Civil Remedy Notice of Insurer Violations
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Filing Number:     781858
Filing Accepted:  9/9/2024
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Complainant
Last/Business Name *  
EYM DINER OF FLORIDA, LLC.   First Name   UNIT 6394
Street Address * 4999 34TH STREET NORTH
City, State Zip * ST. PETERSBURG, FL 33714
Email Address * DAVID@PEOPLEFIRSTLEGAL.COM
Complainant Type: * Insured
Insured
Last/Business Name*   EYM DINER OF FLORIDA, LLC.   First Name   UNIT 6394
Policy # * VBA852149-00 Claim #* 7030174197
Attorney
Attorney is Applicable
Last Name* SHOLL First Name * DAVID Initial
Street Address* 11340 SW 51 STREET
City, State Zip* MIAMI , FL 33165
Email Address * DAVID@PEOPLEFIRSTLEGAL.COM
Violation
Insurer Type *   Authorized Insurer Unauthorized Insurer
 
Insurer Name*   COVINGTON SPECIALTY INSURANCE COMPANY
NAIC Company Code 13027
 
Name of individual responsible for violation (if any):* VINCENT CICCI (“EM”), JONATHAN CAMARRO (“RSUI”), CASEY AGABITTI (“EM”), JARROD BURNS (“BSE”), CHRISTOPHER TRACEY, EVELYN MERCHANT, MONICA MARTA, KARLA MENDEZ, GUSTAVO RODRIGUEZ, MICHAEL POSADA, KRISTEN HEFLEY, ENGLE MARTIN (INCLUDING ITS AGENTS), BSC
Type of Insurance * Commercial Property & Casualty   
Reason for Notice *
Unfair Trade Practice
* Statutory provision(s) which the insurer allegedly violated.
 
626.9541(1)(i)(1) Attempting to settle claims on the basis of an application, when serving as a binder or intended to become a part of the policy, or any other material document which was altered without notice to, or knowledge or consent of, the insured.
626.9541(1)(i)(2) A material misrepresentation made to an insured or any other person having an interest in the proceeds payable under such contract or policy, for the purpose and with the intent of effecting settlement of such claims, loss, or damage under such contract or policy on less favorable terms than those provided in, and contemplated by, such contract or policy.
626.9541(1)(i)(3)(a) Failing to adopt and implement standards for the proper investigation of claims.
626.9541(1)(i)(3)(b) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue.
626.9541(1)(i)(3)(c) Failing to acknowledge and act promptly upon communications with respect to claims.
626.9541(1)(i)(3)(f) Failing to promptly provide a reasonable explanation in writing to the insured of the basis in the insurance policy, in relation to the facts or applicable law, for denial of a claim or for the offer of a compromise settlement.
626.9541(1)(i)(3)(g) Failing to promptly notify the insured of any additional information necessary for the processing of a claim.
* Specific policy language that is relevant to the violation.
Enter all words or phrases (one at a time) that should be used to filter.

626.9541(1)(i)(1) Attempting to settle claims on the basis of an application, when serving as a binder or intended to become a part of the policy, or any other material document which was altered without notice to, or knowledge or consent of, the insured. 626.9541(1)(i)(2) A material misrepresentation made to an insured or any other person having an interest in the proceeds payable under such contract or policy, for the purpose and with the intent of effecting settlement of such claims, loss, or damage under such contract or policy on less favorable terms than those provided in, and contemplated by, such contract or policy. 626.9541(1)(i)(3)(a) Failing to adopt and implement standards for the proper investigation of claims. 626.9541(1)(i)(3)(b) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue. 626.9541(1)(i)(3)(c) Failing to acknowledge and act promptly upon communications with respect to claims. 626.9541(1)(i)(3)(f) Failing to promptly provide a reasonable explanation in writing to the insured of the basis in the insurance policy, in relation to the facts or applicable law, for denial of a claim or for the offer of a compromise settlement. 626.9541(1)(i)(3)(g) Failing to promptly notify the insured of any additional information necessary for the processing of a claim. When something is relevant to a violation, it has a logical connection to the issue at hand and can help determine whether a violation has occurred. What follows is a compilation of the policy language cited by the insurer during the course of this claim as well as other policy language from the subject insurance policy that the claimant believes bears a logical connection to the issue of whether the insurer has violated the Florida Insurance Code and committed bad faith pursuant to Fla. Stat. 624.155(1)(a). Separately, Claimant contends the policy language cited bears a logical connection to whether the insurer committed bad faith pursuant to Fla. Stat. 624.155(1)(b) by: (1) failing to settle this claim when it could have and should have under the circumstances of this claim; and (2) not acting fairly and in good faith in discharging its contractual responsibilities. In so doing, pursuant to Fla. Stat. 624.155(1)(b, the insurer failed to deal fairly and in good faith with the Claimaint by refusing, without proper cause, to compensate the Claimant for losses covered by the subject policy, such conduct–is separate from bad faith under F.S. 624.155(1)(a) and–gives rise to its own cause of action for bad faith under Florida law. THE POLICY LANGUAGE RELEVANT TO THE VIOLATIONS INCLUDES ALL APPLICABLE LOSS PAYMENT AND COVERAGE PROVISIONS OF POLICY NUMBER POLICY NO.: 80CCX8128 INCLUDING THE DECLARATIONS PAGES AND ALL ENDORSEMENTS TO THE POLICIES, WITH RESPECT TO COVERAGES A, B, C, AND D. ADDITIONALLY, ANY SECTIONS RELIED UPON BY THE INSURER IN ITS COVERAGE DETERMINATION AND FAILURE TO FULLY PAY THE CLAIMS, INCLUDING THE DUTIES IN THE EVENT OF LOSS PROVISIONS AND THE POLICIES’ EXCLUSION OF COVERAGE PROVISIONS. THE CLAIMANT SPECIFICALLY POINTS TO THE FOLLOWING PROVISIONS AS RELEVANT TO THIS CLAIM. GENERAL FACTS AND CIRCUMSTANCES GIVING RISE TO THESE VIOLATIONS AND THIS BAD FAITH CLAIM Because bad faith is considered on a case-by-case basis and therefore requires a contextual analysis based on the existing circumstances, these sections are necessary to provide the background circumstances of the Claimant's allegations of bad faith. Because most first-party bad-faith lawsuits begin with insurers attempting to dismiss such lawsuits on the basis of the contents of the civil remedy notice it is imperative the claimant and insurer share a common understanding of the situation and law surrounding this bad-faith claim. After Hurricane Ian and Hurricane Nicole hit Florida many policyholders find themselves in a crisis due to the malfeasance of their insurance companies. Despite the widespread damage caused by the storms, insurance companies have failed to settle claims fairly and honestly. This has resulted in many policyholders being unable to rebuild their properties, businesses, and lives. These profit-hungry