Filing Number: 786528
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| Filing Accepted: 10/11/2024 |
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1330 WEST AVENUE, APT. 2308 |
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MIAMI BEACH,
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33139
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DUDUPEREZDIAZ@GMAIL.COM |
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Insured |
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PEREZ |
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First Name |
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EDUARDO |
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000988339607 |
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Claim #* |
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0741688931 |
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Attorney is Applicable
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| Last Name* |
PALMA
First Name *
ALAN
Initial
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1680 MICHIGAN AVENUE, SUITE 700 |
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MIAMI BEACH
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FLORIDA
33139
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APALMA@ALANPALMA.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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CASTLE KEY INDEMNITY COMPANY
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NAIC Company Code 10835 |
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| Name of individual responsible for violation (if any):*
SHANE LANCASTER, MARCOS TOLENTINO, AND ERNANI CRUZ
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| Type of Insurance
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Residential Property & Casualty
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| Reason for Notice
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Claim Denial
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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)(d) |
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Denying claims without conducting reasonable investigations based upon available information.
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| 626.9541(1)(i)(3)(f) |
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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.
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| 626.9541(1)(i)(3)(g) |
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Failing to promptly notify the insured of any additional information necessary for the processing of a claim.
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| 626.9541(1)(i)(4) |
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Failing to pay undisputed amounts of partial or full benefits owed under first-party property insurance policies within 60 days after an insurer receives notice of a residential property insurance claim, determines the amounts of partial or full benefits, and agrees to coverage, unless payment of the undisputed benefits is prevented by factors beyond the control of the insurer as defined in s. 627.70131(5).
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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.
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Renewal Condominium Owners Policy
Declarations
Your policy effective date is July 8, 2023
Summary
Named Insured(s)
Eduardo Perez and Maria Barrajon
Mailing address
1300 West Ave Unit 2308
Miami Beach FL 33139
Policy number
988 339 607
Your policy provided by
Castle Key Indemnity Company
Policy period
Begins on July 8, 2023 at 12:01 A.M.
standard time, with no fixed date of
expiration
Premium period
Beginning July 8, 2023 through July 8,
2024 at 12:01 A.M. standard time
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Coverage Limits of Liability Applicable Deductible(s)
Building Property Protection $172,500 Other Peril Deductible Applies**
Additional Living Expense Lesser of $11,500 or 24 months
** $1,000 is your Other Peril Deductible, which applies to the total of all losses under the coverages indicated above.
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The following endorsement changes your policy.
Please read this document carefully and keep it with your policy.
Florida Condominium Amendatory Endorsement
. AP4992
II. In Section I Additional Protection, under item 1, Additional Living
Expense, sub-item a) is replaced by the following:
a) We will pay the reasonable increase in living expenses necessary to
maintain your normal standard of living when a direct physical loss
we cover under Building Property Protection-Coverage A or
Personal Property Protection-Coverage C makes your
condominium or co-op, or the building structure containing your
residence premises uninhabitable. However, additional living
expense due to remediation of mold, fungus, wet rot or dry rot will
not be paid in addition to any amounts paid or payable under
Section I Conditions, Mold, Fungus, Wet Rot and Dry Rot
Remediation As A Direct Result Of A Covered Loss.
Payment for additional living expense as a result of a covered loss
under Building Property Protection-Coverage A or Personal
Property Protection-Coverage C will be limited to the least of the
following:
1) the time period required to repair or replace the property we
cover, using due diligence and dispatch;
2) if you permanently relocate, the shortest time for your
household to settle elsewhere; or
3) 24 months.
In no event shall our payment for additional living expenses,
including lost fair rental income, exceed the limit of liability shown on
your Policy Declarations for Additional Living Expense coverage.
However, payment for your lost fair rental income due to
remediation of mold, fungus, wet rot or dry rot will not be paid in
addition to any amounts paid or payable under Section I Conditions,
Mold, Fungus, Wet Rot And Dry Rot Remediation As A Direct
Result Of A Covered Loss.
These periods of time are not limited by the termination of this policy.
We do not cover any lost income or expense due to the cancellation of a
lease or agreement.
No deductible applies to this protection.
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The following endorsement changes your policy.
Please read this document carefully and keep it with your policy.
AMENDATORY ENDORSEMENT – AP4981
Throughout the policy, when determining the actual cash value of the loss, the costs necessary to repair, rebuild or replace the destroyed, damaged or stolen property may be depreciated. Such costs subject to depreciation may include, but are not limited to, goods, materials, equipment, labor, overhead and profit, taxes, fees or similar charges.
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Agreements We Make With You
We make the following agreements with you:
General
Definitions Used In This Policy
Throughout this policy, when the following words appear in bold type, they
are defined as follows:
3. Building property – means items of real property owned exclusively by an insured person that:
1. do or will comprise a part of the residence premises;
2. are used to service or support the residence premises; or
3. are your insurance responsibility as expressed under the governing rules of the association.
Real property includes only those fixtures, structures, construction material and supplies, installations or additions located either within that portion of the premises used as the residence premises or on the association premises that benefits an insured person and fewer than all unit owners. Real property also includes structures owned solely by you, other than the residence premises, at the location of the residence premises.
6. Condominium - means the development governed by the association
of all unit owners of which you are a member and in which the
residence premises is located.
8. Insured person(s) means you and, if a resident of your household:
a) any relative; and
b) any person under the age of 21 in your care.
Under Building Property Protection-Coverage A, insured person also
means the Association.
9. Insured premises - means
a) the residence premises;
10. Occurrence – means an accident, including continuous or repeated
exposure to substantially the same general harmful conditions during the
policy period, resulting in bodily injury or property damage.
13. Property damage – means physical injury to or destruction of tangible
property, including loss of its use resulting from such physical injury or
destruction.
16. Residence premises – means that premises described on the Policy
Declarations used as a private residence and reserved exclusively for
your use or occupancy.
21. We, us, or our – means the company named on the Policy Declarations
23. You or your – means the person listed under Named Insured(s) on the
Policy Declarations as the insured and that person's resident spouse.
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Insuring Agreement
In reliance on the information you have given us, we agree to provide the coverages indicated on the Policy Declarations. In return, you must pay the premium when due and comply with the policy terms and conditions, and inform us of any change in title, use or occupancy of the residence premises.
Subject to the terms of this policy, the Policy Declarations shows the location of the residence premises, applicable coverages, limits of liability and premiums. The policy applies only to losses or occurrences that take place during the policy period. The Policy Period is shown on the Policy Declarations. This policy is not complete without the Policy Declarations.
Conformity To State Statutes
When the policy provisions conflict with the statutes of the state in which the
residence premises is located, the provisions are amended to conform to
such statutes.
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What Law Will Apply
This policy is issued in accordance with the laws of Florida and covers property or risks principally located in Florida. Subject to the following paragraph, the laws of Florida shall govern any and all claims or disputes in any way related to this policy.
