that a prompt investigation provides better results than a delayed investigation. Finally, the court found that, although the Yacht Club’s expert was able to draw certain conclusions regarding the damage, “nothing in the expert’s report rebuts the presumption that better and more accurate conclusions…would have been drawn” had Lexington been timely notified of the loss. As a result, Lexington was granted summary judgment.
This case provides helpful guidance concerning how, or more accurately, how not, an insured can successfully rebut the presumption of prejudice in late notice claims. Prompt notice provides an insurer with a full and fair opportunity to investigate claimed damages, and to reach more accurate and thorough conclusions.