When Better Late Than Never Isn’t Good Enough: Florida Federal Court Grants Summary Judgment For Insurer In Late-Reported Hurricane Claim | Cozen O’Connor
On September 27, 2021, Judge Jose Martinez of the US District Court for the Southern District of Florida issued a summary judgment in favor of Scottsdale Insurance Company in the LMP Holdings Inc. v. Scottsdale Ins. Co., Case No. 20-24099. The case arose from Hurricane Irma, which was reported more than two years after the storm.
The insured, LMP Holdings, Inc., owned a commercial property in Miami. The insured claimed the property was damaged by Hurricane Irma, which struck South Florida on September 10, 2017. The insured’s craftsman and one of the insured’s officials inspected the property the day after the storm. The handyman noticed holes on the roof that he was mending and a panel from one of the air conditioners on the roof that had come loose. The insured’s official noted extensive water damage in the storage room and some water damage in the reception area of the office.
The insured noticed other problems over time. In the months after the storm, the insured had further problems with the air conditioning, a water stain appeared on the ceiling panel and the insured noticed damage due to rot and wear and tear. However, the insured did not report a claim to Scottsdale until December 10, 2019, about two years and three months after the storm. Scottsdale refused to cover the damage and the insured filed a lawsuit.
Under Florida law, late termination creates a rebuttable presumption of damage for the insurer. If the undisputed factual report determines that communication is so late that no reasonable juror has been able to find it in time, the Florida courts will judge the communication to be late for legal reasons. Courts have ruled that even six months or less is not considered a “quick” termination.
In this case, the insured waited 27 months after the first discovery of damage to the thing before filing the complaint, and accordingly the notification of the insured was legally premature. Regardless of whether the insured person would not exceed the deductible, the court ruled that reporting in good time was not excused because the insured person may not be aware of the full extent of the damage or the damage would exceed the deductible.
Therefore, the burden of proof shifted to the insured in order to rebut the presumption of damage resulting from the failure to notify the insured. The court found that while the insured claimed that Scottsdale had provided no evidence that the late reporting had put him at a disadvantage, it was not Scottsdale’s burden to do so.
The court found that the insured had failed to meet his burden, as the insured merely presented different opinions of the experts about the cause of the damage suffered in order to refute the presumption of bias. In addition, the insured made several repairs before making his claim with Scottsdale, so Scottsdale suffered from being unable to inspect the property prior to making those repairs and not participating in repairing the damage.
The court found that the insured did not provide evidence that a previous inspection, particularly one carried out prior to repair, would not have affected the investigation. Accordingly, the court issued a summary judgment in Scottsdale’s favor.
The decision provides further support to insurers to invoke a defense against late termination if a claim is reported long after the date of the claim.