If a covered loss to property, or any other occurrence for which coverage applies under this policy happens outside Florida, claims or disputes regarding that covered loss to property, or any other covered occurrence may be governed by the laws of the jurisdiction in which that covered loss to property, or other covered occurrence happened, only if the laws of that jurisdiction would apply in the absence of a contractual choice of law provision such as this.
Where Lawsuits May Be Brought
Subject to the following two paragraphs, any and all lawsuits in any way related to this policy, shall be brought, heard and decided only in a state or federal court located in Florida. Any and all lawsuits against persons not parties to this policy but involved in the sale, administration, performance, or alleged breach of this policy, or otherwise related to this policy, shall be brought, heard and decided only in a state or federal court located in Florida, provided that such persons are subject to or consent to suit in the courts
specified in this paragraph.
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Section I-Your Property
Building Property Protection-Coverage A
Property We Cover Under Coverage A: We will cover building property.
Property We Do Not Cover Under Coverage A: We do not cover land.
Losses We Cover Under Coverage A:
We will cover sudden and accidental direct physical loss to property described in Building Property Protection – Coverage A except as limited or excluded in this policy.
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Section I Additional Protection
3. Debris Removal
We will pay reasonable expenses you incur to remove debris of covered property damaged by a loss we cover. If the loss to the covered property and the cost of debris removal are more than the Limit Of Liability shown on the Policy Declarations for the covered property, we will pay up to an additional 5% of that limit for debris removal.
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Section I Conditions
4. Our Settlement Options
In the event of a covered loss, under Building Property Protection-Coverage A Coverage A, we will pay for all or any part of the damaged, destroyed or stolen property as described in Condition 5. “How we pay for a Loss.”
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5. How We Pay For A Loss
Within 90 days after we receive notice of an initial, reopened, or supplemental claim under Building Property Protection-Coverage A or Personal Property Protection-Coverage C from you, we shall pay or deny such claim or a portion of the claim unless the failure to pay such claim or a portion of the claim is caused by factors beyond our control which reasonably prevent such payment. Claims will be paid within 20 days of written agreement between you and us, except as provided in subparagraph b)l) below regarding the payment of amounts for underpinning or grouting. Under Building Property Protection- Coverage A and Personal Property Protection-Coverage C, payment for covered loss will be by one or more of the following methods:
a. Actual Cash Value Method. Except as provided in the Personal Property Replacement Cost Method provision below, if you do not repair or replace the damaged, destroyed or stolen property, payment will be on an actual cash value basis. This means there may be a deduction for depreciation. Payment will not exceed the limit of liability shown on the Policy Declarations for the coverage that applies to the damaged, destroyed or stolen property, regardless of the number of items involved in the loss.
b. Building Property Replacement Cost Method. Except as otherwise provided below, we will make additional payment to reimburse you for cost in excess of actual cash value if you repair, rebuild or replace damaged, destroyed, or stolen covered property under Building Property Protection-Coverage A. We will make payment as the repair, rebuilding or replacement work is performed and expenses are incurred.
Payment for total loss to property covered under Building Property Protection-Coverage A will be on a replacement cost basis, except as indicated below, meaning that the amount we pay you for the repair, rebuilding or replacement of the damaged, destroyed or stolen covered property will not include a deduction for depreciation.
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Our total payment under this Building Property Replacement
Cost Method provision will not exceed the smallest of the following amounts:
1. the reasonable and necessary cost to replace the damaged part(s) of the building property with equivalent construction for similar use on the same residence premises;
2. the reasonable and necessary cost to repair the damaged part(s) of the building property with equivalent construction for similar use on the same residence premises; or
3. the limit of liability applicable to the building property as shown on the Policy Declarations for Building Property Protection-Coverage A.
6. Our Settlement Of Loss
We will settle any covered loss with you unless another payee is named in the policy or is legally entitled to receive payment. We will settle within 20 days after the amount of loss is finally determined. This amount may be determined by an agreement between you and us, an appraisal award, neutral evaluation of sinkhole activity loss, or a court judgment. Notwithstanding the foregoing, with respect to a covered sinkhole loss, as provided in Section I Conditions, item 5, How We Pay For A Loss, we will not pay any amounts for underpinning or grouting until you enter into a contract for the performance of building
stabilization or foundation repairs.
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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.
Eduardo Perez and Maria Barrajon (hereinafter, the “Insureds”) purchased from Castle Key Indemnity Company (hereinafter, “Castle Key”) and maintained in full force and effect, by and through the payments of premiums, an all-risk Condominium Owner’s Insurance Policy bearing policy number 000988339607 (hereinafter, the “Policy”) for the policy term of July 8, 2023 to July 8, 2024, for the property located at 1330 West Avenue, Apt. 2308, Miami Beach, FL 33139 (hereinafter, the “Premises” or “Property”). The Property is a luxury condominium consisting of 1,384 square feet, two bedrooms and two bathrooms, a washer/dryer, and high-end finishings, including: 1) natural pine wood flooring, which runs continuous throughout the Property; 2) the finest venetian plaster available on the market, which also runs continuous throughout the entire Property; 3) a terrazzo waterfall countertop; and 4) custom-made closets and cabinets, which lie atop of the Insureds’ continuous natural wood flooring.
Pursuant to the Policy, Castle Key insured, subject to certain terms, conditions, limitations, exclusions and endorsements, the Property. The Policy also affords coverage for personal property, additional living expense damages, loss assessments, reasonable emergency measures, mold-testing. mold remediation, and debris removal expenses incurred by the Insureds due to all sudden and accidental losses, which are not expressly limited or excluded in the Policy.
It is undisputed that on January 10, 2024, the Property sustained substantial damages due to a sudden and accidental water leak that emanated from a broken sprinkler pipe on the 27th floor of the Insureds’ building (hereinafter, the “Loss”). The water from the sprinkler pipe inundated the Insureds’ Property and caused extensive damages to the Insureds’ natural pine wood flooring and the Insureds’ venetian plaster.
Immediately after the Loss, the Insureds attempted to mitigate and protect their Property from further damage by authorizing Sprinklermatic Fire Protective Systems, Inc. to render reasonable emergency measures on the Property. The following day, on or around January 11, 2024, the Insureds promptly notified Castle Key of the Loss. Castle Key assigned Claim No. 0741688931 to the Insureds’ Loss, and assigned a field adjuster, Ernani Cruz to investigate same.
On or around January 18, 2024, Ernani Cruz inspected the Insureds’ Property on behalf of Castle Key. All of the Insureds’ damages were presented to Mr. Cruz during his inspection of the Property. Notwithstanding, following his inspection of the Insureds’ Property, Mr. Cruz prepared a low-ball estimate dated January 18, 2024, which erroneously opined that the Loss caused $9,224.69 in damages, on a replacement cost value basis (hereinafter, “RCV”), and $9,097.63 in damages, on an actual cash value (hereinafter, “ACV”) to the Insureds’ Property.