corporations have taken advantage of their policyholders, leaving them in dire straits. With natural disasters like hurricanes striking frequently, the insurers use this as an excuse to increase premiums and decrease coverage, lining their own pockets while leaving their customers struggling to make ends meet. These companies have further exacerbated the problem by cherry-picking their policyholders, only covering those deemed low-risk or profitable, and leaving high-risk individuals with little to no coverage. The insurance industry's bad faith practices have only worsened the situation. They deny valid claims, delay payments, and fail to properly investigate claims, all in the name of profit. Under Florida law, insurance companies are required to act in good faith towards their policyholders. However, these companies have flouted these laws with impunity. Their greed and callousness have resulted in a catastrophic insurance crisis that threatens to ruin the lives of thousands of Floridians and Florida-based businesses. As a result of this bad faith on the part of the insurance companies, Florida found itself in an insurance crisis. Many policyholders were left feeling frustrated and helpless as they struggled to navigate a complex system that seemed stacked against them. (I)(1) CIRCUMSTANCES REGARDING BAD FAITH AND THE CURRENT INSURANCE CRISIS: Florida’s bad faith laws provide important protections for consumers while allowing sufficient opportunity to settle for insurers acting in good faith. It is important to note at the outset that bad faith is not limited by an insurer’s good intentions. Instead, Florida’s bad faith laws are expansive in scope and the boundaries of bad faith law in Florida encompass even well-intentioned acts by insurers. See Victor E. Schwartz, Restoring The Good Faith in Florida’s “Bad Faith” Insurance Litigation, 11 (2011). There is no legal requirement for malevolent will. Id. Simply put, bad faith is a dishonest or unfair act that occurs when an insurance company does not meet legal or contractual obligations under Florida law–even technical ones. It is important to note that insurers set themselves up for bad faith by not acting fairly towards their insureds. Insurers cannot be “setup” for bad faith if the insurer “undertakes a prompt investigation of the loss, timely evaluation of the legal liability of the insured, communicates to the insured the material events of the adjustment process, and acts reasonably with regard to opportunities to settle the loss and protect the assets of the insured.” Rutledge R. Liles, Florida Insurance Bad Faith Law: Protecting Businesses and You, 85 FLA. B.J. 8, 11 (Mar. 2011). THE REQUIREMENTS OF THE CIVIL REMEDY NOTICE Before a Claimant can bring a bad faith claim, the insurance company must be given 60 days to cure the alleged violation(s). To begin the process, a Civil Remedy Notice (“CRN”) is filed with both the insurance company and the Department of Financial Services. The plain language of Fla. Stat. § 624.155(3)(b) instructs the policyholder to “state with specificity” certain information in the CRN. According to the Department of Financial Services, “the specificity requirement [of 624.155] will be met if all of the fields on the electronic form which include those statutorily required are filled out.” Florida Senate Committee on the Judiciary, Insurance Bad Faith: Interim Report 2012-132, 7 (Nov. 2011), F.N. 60 (citing Meeting with Department of Financial Services staff (Aug. 24, 2011)). Further, Florida Courts recognize that the statute cannot create a barrier to entry to a bad faith lawsuit and have held that only substantial compliance with the specificity requirement of the statute is needed by a Claimant, not strict compliance. See Pin-Pon Corp. v. Landmark Am. Ins. Co., 2020 U.S. District LEXIS 212941. In other words, despite insurers’ contentions to the contrary, the specificity threshold is very low. As such, Fla. Stat. 624.155 provides the insurer with a 60-day “safe harbor” period to address and settle the claim in order to prevent a bad faith action even if the CRN fails to describe the amount of the claim, the nature of the insurer’s alleged bad faith conduct with great detail, or has technical defects. (I)(3) CIRCUMSTANCES FOR BRINGING THE BAD FAITH LAWSUIT UNDER FLORIDA LAW Florida’s strong bad faith law puts it in a unique posture to effectively protect consumers by holding insurers accountable for their misconduct. Florida Senate Committee on the Judiciary, Insurance Bad Faith: Interim Report 2012-132, 17 (Nov. 2011). The good news for bad faith claimants in Florida is that the law is quite clear. Fla. Stat. 624.155 provides that “any person may bring a civil action against an insurer when such person is damaged” by certain acts by an insurer. Florida courts have interpreted this good faith requirement in Florida as an insurer’s duty “to refrain from acting solely on the basis of their own interest” in the claims process. The measure of whether an insurer has acted in good faith is, necessarily, determined by an assessment of the lengths to which the carrier went in an effort to provide the insured with the protection afforded by the insurance policy. It is for this reason that under Florida’s bad faith laws “‘the focus in a bad faith case is not on the actions of the claimant but rather on those of the insurer in fulfilling its obligations to the insured.’” Berges v. Infinity Ins. Co., 896 So. 2d 665, 677 (Fla. 2004)). That said, a claimant’s actions are “not completely ignored under Florida law” but they only become relevant after the insurer has attempted to settle the bad faith allegations. See Snowden v. Lumberman’s Mut. Casualty Co., 358 F. Supp. 2d 1125, 1129 (N.D. Fla. 2003). Consequently, an insurer responding to this notice by merely attacking its substance and denying all allegations of bad faith is in itself likely an act of bad faith unless the insurer provides a detailed explanation of the investigation it undertook in response to this CRN and engages in a substantive information exchange with the Claimant designed to settle the dispute alleged herein. See also generally Crosby v. Jones, 705 So. 2d 1356, 1358 (Fla. 1998) (“the public policy of Florida is to encourage settlements”); Abbott v. Purdy Group Inc. v. Bell, 738 So. 2d 1024, 1027 (Fla. 4th D.C.A. 1999) (the public policy of Florida is to “promote settlements and early termination of litigation”) (citation omitted). If an insurance company fails to respond to a CRN with particularity or provides incomplete or inaccurate information, it can be considered bad faith and may be subject to legal action. Therefore, it is essential for insurance companies to take CRNs seriously and respond promptly and accurately with the requested information.
 
* Facts and circumstances giving rise to the violation.
Enter all words or phrases (one at a time) that should be used to filter.

