Filing Number: 781526
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| Filing Accepted: 9/5/2024 |
| Last/Business Name
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LENNAR HOMES, LLC
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First Name |
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| Street Address
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5505 WATERFORD DISTRICT DRIVE |
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MIAMI,
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33126
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| Email Address
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LKERR@COGBURNLEGAL.COM |
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Insured |
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| Last/Business Name* |
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VICTOR’S STUCCO, INC. |
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First Name |
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| Policy # * |
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AGL0016344-02 (2016-17); AGL0016344-03 (2017-18) |
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Claim #* |
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000014025100 |
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Attorney is Applicable
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| Last Name* |
KERR
First Name *
LAUREN
Initial
D
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| Street Address* |
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777 S. HARBOUR ISLAND BLVD., SUITE 245 |
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TAMPA
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FL
33602
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| Email Address * |
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LKERR@COGBURNLEGAL.COM |
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| Insurer Type
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Authorized Insurer
Unauthorized Insurer
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| Insurer Name |
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| Insurer Name* |
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ARCH SPECIALTY INSURANCE COMPANY
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| Insurer Name* |
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| Street Address* |
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,
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NAIC Company Code 21199 |
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| Name of individual responsible for violation (if any):*
GARTNER+BLOOM, ATTORNEYS FOR ARCH SPECIALTY INSURANCE COMPANY
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| Type of Insurance
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Commercial Property & Casualty
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| Reason for Notice
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Claim Denial
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Claim Delay
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Unfair Trade Practice
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Statutory provision(s) which the insurer allegedly violated.
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| 624.155(1)(b)(1) |
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Not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests.
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| 626.9541(1)(i)(3)(a) |
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Failing to adopt and implement standards for the proper investigation of claims.
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| 626.9541(1)(i)(3)(b) |
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Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue.
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| 626.9541(1)(i)(3)(d) |
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Denying claims without conducting reasonable investigations based upon available information.
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Specific policy language that is relevant to the violation.
Enter all words or phrases (one at a time) that should be used to filter.
Victor’s Stucco, Inc. (“Victors”) purchased at least two commercial general liability (“CGL”) policies from Arch Specialty Insurance Company ("ARCH”) providing coverage for liability because of property damage resulting from Victors’ work, specifically Policy Numbers AGL0016344-02 (2016-17) and AGL0016344-03 (2017-18) (the “Policies”).
The insuring agreements of the Policies state, in relevant part:
We will pay those sums that the insured becomes legally obligated to pay as damages because of … “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages …
The Policies define “property damage” to include:
a. Physical injury to tangible property, including all resulting loss of use of that property … or
b. Loss of use of tangible property that is not physically injured …
For coverage to be afforded, “property damage” must have been caused by an “occurrence,” which is defined under the Policies as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions”.
Not only do the Policies provide coverage to the named insured, Victors, they also provide coverage to Lennar Homes, LLC (“Lennar”) as an additional insured.
The Policies contain the following endorsement:
BLANKET ADDITIONAL INSURED ENDORSEMENT
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
SECTION II – WHO IS AN INSURED is amended to include as an additional insured those persons or organizations who are required under a written contract with you to be named as an additional insured, but only with respect to liability for … “property damage” … caused, in whole or in part, by your acts or omission or the acts or omissions of your subcontractors:
a. In the performance of your ongoing operations or “your work”, including “your work” that has been completed . . .
The subcontract between Lennar and Victors required that Victors name “Lennar Corporation including its subsidiaries [&] … affiliated companies…” as additional insureds on its CGL policies of insurance for Victors’ ongoing and products/completed operations. Lennar Homes, LLC is a subsidiary/affiliate company of Lennar Corporation.
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Facts and circumstances giving rise to the violation.
Enter all words or phrases (one at a time) that should be used to filter.
This civil remedy notice is being filed because Arch Specialty Insurance Company (“ARCH”) has failed to address Lennar Homes, LLC’s (“Lennar”) tenders of defense in good faith. The ARCH policies implicated are Policy Numbers AGL0016344-02 (2016-17) and AGL0016344-03 (2017-18) (the “Policies”).
Lennar has been named as a defendant in an arbitration action styled as Joshua Leigh Vaughan and Amanda Taylor Vaughan v. Lennar Homes, LLC (the “Lawsuit”). The Lawsuit alleges property damage resulting from stucco system-related claims due to work performed by Lennar’s stucco subcontractor, Victor’s Stucco, Inc. (“Victors”). During original construction, Victors performed work on the project pursuant to the terms and conditions of its subcontract with Lennar. Because of the pending allegations and Victors’ work at the subject property, Lennar tendered the claim to ARCH. To date, ARCH has failed to provide either Lennar or Victors with a defense in the Lawsuit.