The Insured, Eduardo Perez disagreed with the scope and amount of Mr. Cruz’s low-ball estimate, which amongst other things: 1) applied incorrect measurements of the Property in calculating the amount of materials and supplies that were necessitated due to the Loss; 2) failed to account for any of the damages sustained to the Insureds’ venetian plaster, which runs continuous throughout the entire Property; 3) failed to acknowledge that any of the natural wood flooring or the underlayment in the Insureds’ Property required removal and replacement; 4) failed to acknowledge that any of the Insureds’ baseboards required detachment, resetting, staining and finishing; 5) failed to acknowledge that the cabinets and the appliances, other than the refrigerator, in the Insureds’ kitchen required detachment and resetting; 6) failed to account for the necessary removal and replacement of the terrazzo waterfall countertop and quartz countertops in the Insureds’ kitchen; 7) failed to account for the necessary removal and replacement of the door casings in the Property; 8) failed to account for the necessary removal and replacement of all of the Insureds’ closets, which lied atop of the continuous wood flooring in the Property; 9) failed to account for the cost of procuring the permits required to effectuate the repairs on the Property; 10) failed to account for the costs associated with complying with the rules and regulation of the Insureds’ condominium association, which regulate the time and manner of construction and debris removal in the Insureds’ building; 11) failed to account for labor minimums associated with the contractors required to effectuate the complete repair of the Property; 12) failed to account for the necessary priming and painting of the Property; 13) failed to account for damages not caused by direct physical loss but associated with “matching” as per § 626.9744(2), Florida Statutes (2004); and 14) failed to address the physical damages to the Insureds’ Property, which will be incurred in the repair and replacement of portions of the Insureds’ Property, that did sustain direct physical damage as per § 626.9744(1), Florida Statutes (2004). The foregoing is not an exhaustive list of the countless omissions and deficiencies in Mr. Cruz’s low-ball estimate.
After Mr. Perez communicated his disagreement with Castle Key’s low-ball estimate, Castle Key removed and analyzed a portion of the Insureds’ flooring. Subsequently, Castle Key conceded that the Insureds’ flooring could not simply be repaired but required complete removal and replacement to restore the Property to pre-loss condition. Mr. Cruz then prepared another low-ball estimate dated April 25, 2024, which erroneously opined that the Loss caused $30,432.86 in damages, on an RCV basis, and $22,509.67 in damages, on an ACV basis, to the Insureds’ Property. Whereas Mr. Cruz’s second estimate accounted for the necessary removal and replacement of the Insureds’ wood-flooring, it was otherwise deficient for the same reasons set forth above with respect to Mr. Cruz’s initial low-ball estimate of January 18, 2024.
Once again, Mr. Perez disagreed with Castle Key’s revised low-ball estimate. In support, Mr. Perez presented a proposal from a flooring contractor, LD&D, which demonstrated that the actual cost of simply replacing the flooring in the Property was $58,450.00, an amount 92% greater than the second revised low-ball estimate prepared by Mr. Cruz.
Castle Key did not remit payment to the Insureds for the undisputed amount of insurance benefits owed to the Insureds under their Policy as determined by Mr. Cruz, nor did Castle Key request any additional information or documentation from the Insureds, which Castle Key deemed necessary for processing the Insureds’ claim.
On or around May 1, 2024, Castle Key assigned a general contractor, Eddy Rodriguez of Total Quality Restoration, to conduct another inspection of the Insureds’ Property and to prepare another estimate of the Insureds’ damages. On May 3, 2024, Mr. Rodriguez inspected the Insureds’ Property in the presence of Mr. Perez who, once again, identified all of the known damages that were sustained to the Property and caused by the Loss.
At or around the time of Mr. Rodriguez’s inspection of the Insureds’ Property, Castle Key assigned another insurance adjuster, Marcos Tolentino to adjust the Insureds’ claim. On May 28, 2024, Mr. Tolentino sent an email to Mr. Perez, which stated, “I have the prior adjuster's estimate and need to discuss it with you to see where the discrepancy is with your estimate.” Mr. Perez immediately responded, wherein he: 1) formally requested a copy of Mr. Rodriguez’s estimate of the Insureds’ Loss; and 2) itemized the numerous deficiencies existing in Mr. Cruz’s low-ball estimates. Mr. Tolentino replied to Mr. Perez and attached Mr. Cruz’s estimate of April 25, 2024, not the one prepared by Mr. Rodriguez. Further, Mr. Tolentino stated that he also “noticed discrepancies” in the prior estimates prepared by Mr. Cruz. Over the next two weeks, Mr. Perez reiterated his request for a copy of the estimate prepared by Mr. Rodriguez.
On June 12, 2024, Mr. Tolentino finally forwarded Mr. Rodriguez’s estimate to Mr. Perez. Mr. Rodriguez’s estimate was dated June 7, 2024, and reflected Mr. Rodriguez’s opinion that the Loss caused $30,022.33 in damages, on a RCV basis, and $25,470.35 in damages, on an ACV basis, to the Insureds’ Property. Whereas Mr. Rodriguez’s estimate accounted for the cost of: 1) detaching, resetting, staining, and finishing the Insureds’ baseboards; 2) detaching and resetting all the appliances in the Insureds’ kitchen; 3) additional painting; and 4) detaching and resetting the vanities in the Insureds’ half bathroom, Mr. Rodriguez’s estimate was otherwise deficient for the same reasons hi-lighted above with respect to Mr. Cruz’s initial low-ball estimate of January 18, 2024.
Upon information and belief and pursuant to emails exchanged with Mr. Tolentino, it is readily apparent that Castle Key encouraged or otherwise pressured Mr. Rodriguez to alter his estimate to reduce and/or limit the scope and cost of repairs required to restore the Insureds’ Property to pre-loss condition. Upon information and belief, Castle Key utilized this tactic to reduce and/or limit the amount of insurance benefits that Castle Key had to pay the Insureds for their claim under the Policy.
On or around July 29, 2024, Castle Key remitted a check dated June 24, 2024, in the amount of $21,509.67 to the Insureds for the undisputed amount of damages sustained to the Property due to the Loss. The foregoing check constitutes the first payment of indemnity remitted by Castle Key to the Insureds on their claim. It was paid 200 days after the Insureds reported the Loss to Castle Key and 95 days after Mr. Cruz prepared the estimate that formed the basis for Castle Key’s payment. Meanwhile, Castle Key did not request any information or documents from the Insureds as part of Castle Key’s investigation of the claim prior to remitting the payment, nor did Castle Key otherwise inform the Insureds of any additional information or documents deemed necessary by Castle Key to render its claim determination and to remit the undisputed payment. Notwithstanding the foregoing, Castle failed and/or refused to pay any interest to the Insureds on the undisputed payment as required by § 627.70131, Florida Statutes (2023).