I. INTRODUCTION In the delicate balance of commercial industry, the arena of insurance holds a sacred duty, a beacon of trust and refuge in the face of calamity. This role, particularly in the state of Florida, is deeply interwoven with the Public Trust, and its key players bear a profound obligation to honor this trust. COVINGTON SPECIALTY INSURANCE CO. (hereinafter "INSURANCE COMPANY"), with a disturbing display of negligence and deceit, threatens to unravel this bond of trust. The troupe leading this reprehensible performance includes Vincent Cicci (“EM”), Jonathan Camarro (“RSUI”), Casey Agabitti (“EM”), Jarrod Burns (“BSE”), Christopher Tracey, Evelyn Merchant, Monica Marta, Karla Mendez, Gustavo Rodriguez, Michael Posada, Kristen Hefley, Engle Martin (including its agents), BSC Forensics (including its agents), as well as insurers and their agents included in any attached documentation (collectively referred to as "REPRESENTATIVES"). With a startling lack of experience and a blatant disregard for their professional duties, they have steered this already storm-battered vessel straight into catastrophe. II. THE INSUREDS AND THE DISASTER EYM DINER OF FLORIDA, LLC. (collectively known as “THE INSUREDS”), have been devoted policyholders for 4 years at their property located at 4999 34th Street North, Unit 6394, St. Petersburg, FL 33714 They faithfully fulfilled their part of the bargain, regularly paying their premiums with the just expectation of appropriate coverage when disaster strikes. Unfortunately, when Hurricane Ian, an event of unparalleled magnitude, swept through Florida on September 28, 2022, the INSURANCE COMPANY abandoned THE INSUREDS in the aftermath of the devastation. Despite their Insurance Policy, POLICY NO.: VBA852149-00, being active and unblemished, their dire plight was met with obstruction and negligence. III. DETAILED VIOLATIONS Violation of Section 626.9541(1)(i)(1) In the aftermath of Hurricane Ian, THE INSUREDS found themselves grappling not only with the physical damage inflicted upon their property but also a different kind of tempest—one of manipulated documents and the deceitful attempts to exploit them. The field adjuster's estimate, a document pivotal to the determination of the claim's worth, was manipulated without the knowledge or consent of THE INSUREDS. This document, altered by unnamed and unseen individuals acting on behalf of the INSURANCE COMPANY, was used as an unjust tool to diminish the rightful benefits owed to THE INSUREDS. This brazen act stands in direct violation of Florida Statute 626.9541(1)(i)(1), causing significant financial distress to THE INSUREDS and shaking the very foundation of their trust in the insurance system. Violation of Section 626.9541(1)(i)(2) To add insult to injury, the REPRESENTATIVES, acting as agents of the INSURANCE COMPANY, made material misrepresentations with a clear intent of coercing THE INSUREDS into accepting a settlement far below what they were justly entitled to. This calculated deception was not only a gross violation of Florida Statute 626.9541(1)(i)(2), but it also trampled on the spirit of the contractual relationship between the INSURANCE COMPANY and THE INSUREDS. The ensuing stress, uncertainty, and mental turmoil inflicted on THE INSUREDS by this insidious strategy are beyond comprehension. Violation of Section 626.9541(1)(i)(3)(a) Despite the complexities and the sizable stakes associated with the claim, the REPRESENTATIVES shockingly failed to adopt and implement appropriate standards for its investigation. This crucial violation of Florida Statute 626.9541(1)(i)(3)(a) led to a gross undervaluation of the damage suffered by THE INSUREDS. This flagrant dereliction of duty only amplified THE INSUREDS' already mounting financial woes and intensified their feeling of betrayal at the hands of the INSURANCE COMPANY. Violation of Section 626.9541(1)(i)(3)(b) Despite the complexities of the claim and the stark inconsistencies in their approach, the REPRESENTATIVES, acting for the INSURANCE COMPANY, failed to clarify pertinent facts or policy provisions to THE INSUREDS. Their violation of Florida Statute 626.9541(1)(i)(3)(b) has led to confusion, disappointment, and mistrust, further aggravating THE INSUREDS' mental anguish. Violation of Section 626.9541(1)(i)(3)(c) Furthermore, the REPRESENTATIVES failed to acknowledge and act promptly upon communications regarding THE INSUREDS' claims, violating Florida Statute 626.9541(1)(i)(3)(c). This negligence and lack of professional conduct have caused significant delays in processing the claim, placing additional stress and financial hardship on THE INSUREDS. Violation of Section 626.9541(1)(i)(3)(f) Despite numerous attempts by THE INSUREDS to understand the basis for the denial of their claim, the REPRESENTATIVES did not provide a reasonable explanation in writing. This blatant disregard for the provisions of Florida Statute 626.9541(1)(i)(3)(f) further underscored the extent of the INSURANCE COMPANY's deception and lack of transparency. Violation of Section 626.9541(1)(i)(3)(g) In yet another display of gross incompetence and violation of Florida Statute 626.9541(1)(i)(3)(g), the REPRESENTATIVES failed to promptly notify THE INSUREDS of additional information required for claim processing. This deliberate delay tactic added to the bureaucratic red tape, causing unnecessary frustration and uncertainty for THE INSUREDS, who were merely seeking the coverage they were promised. Moreover, the exclusionary and limiting language is unconscionable and therefore, unenforceable. Under Florida law, “before a court may hold a contract unconscionable, it must find that it is both procedurally and substantively unconscionable.” Gainesville Health Care Ctr., Inc. v. Weston, 857 So. 2d 278 (Fla. 1st DCA 2003). It is therefore important for businesses to understand that its negotiation process and substantive contract terms may be scrutinized by Florida courts in breach of contract actions if a defense of unconscionability is raised. “The concept of unconscionability does not mean, however, that a court will relieve a party of his obligations under a contract because he has made a bad bargain containing contractual terms which are unreasonable or impose an onerous hardship on him.” Gainesville Health Care Ctr., Inc. v. Weston, 857 So. 2d 278 (Fla. 1st DCA 2003). “It is only where it turns out that one side or the other is to be penalized by the enforcement of the terms of a contract so unconscionable that no decent, fair-minded person would view the ensuing result without being possessed of a profound sense of injustice, that equity will deny the use of its good offices in the enforcement of such unconscionability.’” Steinhardt v. Rudolph, 422 So. 2d 884 (Fla. 3d DCA 1982). Under Florida law, courts will only find a contract to be unconscionable if it is both procedurally and substantively unconscionable. Bellsouth Mobility LLC v. Christopher, 819 So. 2d 171 (Fla. 4th DCA 2002). However, while both elements must be present, they do not have to be present to the same degree. Basulto v. Hialeah Auto., 141 So. 3d 1145 (Fla. 2014). In Basulto, Florida’s Supreme Court held that court should use a “sliding scale” approach when both procedural and substantive unconscionability are present to some degree. This sliding scale analysis employs “a balancing approach . . . allowing one prong to outweigh another provided that there is at least a modicum of the weaker prong.” SHEDDF2-FL3, LLC v. Penthouse S., LLC, 314 So. 3d 403 (Fla. 3d DCA 2020). “The more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to conclude that the term is unenforceable, and vice versa.” 12550 Biscayne Condo. Ass’n, Inc. v. NRD Investments, LLC., 46 Fla. L. Weekly D2401 (Fla. 3d DCA Nov. 10, 2021). Procedural unconscionability relates to the manner in which a contract is made and involves consideration of issues such as the bargaining power of the parties and their ability to know and understand disputed contract terms. 