Included in the subcontract between Lennar and Victors was a requirement that Victors would secure commercial general liability ("CGL") insurance and name Lennar as an Additional Insured. Victors purchased at least two policies, the Policies, from ARCH, which provide coverage for liability because of property damage resulting from Victors’ work. This coverage extends to both the named insured, Victors, and the additional insured, Lennar.
The Policies provides blanket coverage where required by written contract, as described supra. Because the written subcontract required Victors to name Lennar as an additional insured, Lennar is an additional insured under the Policies.
This claim has been pending for over a year without ARCH’s participation. Lennar tendered its defense to ARCH on or about August 23, 2023. Lennar again tendered its defense to ARCH on May 20, 2024 and provided ARCH with notice of the Lawsuit. On August 14, 2024, ARCH denied Lennar’s tender of defense. ARCH’s refusal to provide a defense is knowingly wrongful because the Lawsuit, as pled, implicates coverage under the Policies and does not clearly implicate any exclusions under the Policies.
"Under Florida law, an insurer's duty to defend its insured against legal action is quite broad, and 'is determined by comparing the allegations contained within the four corners of the underlying complaint with the language of the policy.'" Zurich Am. Ins. Co. v. Southern- Owners Ins. Co., 314 F. Supp. 3d 1284, 1299 (M.D. Fla. 2018) (Howard, J.) citing Addison Ins. Co. v. 4000 Island Blvd. Condo. Ass'n, Inc., 263 F. Supp. 3d 1266, 1269 (S.D. Fla. 2016) (quoting Jones v. Fla. Ins. Guar. Ass'n Inc., 908 So. 2d 435, 443 (Fla. 2005)). That is, an insurer's duty to defend is determined solely by the allegations in the underlying complaint. Zurich, 314 F. Supp. 3d at 1299 citing Category 5 Mgmt. Grp., LLC v. Companion Prop. & Cas. Ins. Co., 76 So. 3d 20, 23 (Fla. 1st DCA 2011); Lawyers Title Ins. Corp. v. JDC (Am.) Corp., 52 F.3d 1575, 1580 (11th Cir. 1995). "The duty arises when the relevant pleadings allege facts that 'fairly and potentially bring the suit within policy coverage.'" Id. citing Lawyers Title Ins. Corp., 52 F.3d at 1580 (quoting Lime Tree Vill. Cmty. Club Ass'n, Inc. v. State Farm Gen. Ins. Co., 980 F.2d 1402, 1405 (11th Cir. 1993)). The actual facts of the situation are not relevant, such that "the insurer must defend even if facts alleged are actually untrue or legal theories unsound." Id. As a result, "an insurer's duty to defend is distinct from, and broader than, the duty to indemnify," Id. citing Sinni v. Scottsdale Ins. Co., 676 F. Supp. 2d 1319, 1323 (M.D. Fla. 2009), which "must be determined by analyzing the policy coverage in light of the facts in the underlying case," J.B.D. Constr., Inc. v. Mid-Continent Cas. Co., 571 F. App'x 918, 927 (11th Cir. 2014) (emphasis added). In addition, where an injured party "alleges facts partially within and partially outside the coverage of the policy, the insurer is obligated to defend the entire suit." Category 5 Mgmt. Grp., LLC, 76 So. 3d at 23.
The only way an insurer can avoid its duty to defend based on an exclusion is by showing that the allegations in the underlying complaint fall solely and entirely within that exclusion. See Lime Tree Vill. Cmty. Club Ass’n, Inc. v. State Farm Gen. Ins. Co., 980 F.2d 1402, 1405-07 (11th Cir. 1993); see also Northland Cas. Co. v. HBE Corp., 160 F. Supp. 2d 1348, 1359 (M.D. Fla. 2011). “If the allegations of the complaint leave any doubt regarding the duty to defend, the question must be resolved in favor of the insured requiring the insurer to defend.” Baron Oil Co. v. Nationwide Mut. Fire Ins. Co., 470 So. 2d 810, 814 (Fla. 1st DCA 1985); see also Higgins v. State Farm Fire & Cas. Co., 894 So. 2d 5, 10 (Fla. 2004) (approving standard articulated in Baron Oil); Voeller Constr., Inc. v. Southern-Owners Ins. Co., No. 8:13-cv-3169, 2014 U.S. Dist. Lexis 61862 at *4 (M.D. Fla. May 5, 2014). Lennar disputes the application of any policy exclusions to the Lawsuit entirely. However, even if the exclusions did apply to the Lawsuit, the allegations of the Lawsuit do not fall solely and entirely within ARCH’s purported exclusions and therefore ARCH cannot avoid its duty to defend its insureds.