On July 17, 2024, the Insureds were forced to retain undersigned counsel to prosecute their rights with respect to the Insureds’ claim due to Castle Key’s failure to properly and timely compensate, settle, and adjust the Insureds’ claim in contravention of the Policy and §§ 624.155, 626.9541, and 627.70131, Florida Statutes.
On July 17, 2024, undersigned counsel sent a letter of representation to Castle Key, which requested Castle Key produce: 1) copies of any and all correspondence exchanged with the Insureds relating to the Claim; 2) any and all outstanding requests for information and/or documents submitted to the Insureds and relating to the Claim; and 3) any and all other outstanding requests for compliance with post-loss conditions submitted by Castle Key to the Insureds and relating to the Claim. Castle Key never substantively responded or produced any documents to undersigned counsel that were responsive to the foregoing requests.
On August 13, 2024, after a complete copy of the Insureds’ policy was produced by Castle Key, undersigned counsel sent an email to Castle Key, which formally asked whether Castle Key would agree to extend the deadline for the Insureds’ submission of a sworn statement in proof of loss (hereinafter, “SPOL”). Castle Key never responded to the latter request from undersigned counsel.
On August 21, 2024, undersigned counsel, pursuant to § 627.70132, Florida Statutes (2024), served Mr. Tolentino with formal written notice of the Insureds’ supplemental claim for: 1) additional property damages sustained to the Insureds’ residence premises due to the subject Loss; and 2) additional living expenses that the Insureds will incur to maintain their normal standard of living when they commence formal repairs on the Property and the Property is rendered uninhabitable as a result.
Notably, the latter correspondence attached the Insureds’ fully executed SPOL, which reflected a net claim of $161,490.33 itemized as follows: 1) $172,500.00 in ACV damages sustained to the Insureds’ Residence Premises; and 2) $11,500.00 in additional living expense damages (hereinafter, “ALE”) sustained due to the Loss. The Insureds’ SPOL was accompanied by 121 pages of exhibits and a 6-page correspondence, which methodically evinced and comprehensively delineated and itemized the basis for same. The Insureds’ exhibits included estimates prepared by: 1) an expert loss consultant, Suissa Loss Consulting; 2) a flooring contractor, LD&D; 3) a cabinet contractor, International Cabinet’s Contractors; and 4) a venetian plaster contractor, Miami Venetian Plaster Corp. Additionally, aside from the inspections of the Property performed by each of the foregoing experts, the following matters were factored into the Insureds’ determination of their total ACV damages: 1) the Rules and Regulations of the Insureds’ condominium association; 2) the applicable building code for Miami Beach; 3) the pre-loss condition of the Property; 4) the loss history for the Property; and 5) listings on Air BNB and VRBO, which reflected the fair rental value of comparable luxury accommodations in Miami Beach.
On August 24, 2024, Mr. Tolentino incredulously asked the Insureds to “outline in detail the insured's supplemental claim and what specifically is in their supplement.”
On August 26, 2024, undersigned counsel responded to Mr. Tolentino’s request and stated: “With respect to your request for an “outline in detail [of] the insured's supplemental claim,” I point your attention to my email below from August 21st, which attached a detailed correspondence that comprehensively delineated and itemized my clients’ supplemental claim. Notably, the latter correspondence also attached my clients’ fully executed sworn statement in proof of loss, as well as 121 pages of exhibits that fully substantiated same. I have attached that correspondence again for your convenience.”
On September 5, 2024, the Insureds received a letter dated August 19, 2024, from a litigation adjuster at Castle Key, Shane Lancaster. Mr. Lancaster’s correspondence acknowledged receipt of undersigned counsel’s letter of representation, requested a copy of any all estimates relating to the Insureds’ damages, and requested another opportunity to reinspect the Insureds’ Property.
On September 5, 2024, undersigned counsel responded to Mr. Lancaster’s correspondence, provided another copy of the Insureds’ supplemental claim letter that was provided to Castle Key on August 21, 2024 and August 26, 2024, and provided dates of availability for the third re-inspection requested by Castle Key of the Insureds’ Property.
On September 12, 2024, Castle Key’s adjuster, Riley Weiss conducted a third inspection of the Insureds’ Property on behalf of Castle Key. On September 16, 2024, Castle Key produced a copy of Mr. Riley’s estimate, which opined that the Loss caused $72,385.58 in damages on a RCV basis and $62,198.83 in damages on an ACV basis to the Insureds’ Property. Mr. Riley’s estimate: 1) failed to account for the necessary cost of staining and finishing the Insureds’ baseboards; 2) failed to acknowledge the necessary cost of removing and replacing the quartz countertop in the Insureds’ kitchen; 3) failed to account for the necessary cost of removing and replacing all of the Insureds’ closets; 4) failed to account for the necessary cost associated with the removal and replacement of all of the door casings in the Property; 5) failed to account for the cost of procuring the permits necessary to restore the Property to pre-loss condition; and 6) failed to account for any of the rules and regulation of the Insureds’ condominium association, which regulate the time and manner of construction and debris removal in the Insureds’ building. The foregoing is not an exhaustive list of the omissions and deficiencies in Mr. Riley’s estimate.
On September 16, 2024, Mr. Lancaster confirmed that Castle Key would remit an additional undisputed payment to the Insureds in the amount of $39,689.16 based upon Mr. Riley’s estimate.
On September 26, 2024, Mr. Lancaster confirmed that Castle Key would not remit any additional indemnity to the Insureds for their claim.
On September 27, 2024, the Insureds received a supplemental undisputed payment from Castle Key in the amount of $39,689.16. Undersigned counsel then sent an email to Mr. Lancaster, which stated in pertinent part as follows: “there was no correspondence included with the attached check, nor have I received a formal coverage determination regarding my clients’ supplemental claim that was submitted on August 21st. I understand from your email below that this is the final payment going out. However, I need to know whether Allstate is formally denying the remainder of my clients’ supplemental claim, so we may proceed accordingly. Please advise.”
On September 30, 2024, Mr. Lancaster responded and stated, “The final determination letter is our estimate sent out.”