12550 Biscayne Condo. Ass’n, Inc. v. NRD Investments, LLC., 46 Fla. L. Weekly D2401 (Fla. 3d DCA Nov. 10, 2021). A contractual provision is procedurally unconscionable if the alleged non-breaching party lacked “meaningful choice” about the provision in question. Gainesville Health Care Ctr., Inc. v. Weston, 857 So. 2d 278 (Fla. 1st DCA 2003). To determine whether a contract is procedurally unconscionable, a court must look to the “circumstances surrounding the transaction” to determine whether the complaining party had a “meaningful choice” at the time the contract was entered. Kohl v. Bay Colony Club Condo., Inc., 398 So. 2d 865 (Fla. 4th DCA 1981). “Among the factors to be considered [while determining whether a contractual provision is procedurally unconscionable] are whether the complaining party had a realistic opportunity to bargain regarding the terms of the contract, or whether the terms were merely presented on a ‘take-it-or-leave-it’ basis; and whether he or she had a reasonable opportunity to understand the terms of the contract.” A substantively unconscionable contract is one that “no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other.” Woebse v. Health Care & Ret. Corp. of Am., 977 So. 2d 630 (Fla. 2d DCA 2008). For substantive unconscionability, courts must determine whether the contractual terms are “so outrageously unfair as to shock the judicial conscience. Courts do not equate unconscionability with mere unreasonableness.” Belcher v. Kier, 558 So. 2d 1039 (Fla. 2d DCA 1990). The Harm Suffered by the Insureds includes: Financial Consequences: At its core, the primary damage of bad faith is financial. Insurance policies serve as safety nets against unforeseen damages and losses. If an insurer refuses to pay out a valid claim, delays payments, or significantly undervalues the cost of repairs, the policyholder is often left to bear these financial burdens. These burdens may lead to crippling debt, bankruptcy, or even the loss of the insured property. They've diligently paid their insurance premiums and expect their policy to cover the costs of repairing the property to pre-loss condition. However, their insurance company unjustly refuses to properly pay the claim, citing reasons that aren't applicable under their policy's provisions. As a result, they're left with tens or even hundreds of thousands of dollars in repair costs, which could lead to mounting debt and potential bankruptcy. Legal Consequences: In many instances, insured parties may have to engage in expensive and time-consuming legal battles to receive the compensation they're owed. This could include the cost of hiring a lawyer, court fees, and the loss of personal or work time. To receive a fair settlement, the insured has been forced to hire an attorney to fight for them. Legal fees can quickly pile up, not to mention the time and stress involved in legal proceedings. Mental and Emotional Stress: The stress and anxiety of fighting a bad faith claim can have serious mental and emotional consequences. The process can be incredibly stressful and confusing, particularly if the insured has never navigated the complex insurance landscape before. This can lead to stress-related health conditions like insomnia, depression, and anxiety disorders. Here, the policyholder now has to worry about where their family will live, in addition to dealing with the bureaucracy and delay tactics of the insurer. The constant stress and uncertainty surely has or will lead to mental health problems like depression and anxiety. Distrust in the System: Bad faith practices erode trust in the insurance system. This might discourage individuals from seeking coverage in the future, leaving them vulnerable to the financial impact of property damages. The negative experiences can also affect other consumers, causing a ripple effect that undermines the industry as a whole. Here, after experiencing the anguish of a denied, delayed, and underpaid claim, the Insured has developed a deep-seated dislike of insurance companies. They may decide not to renew their policy or get insured in the future, leaving them financially vulnerable in the event of a catastrophe. Damage to Personal Belongings and Health: If the insurer does not act swiftly and adequately to cover damages, it could lead to further deterioration of the property and personal belongings due to continued exposure to elements like water, heat, or mold - despite best efforts to mitigate the damage by the Insured(s). This could also potentially expose the insured and their family to health hazards like mold or structural instability. Opportunity Cost: The time spent dealing with a bad-faith insurance company could be better used elsewhere. Policyholders may lose out on opportunities such as work, education, or personal pursuits because of the time and energy consumed by the claims process. Here, the Insured(s) have had to take time off work or abandon personal pursuits to chase the insurer, gather supporting evidence, engage in discussions, and even hire an attorney. This time could otherwise have been used productively or for personal enjoyment. Increased Premiums: After a bad faith claim, policyholders may face higher premiums in the future. This is because other insurers may seek to recoup their bad faith losses from policyholders, even if the original claim was valid and unfairly denied, delayed or underpaid. Further, after having their claim unjustly denied and using litigation to resolve the dispute, a policyholder may find themselves in a difficult position when seeking insurance from a new provider. The previous claim may be seen as a risk factor, and as such, the policyholder may be charged higher premiums, making insurance less affordable all because the prior carrier failed to uphold its end of the contractual bargain. CONCLUSION AND DEMAND In light of the heinous acts and statutory violations outlined above, this Civil Remedy Notice serves as a final warning to the INSURANCE COMPANY. THE INSUREDS demand that the INSURANCE COMPANY correct these violations within sixty (60) days of receiving this Notice, failing which, legal action will ensue. This Notice is not merely a precursor to a lawsuit; it is a testament to the egregious breach of faith perpetrated by the INSURANCE COMPANY. It is a reminder that there is a human cost to such deceit, and it is a cry for justice for THE INSUREDS and others who may have suffered similar fates at the hands of the INSURANCE COMPANY. The law provides for remedies for those affected by the insurance company's violation of these prohibited acts, and THE INSUREDS fully intend to pursue these remedies if the INSURANCE COMPANY continues to neglect its duties. The INSURANCE COMPANY is hereby put on notice. Rectify these transgressions or prepare to face the full force of the law. Therefore, to cure the defects outlined in this Civil Remedy Notice, the INSURANCE COMPANY must: Create and implement adequate guidelines for proper investigation and evaluation as to claims handling and for the training and supervision of employees, which will avoid future statutory violations as set forth above, and to avoid this from occurring in the future; the INSURANCE COMPANY must create and implement adequate guidelines for the proper investigation and evaluation of these types of claims, and for the training and supervision of employees with regard to these types of claims to ensure the INSURANCE COMPANY’s claims handling procedures with regard to these types of losses are adequate to stop further Insureds from being treated unfairly and wrongfully; the INSURANCE COMPANY must assist THE INSURED in mitigating his damages; the INSURANCE COMPANY must not demand pretextual investigations of the Property to further delay tendering payment to THE INSURED to return the Property to its pre-loss condition. The INSURANCE COMPANY must immediately tender all undisputed insurance proceeds to THE INSURED, while continuing to adjust the loss with THE INSURED; The INSURANCE COMPANY must act fairly and honestly towards THE INSURED and with due regard for their best interests in attempting to settle THE INSURED’S claim; The INSURANCE COMPANY must immediately tender all insurance benefits due and owing to THE INSURED under the Policy pursuant to the relevant policy provisions provided therein that would reasonably place THE INSURED back to their pre-loss condition, including, but not limited to all interest due and owing under applicable Florida Statutes, The INSURANCE COMPANY must also pay THE INSURED the fair value of his insurance claim and all expenses incurred with the adjustment of the claim (including the amount demanded in any public adjuster or contractors estimate), which includes adjuster fees, costs and attorney fees.