ARCH appears to be relying on the “Residential and Residential Conversion Limitation Endorsement” of the Policies, but it does not apply. The exclusion plainly provides for three exceptions: “[t]his endorsement shall not apply where such development or construction does not exceed 12 units in any one dwelling or housing development or when work is performed on a property that has obtained a certificate of occupancy prior to such work being performed.” The first exception to the exclusion applies to this matter - as the exception plainly reads that “[t]his endorsement shall not apply where such … construction … does not exceed 12 units in any one dwelling…”. The instant matter involves a single-family home and does not exceed 12 units in any one dwelling. At best, the exclusion is ambiguous. “Generally, insurance coverage must be broadly construed in favor of the insured, which exclusions must be narrowly construed against the insurer. . . Further, ambiguous policy provisions are interpreted liberally in favor of the insured and strictly against the drafter who prepared the policy…”. Air Quality Assessors of Florida v. Southern-Owners Ins. Co., 354 So. 3d 569, 572 (Fla. 1st DCA 2022) (internal citations omitted). Moreover, the classification page of the Policies specifically indicates Victors would be performing plastering or stucco work on one- or two-family dwellings and Victors named several residential home developers as additional insureds on the endorsements of the Policies. Therefore, Arch cannot claim in good faith to have issued the Policies to Victors to perform work on one-or two-family homes and name residential home builders as additional insureds, and simultaneously argue the endorsement bars coverage for any property damage resulting from Victors’ work on same.
ARCH’s failure to defend its insureds has prejudiced and damaged Lennar. Lennar has been forced to incur defense costs in the Lawsuit, for which ARCH is responsible. The Lawsuit includes allegations of losses covered under the Policies. Under Florida law, ARCH’s duty to defend its insureds was triggered by the Plaintiffs’ allegations, whether they are proven to be true or not. ARCH’s unreasonable handling of Lennar’s claim has caused it to incur substantial legal fees and costs in defending itself against the claims. The attorneys' fees and costs that Lennar has incurred have unjustly burdened Lennar. ARCH has also prejudiced and damaged its named insured by exposing Victors to Lennar’s claim to recover these substantial fees and costs. Lennar has exhausted all available options to convince ARCH to deal with Lennar in good faith, to no avail.
Additionally, ARCH has failed to appropriately consider or explore settlement opportunities, subjecting Lennar and Victors to exposure to a verdict. Moreover, by refusing to defend Lennar, ARCH has greatly exposed its named insured Victors to a much larger claim for Lennar’s defense costs in this matter pursuant to the contractual indemnification provisions in the subcontract.
Victors and Lennar are deluged with claims arising from Victors’ work. ARCH must exercise its duty of good faith to both Lennar and Victors and must employ “the same degree of care and diligence as a person of ordinary care and prudence should exercise in the management of his own business.” Farinas v. Florida Farm Bureau Gen. Ins. Co., 850 So. 2d 555 (Fla. 4th DCA 2003) (internal citations omitted). Under Farinas, ARCH is obligated to fully investigate all claims at hand to determine how to best limit its insured’s liability; (2) seek to settle as many claims as possible within the policy limits; (3) minimizing the magnitude of possible excess judgments against its insureds by reasoned claim settlement; and (4) keeping the insureds informed of the claim resolution process.
ARCH’s obligations extend to all the insureds under the Policies and are not limited to the named insured. Thus ARCH’s obligations extend to additional insureds, like Lennar. To date, Lennar is unaware of ARCH’s investigation, if any, of the claims against Lennar, or its efforts, if any, to resolve as many of the claims against Lennar as possible within existing policy limits. Likewise, ARCH has never advised Lennar how, or if, it intends to minimize the magnitude of possible excess judgments against insured Victors or Lennar, nor has ARCH apprised Lennar of any claim resolution process.
Given ARCH’s lack of participation and the other facts outline above, ARCH has utterly failed or even attempted to meet the standard for good faith in this matter.
Lennar will be filing suit against ARCH but is also filing this notice in an effort to provide ARCH with a last opportunity to deal with Lennar in good faith as well as to perfect its right to pursue the remedies provided under Section 624.155, Florida Statutes. ARCH can cure by acknowledging its duty to defend and reimbursing Lennar its reasonable defense costs incurred to date and working together with Lennar to resolve this claim.
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The submitter hereby states that this notice is given in order to perfect the rights of the
person(s) damaged to pursue civil remedies authorized by Section 624.155, Florida Statutes.
Before submitting a Notice using this system, please verify that all text has been entered
correctly and completely. Once the Notice has been submitted, the text cannot be changed
or deleted.
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DFS-10-363
Rev. 10/14/2008
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