Castle Key never remitted any additional insurance benefits to the Insureds on their claim, nor did Castle Key ever attempt to settle the Insureds’ outstanding damages. Moreover, Castle Key never remitted any interest to the Insureds on the undisputed claim payment of $22,509.67 that Castle Key remitted to the Insureds 200 days after Castle Key received notice of the Loss. Further, aside from the re-inspection of the Property by Mr. Riley, Castle Key never notified the Insureds of any additional information deemed necessary by Castle Key to process the Insureds’ claim. Additionally, Castle Key never provided the Insureds with any explanation, much less a reasonable one, in relation to the facts or applicable law, for Castle Key’s effective denial and refusal to pay $121,801.17 of the Insureds’ claimed damages. In particular, Castle Key never proffered any explanation for its refusal to cover: 1) the necessary cost of staining and finishing the Insureds’ baseboards; 2) the necessary cost of removing and replacing the quartz countertop in the Insureds’ kitchen; 3) the necessary cost of removing and replacing all of the Insureds’ closets; 4) the necessary cost associated with removing and replacing of all of the door casings in the Property; 5) the cost of procuring the permits required by the city of Miami Beach to effectuate the repairs necessitated due to the Loss; 6) the additional cost of labor, materials, and debris removal expenses attributed to compliance with the rules and regulation of the Insureds’ condominium association; and 7) the Insureds’ additional living expense damages. Finally, Castle Key never provided any explanation to support its low-ball assessment of the cost of rendering the undisputed scope of repairs, which were partially evinced by the estimates proffered by LD&D and Miami Venetian Plaster Corp in support of the Insureds’ supplemental claim.
Pursuant to the above referenced record, it is beyond reproach that: 1) the Insureds’ Loss is covered under their All-Risk Policy; 2) the Insureds timely notified Castle Key of the Loss; 3) at all relevant times the Insureds fully cooperated with Castle Key’s investigation and adjustment of the claim and otherwise satisfied all of post-loss obligations set forth under the Policy; and 4) Castle Key materially breached the Policy and violated the Florida Unfair Insurance Trade Practices Act.
II. CASTLE KEY CLEARLY VIOLATED THE FLORIDA UNFAIR INSURANCE TRADE PRACTICES STATUTE
As argued below, the foregoing evidence and record clearly demonstrate that Castle Key violated §§ 626.9541(1)(i)(3)(f), 626.9541(1)(i)(3)(d), 626.9541(1)(i)(3)(g), 626.9541(1)(i)(4), 624.155(1)(b)(1), and 626.9541(1)(i)(3)(a), Florida Statutes in the investigation, handling, and adjustment of the Insureds’ claim.
1. The Insureds’ Loss is Covered Under Their All-Risk Policy
First, as a threshold matter it is beyond reproach that the Insureds’ Loss is covered under their All-Risk Policy. The Policy states in pertinent part as follows:
* * *
“Insuring Agreement
In reliance on the information you have given us, we agree to provide the coverages indicated on the Policy Declarations. In return, you must pay the premium when due and comply with the policy terms and conditions, and inform us of any change in title, use or occupancy of the residence premises.
Subject to the terms of this policy, the Policy Declarations shows the location of the residence premises, applicable coverages, limits of liability and premiums. The policy applies only to losses or occurrences that take place during the policy period. The Policy Period is shown on the Policy Declarations. This policy is not complete without the Policy Declarations.”
* * *
“Section I-Your Property
Building Property Protection-Coverage A
Property We Cover Under Coverage A: We will cover building property. Property We Do Not Cover Under Coverage A: We do not cover land.
Losses We Cover Under Coverage A:
We will cover sudden and accidental direct physical loss to property described in Building Property Protection – Coverage A except as limited or excluded in this policy.”
* * *
Under Florida law, “[i]n order to recover under an all-risk insurance policy, the Insureds must first show (1) a fortuitous loss (2) that occurred during the policy period.” See Town Kitchen LLC v. Certain Underwriters at Lloyd's, 522 F. Supp. 3d 1216, 1221 (S.D. Fla. 2021) citing Great Lakes Reinsurance (UK) PLC v. Kan-Do, Inc., 639 F. App'x 599, 601 (11th Cir. 2016). “Once the insured meets the light burden of establishing that a loss occurred due to some fortuitous event or circumstance, the burden shifts to the insurer to show that the loss is excluded by some language set out in the policy.” Id. The Insureds’ Policy was in effect for the policy period of July 8, 2023-July 8, 2024. Therefore, under Florida law, the Insureds possessed a duty to show that they sustained a fortuitous loss during that time-period. The Policy states as follows:
* * *
“Renewal Condominium Owners Policy
Declarations
Your policy effective date is July 8, 2023
Summary
Named Insured(s)
Eduardo Perez and Maria Barrajon
Mailing address
1300 West Ave Unit 2308
Miami Beach FL 33139
Policy number
988 339 607
Your policy provided by
Castle Key Indemnity Company
Policy period
Begins on July 8, 2023 at 12:01 A.M.
standard time, with no fixed date of
expiration
Premium period
Beginning July 8, 2023 through July 8,
2024 at 12:01 A.M. standard time”
* * *
In application to the facts, it is readily apparent that the Insureds satisfied their burden of proving that the Loss was fortuitous and occurred during the above referenced policy period. Once again, on or around January 11, 2024, the Insureds promptly notified Castle Key that their “residence premises” sustained a Loss that occurred the preceding day and was caused by a sudden and accidental water leak that emanated from a broken sprinkler pipe on the 27th floor of the Insureds’ building. The Insureds’ notification to Castle Key regarding the circumstances of the Loss was corroborated by: 1) a condo incident report dated January 11, 2024, that was prepared by the property manager of the Insureds’ building and subsequently produced to Castle Key; 2) invoices prepared by Sprinklermatic, which reflected water remediation services rendered on the Property on January 10, 2024, due to the Loss; and 3) the Insureds’ presentation of damages to Castle Key’s adjuster, Ernani Cruz during his inspection of the Property on January 18, 2024.
Meanwhile, that the Insureds’ Loss is covered under the Policy is undisputed pursuant to Castle Key’s undisputed indemnity payments of $21,509.67 and $39,689.16 that were issued on or around July 29, 2024, and September 27, 2024, respectively.
Finally, no facts exist to demonstrate that the Insureds’ Loss is excluded by some language set out in the Policy. Therefore, it is patently clear that the Insureds are entitled to coverage for their Loss.
2. The Coverages Afforded to the Insureds Under the Policy
Pursuant to the plain and unambiguous language of the Policy, the Insureds were entitled to coverage for all of the “property damage” sustained to their “residence premises” and “building property” due to the Loss. The Policy states as follows:
* * *
Section I-Your Property
Building Property Protection-Coverage A
Property We Cover Under Coverage A: We will cover building property. Property We Do Not Cover Under Coverage A: We do not cover land.
* * *
“Agreements We Make With You
We make the following agreements with you:
General
Definitions Used In This Policy
Throughout this policy, when the following words appear in bold type, they are defined as follows:
3. Building property – means items of real property owned exclusively by an insured person that:
1. do or will comprise a part of the residence premises;
2. are used to service or support the residence premises; or
3. are your insurance responsibility as expressed under the governing rules of the association.