Comments
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rhardeman@rsui.com 11-04-2024 November 4, 2024 Via E-Mail EYM Diner of Florida #18 c/o David Sholl, Esq. The Sholl Firm 7000 W. Palmetto Park Road, Suite 210 Boca Raton, FL 33433 david@peoplefirstlegal.com Re: Civil Remedy Notice of Insurer Violation Complainant: UNIT 6394 EYM DINER OF FLORIDA, LLC. Insured: EYM Diner of Florida #18 Policy No.: VBA852149 00 Claim No.: 7030174197 Date of Loss: 9/28/2022 Property: 4999 34TH STREET NORTH, ST. PETERSBURG, FL 33714 DFS No.: CRN 781858 Accepted Date: 9/9/2024 Matter No.: 202306.0001 Insurer: Covington Specialty Insurance Company Dear Mr. Sholl, We are in receipt of the Civil Remedy Notice of Insurer Violation (“CRN”) that you submitted on behalf of Unit 6394 EYM DINER OF FLORIDA, LLC, incorrectly identified as the insured. The CRN was accepted by the Florida Department of Financial Services on September 9, 2024. This correspondence constitutes Covington Specialty Insurance Company’s (“Covington”) response to the CRN. In addition to the fatal deficiencies in the CRN noted below, Covington points out the named insured is incorrectly identified on the CRN. The policy number and address identified in the CRN correlate to named insured, EYM Diner of Florida #18, LLC, (Insured). Without waiver of that deficiency and the deficiencies noted below, Covington denies each and every allegation of wrongdoing set forth in the CRN and further provides the below response: INTRODUCTION As a preliminary matter, the CRN is legally deficient as it fails to comply with Florida law. The CRN, rather than address the issues specific to this claim as required by Fla Stat. 624.155(3)(b), takes the opportunity to vilify Florida’s Insurance industry. Note that the below section of the CRN is titled GENERAL FACTS AND CIRCUMSTANCES GIVING RISE TO THESE VIOLATIONS AND THIS BAD FAITH CLAIM, however, there is not one fact or circumstance limited to this specific claim. GENERAL FACTS AND CIRCUMSTANCES GIVING RISE TO THESE VIOLATIONS AND THIS BAD FAITH CLAIM Because bad faith is considered on a case-by-case basis and therefore requires a contextual analysis based on the existing circumstances, these sections are necessary to provide the background circumstances of the Claimant's allegations of bad faith. Because most first-party bad-faith lawsuits begin with insurers attempting to dismiss such lawsuits on the basis of the contents of the civil remedy notice it is imperative the claimant and insurer share a common understanding of the situation and law surrounding this bad-faith claim. After Hurricane Ian and Hurricane Nicole hit Florida many policyholders find themselves in a crisis due to the malfeasance of their insurance companies. Despite the widespread damage caused by the storms, insurance companies have failed to settle claims fairly and honestly. This has resulted in many policyholders being unable to rebuild their properties, businesses, and lives. These profit-hungry corporations have taken advantage of their policyholders, leaving them in dire straits. With natural disasters like hurricanes striking frequently, the insurers use this as an excuse to increase premiums and decrease coverage, lining their own pockets while leaving their customers struggling to make ends meet. These companies have further exacerbated the problem by cherry-picking their policyholders, only covering those deemed low-risk or profitable, and leaving high-risk individuals with little to no coverage. The insurance industry's bad faith practices have only worsened the situation. They deny valid claims, delay payments, and fail to properly investigate claims, all in the name of profit. Under Florida law, insurance companies are required to act in good faith towards their policyholders. However, these companies have flouted these laws with impunity. Their greed and callousness have resulted in a catastrophic insurance crisis that threatens to ruin the lives of thousands of Floridians and Florida-based businesses. As a result of this bad faith on the part of the insurance companies, Florida found itself in an insurance crisis. Many policyholders were left feeling frustrated and helpless as they struggled to navigate a complex system that seemed stacked against them. (I)(1) CIRCUMSTANCES REGARDING BAD FAITH AND THE CURRENT INSURANCE CRISIS: Florida’s bad faith laws provide important protections for consumers while allowing sufficient opportunity to settle for insurers acting in good faith. It is important to note at the outset that bad faith is not limited by an insurer’s good intentions. Instead, Florida’s bad faith laws are expansive in scope and the boundaries of bad faith law in Florida encompass even well- intentioned acts by insurers. See Victor E. Schwartz, Restoring The Good Faith in Florida’s “Bad Faith” Insurance Litigation, 11 (2011). There is no legal requirement for malevolent will. Id. Simply put, bad faith is a dishonest or unfair act that occurs when an insurance company does not meet legal or contractual obligations under Florida law–even technical ones. It is important to note that insurers set themselves up for bad faith by not acting fairly towards their insureds. Insurers cannot be “setup” for bad faith if the insurer “undertakes a prompt investigation of the loss, timely evaluation of the legal liability of the insured, communicates to the insured the material events of the adjustment process, and acts reasonably with regard to opportunities to settle the loss and protect the assets of the insured.” Rutledge R. Liles, Florida Insurance Bad Faith Law: Protecting Businesses and You, 85 FLA. B.J. 8, 11 (Mar. 2011). Emphasis added. Moreover, the CRN, rather than place Covington on notice of alleged bad faith acts in order to give them the mandated opportunity to cure, has instead provided what can only be described as a primer on how to bring a bad faith claim. THE REQUIREMENTS OF THE CIVIL REMEDY NOTICE Before a Claimant can bring a bad faith claim, the insurance company must be given 60 days to cure the alleged violation(s). To begin the process, a Civil Remedy Notice (“CRN”) is filed with both the insurance company and the Department of Financial Services. The plain language of Fla. Stat. § 624.155(3)(b) instructs the policyholder to “state with specificity” certain information in the CRN. According to the Department of Financial Services, “the specificity requirement [of 624.155] will be met if all of the fields on the electronic form which include those statutorily required are filled out.” Florida Senate Committee on the Judiciary, Insurance Bad Faith: Interim Report 2012-132, 7 (Nov. 2011), F.N. 60 (citing Meeting with Department of Financial Services staff (Aug. 24, 2011)). Further, Florida Courts recognize that the statute cannot create a barrier to entry to a bad faith lawsuit and have held that only substantial compliance with the specificity requirement of the statute is needed by a Claimant, not strict compliance. See Pin-Pon Corp. v. Landmark Am. Ins. Co., 2020 U.S. District LEXIS 212941. In other words, despite insurers’ contentions to the contrary, the specificity threshold is very low. As such, Fla. Stat. 624.155 provides the insurer with a 60-day “safe harbor” period to address and settle the claim in order to prevent a bad faith action even if the CRN fails to describe the amount of the claim, the nature of the insurer’s alleged bad faith conduct with great detail, or has technical defects. (I)(3) CIRCUMSTANCES FOR BRINGING THE BAD FAITH LAWSUIT UNDER FLORIDA LAW Florida’s strong bad faith law puts it in a unique posture to effectively protect consumers by holding insurers accountable for their misconduct. Florida Senate Committee on the Judiciary, Insurance Bad Faith: Interim Report 2012-132, 17 (Nov. 2011). The good news for bad faith claimants in Florida is that the law is quite clear. Fla. Stat. 624.155 provides that “any person may bring a civil action against an insurer when such person is damaged” by certain acts by an insurer. Florida courts have interpreted this good faith requirement in Florida as an insurer’s duty “to refrain from acting solely on the basis of their own interest” in the claims process. The measure of whether an insurer has acted in good faith is, necessarily, determined by an assessment of the lengths to which the carrier went in an effort to provide the insured with the protection