Real property includes only those fixtures, structures, construction material and supplies, installations or additions located either within that portion of the premises used as the residence premises or on the association premises that benefits an insured person and fewer than all unit owners. Real property also includes structures owned solely by you, other than the residence premises, at the location of the residence premises.
9. Insured premises - means
a) the residence premises;
13. Property damage – means physical injury to or destruction of tangible property, including loss of its use resulting from such physical injury or destruction.
16. Residence premises – means that premises described on the Policy
Declarations used as a private residence and reserved exclusively for
your use or occupancy.”
* * *
Moreover, under the plain language of the Policy, the Insureds were entitled to coverage for damages not only caused by direct physical loss but also those associated with “matching” as per § 626.9744(2), Florida Statutes (2004); and physical damages to the Insureds’ Property, which will be incurred in the repair and replacement of portions of the Insureds’ Property, that did sustain direct physical damage as per § 626.9744(1), Florida Statutes (2004). The Policy states in pertinent part as follows:
* * *
“Conformity To State Statutes
When the policy provisions conflict with the statutes of the state in which the residence premises is located, the provisions are amended to conform to such statutes.”
* * *
“What Law Will Apply
This policy is issued in accordance with the laws of Florida and covers property or risks principally located in Florida...”
* * *
The Insureds’ Policy constitutes a homeowner’s insurance policy that provides for the adjustment and settlement of first-party losses based on repair or replacement cost. The Policy states as follows:
* * *
“6. How We Pay For A Loss….
Under Building Property Protection- Coverage A and Personal Property Protection-Coverage C, payment for covered loss will be by one or more of the following methods:….
Payment for total loss to property covered under Building Property Protection-Coverage A will be on a replacement cost basis, except as indicated below, meaning that the amount we pay you for the repair, rebuilding or replacement of the damaged, destroyed or stolen covered property will not include a deduction for depreciation.”
* * *
Therefore, the Insureds’ Policy must comply with the requirements set forth in § 626.9744, Florida Statutes (2004), which state as follows:
* * *
“Claim settlement practices relating to property insurance. Unless otherwise provided by the policy, when a homeowner’s insurance policy provides for the adjustment and settlement of first-party losses based on repair or replacement cost, the following requirements apply:
(1) When a loss requires repair or replacement of an item or part, any physical damage incurred in making such repair or replacement which is covered and not otherwise excluded by the policy shall be included in the loss to the extent of any applicable limits. The insured may not be required to pay for betterment required by ordinance or code except for the applicable deductible, unless specifically excluded or limited by the policy.
(2) When a loss requires replacement of items and the replaced items do not match in quality, color, or size, the insurer shall make reasonable repairs or replacement of items in adjoining areas. In determining the extent of the repairs or replacement of items in adjoining areas, the insurer may consider the cost of repairing or replacing the undamaged portions of the property, the degree of uniformity that can be achieved without such cost, the remaining useful life of the undamaged portion, and other relevant factors.” § 626.9744, Florida Statutes (2004).
* * *
Because the Insureds’ Policy does not opt out of Section 626.9744, it is clear that the Insureds are also entitled to coverage for physical damages to their Property, which will be incurred in the repair and replacement of portions of their Property, which did sustain direct physical damage as a result of Loss, and for damages associated with “matching.”
Further, the Policy also affords coverage to the Insureds for the reasonable expense of removing debris from the Property due to the Loss. The Policy states in pertinent part as follows:
* * *
“Section I Additional Protection
3. Debris Removal
We will pay reasonable expenses you incur to remove debris of covered property damaged by a loss we cover. If the loss to the covered property and the cost of debris removal are more than the Limit Of Liability shown on the Policy Declarations for the covered property, we will pay up to an additional 5% of that limit for debris removal.”
* * *
Finally, the Policy also affords coverage for additional living expenses as a result of the Loss. The Policy states as follows:
* * *
“The following endorsement changes your policy. Please read this document carefully and keep it with your policy.
Florida Condominium Amendatory Endorsement . AP4992
II. In Section I Additional Protection, under item 1, Additional Living Expense, sub-item a) is replaced by the following: a) We will pay the reasonable increase in living expenses necessary to maintain your normal standard of living when a direct physical loss we cover under Building Property Protection-Coverage A or Personal Property Protection-Coverage C makes your condominium or co-op, or the building structure containing your residence premises uninhabitable…
Payment for additional living expense as a result of a covered loss under Building Property Protection-Coverage A or Personal Property Protection-Coverage C will be limited to the least of the following:
1) the time period required to repair or replace the property we cover, using due diligence and dispatch;
2) if you permanently relocate, the shortest time for your household to settle elsewhere; or
3) 24 months…
No deductible applies to this protection.
* * *
Pursuant to the foregoing, it is beyond reproach that the Policy affords coverage for all of the: 1) “property damage” sustained to the Insureds’ “residence premises” and “building property” due to the Loss, including property damages associated with the application of § 626.9744, Florida Statutes (2004) to the Loss; 2) debris removal expenses; and 3) additional living expenses.
3. The Covered Damages Sought by the Insureds on Their Claim
Once again, the Insureds’ claim sought coverage for: 1) all property damages sustained to the Insureds’ residence premises due to the subject Loss, including property damages consistent with the application of § 626.9744, Florida Statutes (2004) to the Loss; 2) debris removal expenses; and 3) additional living expenses that the Insureds will incur to maintain their normal standard of living when they commence formal repairs on the Property and the Property is rendered uninhabitable as a result.
In support, the Insureds, by and through undersigned counsel, served Castle Key with a 6-page correspondence which comprehensively delineated the Insureds’ claim, and which hi-lighted the deficiencies in Castle Key’s adjustment of the claim. Notably, the latter correspondence attached the Insureds’ fully executed SPOL, which reflected a net claim of $161,490.33 itemized as follows: 1) $172,500.00 in ACV damages sustained to the Insureds’ Residence Premises; and 2) $11,500.00 in ALE sustained due to the Loss. The Insureds’ SPOL was accompanied by 121 pages of exhibits which comprehensively itemized and evinced the legal and factual basis for same. The Insureds’ exhibits included estimates prepared by: 1) an expert loss consultant, Suissa Loss Consulting; 2) a flooring contractor, LD&D; 3) a cabinet contractor, International Cabinet’s Contractors; and 4) a venetian plaster contractor, Miami Venetian Plaster Corp. Additionally, aside from the inspections of the Property performed by each of the foregoing experts, the following matters were factored into the Insureds’ determination of their total ACV damages: 1) the Rules and Regulations of the Insureds’ condominium association; 2) the applicable building code for Miami Beach; 3) the pre-loss condition of the Property; 4) the loss history for the Property; and 5) listings on Air BNB and VRBO, which reflected the fair rental value of comparable luxury accommodations in Miami Beach, all of which were produced to Castle Key.
4. Castle Key Was Obligated to Pay or Deny The Insureds’ Claim Within
60 Days and to Provide a Reasonable Explanation to the Insureds
Pursuant to the Policy and § 627.70131, Florida Statutes (2023), Castle Key was obligated to: 1) pay or deny the Insureds’ claim within 60 days of Castle Key’s receipt of notice of the Insureds’ initial and supplemental claims; 2) provide a reasonable explanation in writing to the Insureds of the basis in the insurance policy, in relation to the facts or applicable law, for the payment, denial, or partial denial of their claim; and 3) pay interest to the Insureds on Castle Key’s undisputed claim payment of $21,509.67 that was paid 200 days after the Insureds reported the Loss to Castle Key and 95 days after Mr. Cruz prepared the estimate that formed the basis for Castle Key’s undisputed payment. This abundantly clear based upon the Policy and § 627.70131, Florida Statutes, which state as follows:
* * *
“Section I Conditions
4. Our Settlement Options
In the event of a covered loss, under Building Property Protection-Coverage A Coverage A, we will pay for all or any part of the damaged, destroyed or stolen property as described in Condition 5. “How we pay for a Loss.”
* * *
5. “How We Pay For A Loss
Within 90 days after we receive notice of an initial, reopened, or supplemental claim under Building Property Protection-Coverage A or Personal Property Protection-Coverage C from you, we shall pay or deny such claim or a portion of the claim unless the failure to pay such claim or a portion of the claim is caused by factors beyond our control which reasonably prevent such payment. Claims will be paid within 20 days of written agreement between you and us, except as provided in subparagraph b)l) below regarding the payment of amounts for underpinning or grouting. Under Building Property Protection- Coverage A and Personal Property Protection-Coverage C, payment for covered loss will be by one or more of the following methods:”
* * *
“Conformity To State Statutes
When the policy provisions conflict with the statutes of the state in which the residence premises is located, the provisions are amended to conform to such statutes.”
* * *
“What Law Will Apply
This policy is issued in accordance with the laws of Florida and covers property or risks principally located in Florida...”
* * *
“(7)(a) Within 60 days after an insurer receives notice of an initial, reopened, or supplemental property insurance claim from a policyholder, the insurer shall pay or deny such claim or a portion of the claim unless the failure to pay is caused by factors beyond the control of the insurer. The insurer shall provide a reasonable explanation in writing to the policyholder of the basis in the insurance policy, in relation to the facts or applicable law, for the payment, denial, or partial denial of a claim. If the insurer's claim payment is less than specified in any insurer's detailed estimate of the amount of the loss, the insurer must provide a reasonable explanation in writing of the difference to the policyholder. Any payment of an initial or supplemental claim or portion of such claim made 60 days after the insurer receives notice of the claim, or made after the expiration of any additional timeframe provided to pay or deny a claim or a portion of a claim made pursuant to an order of the office finding factors beyond the control of the insurer, whichever is later, bears interest at the rate set forth in s. 55.03. Interest begins to accrue from the date the insurer receives notice of the claim. The provisions of this subsection may not be waived, voided, or nullified by the terms of the insurance policy. If there is a right to prejudgment interest, the insured must select whether to receive prejudgment interest or interest under this subsection. Interest is payable when the claim or portion of the claim is paid. Failure to comply with this subsection constitutes a violation of this code. However, failure to comply with this subsection does not form the sole basis for a private cause of action. § 627.70131, Florida Statutes (2023)(emphasis added).
* * *
5. Castle Key Violated Section 626.9541(1)(i)(3)(f), Florida Statutes
Castle Key clearly violated § 626.9541(1)(i)(3)(f), Florida Statutes because it failed to promptly provide a reasonable explanation in writing to the Insureds of the basis in the insurance policy, in relation to the facts or applicable law, for denial of portions of the Insureds’ supplemental claim or for the offer of a compromise settlement. In fact, as argued below, Castle Key failed and/or refused to provide any explanation to the Insureds in support of Castle Key’s effective denial and refusal to pay $121,801.17 of the Insureds’ damages.
Once again, on September 16, 2024, Castle Key produced a copy of an estimate prepared by Mr. Riley after his re-inspection of the Insureds’ Property, which opined that the Loss caused $72,385.58 in damages on a RCV basis and $62,198.83 in damages on an ACV basis to the Insureds’ Property. On that same date, Mr. Lancaster confirmed that Castle Key would remit an additional undisputed payment to the Insureds in the amount of $39,689.16 based upon the foregoing estimate. Then, on September 26, 2024, Mr. Lancaster confirmed that Castle Key would not remit any additional indemnity to the Insureds for their claim.
On September 27, 2024, undersigned counsel sent an email to Mr. Lancaster, which stated in pertinent part as follows: “there was no correspondence included with the attached check, nor have I received a formal coverage determination regarding my clients’ supplemental claim that was submitted on August 21st. I understand from your email below that this is the final payment going out. However, I need to know whether Allstate is formally denying the remainder of my clients’ supplemental claim, so we may proceed accordingly. Please advise.”
Finally, on September 30, 2024, Mr. Lancaster responded and stated, “The final determination letter is our estimate sent out.” Castle Key never provided the Insureds with any further communication or explanation to support their effective denial of $121,801.17 of the Insureds’ supplemental claim.
The above referenced record demonstrates that Castle Key clearly violated § 626.9541(1)(i)(3)(f), Florida Statutes because its “coverage determination” provided no explanation, much less a reasonable one, in writing to the Insureds of the basis in the insurance policy, in relation to the facts or applicable law, for: 1) Castle Key’s refusal to remit any indemnity to the Insureds for the Insureds’ claimed ALE damages; 2) Castle Key’s refusal to compensate the Insureds for the necessary cost of staining and finishing the Insureds’ baseboards due to the Loss; 3) Castle Key’s refusal to compensate the Insureds for the necessary cost of removing and replacing the quartz countertop in the Insureds’ kitchen due to the Loss; 4) Castle Key’s refusal to compensate the Insureds for the necessary cost of removing and replacing all of the Insureds’ closets due to the Loss; 5) Castle Key’s refusal to compensate the Insureds for the necessary cost associated with the removal and replacement of all of the door casings in the Property due to the Loss; 6) Castle Key’s refusal to compensate the Insureds for the cost of procuring the permits necessary to restore the Property to pre-loss condition; 7) Castle Key’s refusal to compensate the Insureds for costs associated with complying with the rules and regulation of the Insureds’ condominium association, which regulate the time and manner of construction and debris removal in the Insureds’ building; and 8) Castle Key’s refusal to compensate the Insureds for the correct pricing associated with the removal and replacement of the flooring, the venetian plaster, and the terrazzo waterfall in the Insureds’ Property.