afforded by the insurance policy. It is for this reason that under Florida’s bad faith laws “‘the focus in a bad faith case is not on the actions of the claimant but rather on those of the insurer in fulfilling its obligations to the insured.’” Berges v. Infinity Ins. Co., 896 So. 2d 665, 677 (Fla. 2004)). That said, a claimant’s actions are “not completely ignored under Florida law” but they only become relevant after the insurer has attempted to settle the bad faith allegations. See Snowden v. Lumberman’s Mut. Casualty Co., 358 F. Supp. 2d 1125, 1129 (N.D. Fla. 2003). Consequently, an insurer responding to this notice by merely attacking its substance and denying all allegations of bad faith is in itself likely an act of bad faith unless the insurer provides a detailed explanation of the investigation it undertook in response to this CRN and engages in a substantive information exchange with the Claimant designed to settle the dispute alleged herein. See also generally Crosby v. Jones, 705 So. 2d 1356, 1358 (Fla. 1998) (“the public policy of Florida is to encourage settlements”); Abbott v. Purdy Group Inc. v. Bell, 738 So. 2d 1024, 1027 (Fla. 4th D.C.A. 1999) (the public policy of Florida is to “promote settlements and early termination of litigation”) (citation omitted). If an insurance company fails to respond to a CRN with particularity or provides incomplete or inaccurate information, it can be considered bad faith and may be subject to legal action. Therefore, it is essential for insurance companies to take CRNs seriously and respond promptly and accurately with the requested. Given its complete lack of factual allegations re: this claim, the CRN appears to be a copy and paste version of an AI generated law review article or treatise on bad faith. This is supported by the misidentification of the policy number in the first paragraph of page three (3). This same policy number--- 80CCX8128 I---- together with the seven (7) page body of this CRN is found verbatim in at least eighteen (18) other CRNs recently filed by Mr. Sholl for other claims, insurers and insureds. Further evidence that this CRN is not limited to this particular claim is found on page six (6) of the CRN. Mental and Emotional Stress: The stress and anxiety of fighting a bad faith claim can have serious mental and emotional consequences. The process can be incredibly stressful and confusing, particularly if the insured has never navigated the complex insurance landscape before. This can lead to stress-related health conditions like insomnia, depression, and anxiety disorders. Here, the policyholder now has to worry about where their family will live, in addition to dealing with the bureaucracy and delay tactics of the insurer. The constant stress and uncertainty surely has or will lead to mental health problems like depression and anxiety. Emphasis added. The policyholder is a commercial entity operating the commercial property as a Dennys restaurant. The property is not used or insured as a residence. Nonetheless, the CRN claims that “Here, the policyholder now has to worry about where their family will live.” THE CRN DOES NOT COMPLY WITH FS 624.155(3)(b) The department approved CRN form states, "Pursuant to Section 624.155, F.S. please indicate all statutory provisions alleged to have been violated." The CRN alleges generally that Covington has violated Florida Statute Sections 624.155(1)(b)(1), 624.155(1)(b)(3), 626.9541(1)(i)(1), 626.9541(1)(i)(2), 626.9541(1)(i)(3)(a, b, c, f & g) As explained below, no such violations have occurred and Covington denies these alleged violations in their entirety. Further, although the Claimant’s CRN cites the aforementioned statutory provisions, except for 626.9541(1)(i)(1), 626.9541(1)(i)(2), the CRN is devoid of specific facts and instead relies on turning the alleged statutory violation into an accusatory, affirmative statement. The vague and conclusory nature of the alleged violations without factual support hinders Covington’s ability to respond; thus, representing another reason why the CRN is deficient and should be rejected. Similarly, and contrary to Florida Statute §624.155(3)(b)(4) and the department approved CRN form, the CRN fails to set forth any specific policy language that is relevant to the violation. The actual form specifically asks to reference specific policy language that is relevant to the violation, if any. In this section, the claimant fails to include any policy language and instead restates the alleged statutory violations. Further down the CRN does state: The Policy Language Relevant To The Violations Includes All Applicable Loss Payment And Coverage Provisions Of Policy Number Policy No.: 80ccx8128 Including The Declarations Pages And All Endorsements To The Policies, With Respect To Coverages A, B, C, And D. Additionally, Any Sections Relied Upon By The Insurer In Its Coverage Determination And Failure To Fully Pay The Claims, Including The Duties In The Event Of Loss Provisions And The Policies’ Exclusion Of Coverage Provisions. The Claimant Specifically Points To The Following Provisions As Relevant To This Claim. Emphasis added to note the incorrect policy number found in more than eighteen (18) other CRNs filed by Mr. Sholl. Unfortunately, the belated attempt to refer to the policy also fails as there are no specific policy provisions identified and no facts indicating how the policy provisions were violated. This failure to identify policy provisions is particularly problematic where the CRN claims that exclusionary and limiting language of the policy is unconscionable and unenforceable. Absent identifying the specific exclusion or limiting language, it is impossible to evaluate the allegations and be able respond. As for 626.9541(1)(i)(1), the CRN outrageously makes up out of whole cloth an allegation that Covington altered the field adjusters estimate. Notably, they make this allegation without supporting facts, including the author and date of the initial estimate, the amount of the initial estimate, who changed the estimate, when and to how much. Absent supporting facts, this allegation is defamatory and should be stricken from the CRN. As for 626.9541(1)(i)(2), the CRN alleges that Covington made misrepresentations with a clear intent to coerce the insured into settling for an amount less than they were entitled. This allegation, like all the others, has no merit or factual support. In fact, as set forth below, this claim was denied in its entirety and there were no settlement discussions. The CRN is further deficient with respect to the allegations under 626.9541(1)(i)(3) which provides: Committing or performing with such frequency as to indicate a general business practice any of the following---and then lists 10 separate acts. Claimant identifies five of the acts as applicable here. However, not only are there no supporting facts that the acts were committed, there are no facts alleged that these acts were performed with such frequency as to be a general business practice. The CRN is supposed to identify the person or persons representing the Insurer who are most responsible for or who have knowledge of the facts giving rise to the allegations in the notice. While the CRN does identify a number of individuals, it seems to have included every person who may have touched the claim, but had no actual involvement in the adjustment of the claim. For example, The CRN identifies an attorney who was on CCs when Berk, Merchant & Sims (BMS) undertook to conduct an examination under oath (“EUO”) of the corporate representative of the insured, but left the firm and had no actual involvement in the EUO. Similarly, the CRN identifies each secretary and para-legal at BMS who had involvement scheduling the EUO. None of these individuals had involvement in adjusting the claim. Moreover, the CRN does not indicate what wrongful acts these individuals committed or had knowledge of, again, preventing the opportunity to address the purported violations. . Cleary, that is not the intent of the statute. In addition, the CRN’s lack of specificity extends to the “factual” allegations that purportedly gave rise to its filing. Florida’s form for Civil Remedy Notice of Insurer Violations instructs complainants, in relevant part, as follows: “To enable the insurer to investigate and resolve your claim, describe the facts and circumstances giving rise to the insurer’s violation as you understand them at this time.” As explained further below, the CRN falls short of these instructions and merely asserts vague, generic, unsupported, and inaccurate allegations, which Covington fully denies. Moreover, the inferences suggested by the CRN’s allegations are wholly without merit and Covington denies each entirely. The CRN’s failure to specify the facts and circumstances purportedly triggering its filing demonstrates another reason why the CRN should be rejected. As noted, Covington denies all allegations of statutory violations, acts of bad faith, and improper claim handling. Covington always has, and always will, work in good faith to diligently investigate, evaluate, adjust, and resolve a claim, including the subject claim, in full accordance with the applicable insurance policy and Florida law. Further, as explained herein, Covington has always handled the subject claim honestly, properly, in good faith, and with full regard for the interests of its insured. Finally, as set forth below, the claimant lists harms that are not viable harms subject to cure in a first party property bad faith suit and not specific to this claim. See below: These “cures” are improper pursuant to Florida case law. See Talat Enterprises, Inc., v. Aetna Casualty and Surety Co., 753 So.2d 1278, 1281 (Fla. 2000). The Talat case provides that the scope of what can be "cured" is limited to the alleged non-payment of the contractual amount due our Insured. Talat also commented that "It naturally follows that for there to be a ‘cure’, what had to be ‘cured’ is the non-payment of the contractual amount due the insured. In the context of a first-party insurance claim, the contractual amount due the insured is the amount owed pursuant to the express terms and conditions of the policy after all of the conditions precedent of the insurance policy in respect to payment are fulfilled....” As a result, only the demanded “cures” relating to the payment for covered damages are proper and legal – the remaining “cures” are improper remedies and contrary to Florida law. Here, even the CRN demand for payment of covered damage is deficient as prior to this CRN the insured made demand for four separate amounts to resolve the claim. Yet the CRN does not advise which of the four amounts would cure the alleged harm. How is Covington to know which of the four demand amounts is the cure amount? The Harm Suffered by the Insureds includes: Financial Consequences: At its core, the primary damage of bad faith is financial. Insurance policies serve as safety nets against unforeseen damages and losses. If an insurer refuses to pay out a valid claim, delays payments, or significantly undervalues the cost of repairs, the policyholder is often left to bear these financial burdens. These burdens may lead to crippling debt, bankruptcy, or even the loss of the insured property. They've diligently paid their insurance premiums and expect their policy to cover the costs of repairing the property to pre-loss condition. However, their insurance company unjustly refuses to properly pay the claim, citing reasons that aren't applicable under their policy's provisions. As a result, they're left with tens or even hundreds of thousands of dollars in repair costs, which could lead to mounting debt and potential bankruptcy. Legal Consequences: In many instances, insured parties may have to engage in expensive and time- consuming legal battles to receive the compensation they're owed. This could include the cost of hiring a lawyer, court fees, and the loss of personal or work time. To receive a fair settlement, the insured has been forced to hire an attorney to fight for them. Legal fees can quickly pile up, not to mention the time and stress involved in legal proceedings. Mental and Emotional Stress: The stress and anxiety of fighting a bad faith claim can have serious mental and emotional consequences. The process can be incredibly stressful and confusing, particularly if the insured has never navigated the complex insurance landscape before. This can lead to stress-related health conditions like insomnia, depression, and anxiety disorders. Here, the policyholder now has to worry about where their family will live, in addition to dealing with the bureaucracy and delay tactics of the insurer. The constant stress and uncertainty surely has or will lead to mental health problems like depression and anxiety. Distrust in the System: Bad faith practices erode trust in the insurance system. This might discourage individuals from seeking coverage in the future, leaving them vulnerable to the financial impact of property damages. The negative experiences can also affect other consumers, causing a ripple effect that undermines the industry as a whole. Here, after experiencing the anguish of a denied, delayed, and underpaid claim, the Insured has developed a deep-seated dislike of insurance companies. They may decide not to renew their policy or get insured in the future, leaving them financially vulnerable in the event of a catastrophe. Damage to Personal Belongings and Health: If the insurer does not act swiftly and adequately to cover damages, it could lead to further deterioration of the property and personal belongings due to continued exposure to elements like water, heat, or mold - despite best efforts to mitigate the damage by the Insured(s). This could also potentially expose the insured and their family to health hazards like mold or structural instability. Opportunity Cost: The time spent dealing with a bad-faith insurance company could be better used elsewhere. Policyholders may lose out on opportunities such as work, education, or personal pursuits because of the time and energy consumed by the claims process. Here, the Insured(s) have had to take time off work or abandon personal pursuits to chase the insurer, gather supporting evidence, engage in discussions, and even hire an attorney. This time could otherwise have been used productively or for personal enjoyment. Increased Premiums: After a bad faith claim, policyholders may face higher premiums in the future. This is because other insurers may seek to recoup their bad faith losses from policyholders, even if the original claim was valid and unfairly denied, delayed or underpaid. Further, after having their claim unjustly denied and using litigation to resolve the dispute, a policyholder may find themselves in a difficult position when seeking insurance from a new provider. The previous claim may be seen as a risk factor, and as such, the policyholder may be charged higher premiums, making insurance less affordable all because the prior carrier failed to uphold its end of the contractual bargain. While it is unclear if claimant is seeking compensation for any of the harms noted above, it is clear that claimant is seeking improper remedies as follows: Therefore, to cure the defects outlined in this Civil Remedy Notice, the INSURANCE COMPANY must: Create and implement adequate guidelines for proper investigation and evaluation as to claims handling and for the training and supervision of employees, which will avoid future statutory violations as set forth above, and to avoid this from occurring in the future; the INSURANCE COMPANY must create and implement adequate guidelines for the proper investigation and evaluation of these types of claims, and for the training and supervision of employees with regard to these types of claims to ensure the INSURANCE COMPANY’s claims handling procedures with regard to these types of losses are adequate to stop further Insureds from being treated unfairly and wrongfully; the INSURANCE COMPANY must assist THE INSURED in mitigating his damages; the INSURANCE COMPANY must not demand pretextual investigations of the Property to further delay tendering payment to THE INSURED to return the Property to its pre-loss condition. The INSURANCE COMPANY must immediately tender all insurance benefits due and owing to THE INSURED under the Policy pursuant to the relevant policy provisions provided therein that would reasonably place THE INSURED back to their pre-loss condition, including, but not limited to all interest due and owing under applicable Florida Statutes, The INSURANCE COMPANY must also pay THE INSURED the fair value of his insurance claim and all expenses incurred with the adjustment of the claim (including the amount demanded in any public adjuster or contractors estimate), which includes adjuster fees, costs and attorney fees. Per Talat, except for the demand for insurance benefits, none of the other demands are proper. Specifically, the policy does not provide for putting the insured property into a pre-loss condition. The policy does not provide benefits for expenses incurred with the adjustment of the claim, adjuster fees, costs or attorney fees. Accordingly, these are not proper demands. The multitude of improper demands nullifies the CRN as it prevents Covington from being able to cure. . FACTUAL CHRONOLOGY OF ADJUSTMENT OF CLAIM The policy provided insurance coverage for the property located at 4999 34th Street North, St. Petersburg, FL 33714, during the one-year term commencing March 15, 2022, subject to its terms, conditions, limitations, exclusions, and applicable deductible. On September 28, 2022, Hurricane Ian made landfall in Florida. Covington received notice of the Insured’s claim on September 30, 2022. On October 4, 2022, the Insured, through it’s insurance agent submitted a damage spreadsheet, with the following claim categories and values: 1. Building Damages---$97,000.00 2. Business Personality Property---$32,000.00 3. Food Spoilage--- $19,580.00 4. Expense to reopen---$1,338 5. Business Income---$2,653 6. Total Claim $154,022.00 Despite submitting the above referenced list of damages and Covington’s requests for supporting information, the Insured did not provide Covington with any detail or documentation to substantiate these figures. On October 13, 2022, Engle Martin, Covington’s independent adjuster, timely inspected the insured property. Thereafter, an engineering firm, BSC Forensics (“BSC”), on behalf of Covington, performed an inspection of the insured property. During their inspection, BSC did not observe any wind damage to the exterior of the building, nor did they observe any peril created openings that allowed water into the building. As a result, pursuant to the policy, the alleged interior water damage is not covered. BSC identified pre-existing damage, rot, deteriorated roofing/flashings, and HVAC leaks, which were not caused by Hurricane Ian. Additionally, it was determined that the loss of power originated away from the insured property. Given these findings, on January 17, 2023, Covington issued correspondence to inform the Insured that the claim did not fall within the policy’s grant of coverage. A copy of BSC’s report was submitted to the Insured on the same date. On March 29, 2023, Covington received a demand letter from The Sholl Law Firm, claiming $1,693,429.22 based on $1,341,223.84 in economic damages and $352,205.38 in non-economic damages. However, the only supporting information provided with the demand letter was a mitigation estimate from “Xtreme Roofing,” dated February 14, 2023, for $84,348.64. No other estimate or information to substantiate the demand was provided nor was there any explanation as to what economic and non-economic damages were being sought. Because the Insured submitted conflicting claim amounts and had yet to produce any documentation in support of its claim, Covington responded to the Insured’s demand letter by requesting an Examination Under Oath (“EUO”) of the Insured’s Corporate Representative. This letter also asked the insured to execute an attached Sworn Statement in Proof of Loss (SPOL) form, to fill out an attached business personal property inventory form and to produce various records, designed to establish the basis of the insured’s claim. The Insured did present someone for the EUO (though this person had little knowledge of the claim or the history of the building) and produced limited relevant documents. The Insured did not timely provide a SPOL. Specifically, the SPOL was not provided until the recent notice of intent to litigate filed on September 12, 2024. The insured also failed to provide a business property inventory form. The Insured assigned Alejandra Fonseca (“Ms. Fonseca”), VP of Operations for EYM Diner, as corporate representative to testify at the EUO on December 7, 2023. During the EUO, Ms. Fonseca testified that she had no knowledge as to what made up the $1,428.193.02 figure of economic damage or the $375,043.49 in non-economic damage contained in the March 29, 2023 demand letter. Additionally, Ms. Fonseca confirmed that Xtreme Roofing did not perform any of the mitigation work set forth in the estimate enclosed to the March 29, 2023 demand letter. Ms. Fonseca testified that the EYM staff had performed repairs and mitigation work to the property, yet could not provide an accurate account of the scope and costs of said repairs/mitigation work, as required by the policy. Further, Ms. Fonseca acknowledged that the property had prior issues with the air conditioner, Although the Insured produced over 1000 pages of documents to Covington, none of the information provided, except for an estimate of repairs from Xtreme Roofing for $422,998.32, supported the Insured’s claimed damages. Notwithstanding the lack of evidence, Ms. Fonseca testified at the EUO that the Insured would be proceeding with the $422,998.32 estimate. After completing the EUO, Covington again asked for records and information to substantiate the Insured’s claim. Covington also sent the transcript to the Insured’s counsel and asked for the Insured to review and sign the EUO transcript or make edits on the enclosed errata sheet, as necessary, as required by the policy. Covington followed up on this request at least two more times. To date, the signed EUO transcript has not been returned. On June 3, 2024, Covington denied the claim in its entirety based on the failure of the insured to substantially comply with each of the duties after loss and under the misrepresentation or concealment provisions of the policy. Covington has concluded the insured has inflated its claim beyond its reasonable value, which under Florida law is a misrepresentation of material fact. Further, the insured has concealed the condition of the property before Hurricane Ian. On September 12, 2024, the insured filed a notice of intent to litigate (NOI). Attached to the NOI was a sworn statement in proof of loss (not on the requested form) with a fourth amount of the claim. Without any supporting information or estimate, the Insured’s SPOL claimed damage for $433,450.69. The foregoing factual summary shows that Covington, has at all times, fully and thoroughly investigated this claim. Covington denies all allegations contained in the Civil Remedy Notice and denies it has violated any section of the Florida Statutes or the policy in its handling of the insured’s claim. CONCLUSION As demonstrated in this response, the allegations in the CRN are meritless given Covington's good faith investigation and handling of the subject claim. Contrary to the CRN’s vague, generic allegations, Covington properly investigated, evaluated, and adjusted the subject claim, in good faith, in compliance with the Policy’s terms, and in accordance with Florida law. Covington has always acted, and will continue to act, fairly and honestly towards the Insured and its representatives, with due regard for their interests. Accordingly, Covington reiterates its unequivocal denial of the allegations raised in the CRN and submits that the violations alleged in the CRN have not occurred. Covington also notes that, while this response is meant to be comprehensive, it is based upon the limited, generic, and vague allegations asserted within the Claimant’s CRN, along with the information Covington has received, to date. Thus, this response is not necessarily exhaustive. Neither this response, nor any action by Covington, should be construed as a waiver of any rights, privileges, or defenses available to Covington, under the Policy or the law, and Covington expressly reserves all rights, privileges, and defenses available to it under the Policy and the law. We trust this correspondence adequately addresses the matters raised in the CRN and ask that you please do not hesitate to contact us with any questions, comments, concerns, or requests for additional information concerning this matter. Sincerely, /s/ Evelyn M. Merchant Evelyn M. Merchant EMM/mkm Cc: EYM Diner of Florida #18 Email: salvador.elias@eymgroup.com
Acknowledgement
* 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.

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DFS-10-363
Rev. 10/14/2008