Pursuant to the foregoing facts, it is readily apparent that Castle Key violated Section 626.9541(1)(i)(3)(f), Florida Statutes, in Castle Key’s handling and adjustment of the Insureds’ claim.
6. Castle Key Violated Section 626.9541(1)(i)(3)(d), Florida Statutes
Castle Key also clearly violated § 626.9541(1)(i)(3)(d), Florida Statutes because it effectively denied $121,801.17 of the Insureds’ supplemental claim without conducting a reasonable investigation based upon reasonable information. This is readily apparent based upon the following:
First, on August 21, 2024, undersigned counsel, pursuant to § 627.70132, Florida Statutes (2024), served Mr. Tolentino with formal written notice of the Insureds’ supplemental claim for: 1) additional property damages sustained to the Insureds’ residence premises due to the subject Loss; and 2) additional living expenses that the Insureds will incur to maintain their normal standard of living when they commence formal repairs on the Property and the Property is rendered uninhabitable as a result.
Notably, the latter correspondence attached the Insureds’ fully executed SPOL, which reflected a net claim of $161,490.33 itemized as follows: 1) $172,500.00 in ACV damages sustained to the Insureds’ Residence Premises; and 2) $11,500.00 in ALE damages sustained due to the Loss. The Insureds’ SPOL was accompanied by 121 pages of exhibits and a 6-page correspondence, which methodically evinced and comprehensively delineated and itemized the basis for same. The Insureds’ exhibits included estimates prepared by: 1) an expert loss consultant, Suissa Loss Consulting; 2) a flooring contractor, LD&D; 3) a cabinet contractor, International Cabinet’s Contractors; and 4) a venetian plaster contractor, Miami Venetian Plaster Corp. Additionally, aside from the inspections of the Property performed by each of the foregoing experts, the following matters were factored into the Insureds’ determination of their total ACV damages: 1) the Rules and Regulations of the Insureds’ condominium association; 2) the applicable building code for Miami Beach; 3) the pre-loss condition of the Property; 4) the loss history for the Property; and 5) listings on Air BNB and VRBO, which reflected the fair rental value of comparable luxury accommodations in Miami Beach.
Castle Key conducted little or no investigation in response to the Insureds’ supplemental claim. Notably, Castle Key requested no additional information or documentation from the Insureds. Moreover, Castle Key did not even attempt to speak with undersigned counsel to discuss the Insureds’ supplemental claim. Further, upon information and belief, Castle Key did not even attempt to confer with: 1) the Insureds’ expert loss consultant, Suissa Loss Consulting; 2) the Insureds’ flooring contractor, LD&D; 3) the Insureds’ cabinet contractor, International Cabinet’s Contractors; and 4) the Insureds’ venetian plaster contractor, Miami Venetian Plaster Corp., all of whom provided quotes and estimates that formed the basis for the Insureds’ supplemental claim. Additionally, upon information and belief, Castle Key did not even review, much less take into account: 1) the Rules and Regulations of the Insureds’ condominium association; 2) the applicable building code for Miami Beach; or 3) the listings on Air BNB and VRBO, which reflected the fair rental value of comparable luxury accommodations in Miami Beach.
Pursuant to the foregoing, it is beyond reproach that Castle Key also violated Section 626.9541(1)(i)(3)(3), Florida Statutes in Castle Key’s handling and adjustment of the Insureds’ claim.
7. Castle Key also Violated Section 626.9541(1)(i)(4), Florida Statutes
Castle Key also violated §§ 626.9541(1)(i)(4) and § 627.70131, Florida Statutes (2023), and the Policy as Castle Key failed to pay undisputed amounts of partial or full benefits owed to the Insureds under their first-party property insurance policy within 60 days after Castle Key received notice of the Insureds’ residential property insurance claim, determined the amounts of partial or full benefits, and agreed to coverage. This conclusion is also supported by the facts.
Once again, on or around January 11, 2024, the Insureds promptly notified Castle Key of the Loss. On or around January 18, 2024, Castle Key’s adjuster, Ernani Cruz inspected the Insureds’ Property on behalf of Castle Key. All of the Insureds’ damages were presented to Mr. Cruz during his inspection of the Property. Notwithstanding, following his inspection of the Insureds’ Property, Mr. Cruz prepared a low-ball estimate dated January 18, 2024, which erroneously opined that the Loss caused $9,224.69 in damages, on a replacement cost value basis, and $9,097.63 in damages, on an actual cash value to the Insureds’ Property.
After Mr. Perez communicated his disagreement with Castle Key’s low-ball estimate, Castle Key removed and analyzed a portion of the Insureds’ flooring. Subsequently, Castle Key conceded that the Insureds’ flooring could not simply be repaired but required complete removal and replacement to restore the Property to pre-loss condition. Mr. Cruz then prepared another low-ball estimate dated April 25, 2024, which erroneously opined that the Loss caused $30,432.86 in damages, on an RCV basis, and $22,509.67 in damages, on an ACV basis, to the Insureds’ Property.
Castle Key did not remit payment to the Insureds for the undisputed amount of insurance benefits owed to the Insureds under their Policy as determined by Mr. Cruz, nor did Castle Key request any additional information or documentation from the Insureds, to process the Insureds’ claim.
Rather, on or around May 1, 2024, Castle Key assigned a general contractor, Eddy Rodriguez of Total Quality Restoration, to conduct another inspection of the Insureds’ Property and to prepare another estimate of the Insureds’ damages. On May 3, 2024, Mr. Rodriguez inspected the Insureds’ Property in the presence of Mr. Perez who, once again, identified all of the known damages that were sustained to the Property and caused by the Loss.
On June 12, 2024, Castle Key’s newly assigned adjuster, Mr. Tolentino forwarded Mr. Rodriguez’s estimate to Mr. Perez. Mr. Rodriguez’s estimate was dated June 7, 2024, and reflected Mr. Rodriguez’s opinion that the Loss caused $30,022.33 in damages, on a RCV basis, and $25,470.35 in damages, on an ACV basis, to the Insureds’ Property.
It was not until on or around July 29, 2024, that Castle Key remitted a check dated June 24, 2024, in the amount of $21,509.67 to the Insureds for the undisputed amount of damages sustained to the Property due to the Loss. The foregoing check was remitted by Castle Key to the Insureds 200 days after the Insureds reported the Loss to Castle Key and 95 days after Mr. Cruz prepared the estimate that formed the basis for Castle Key’s undisputed payment. Meanwhile, Castle Key did not request any information or documents from the Insureds as part of Castle Key’s investigation of the claim prior to remitting the foregoing payment, nor did Castle Key otherwise inform the Insureds of any additional information or documents deemed necessary by Castle Key to render its claim determination and to remit the undisputed payment. Notwithstanding, Castle failed and/or refused to pay any amount of interest to the Insureds on Castle Key’s undisputed payment of July 29, 2024.
Pursuant to the foregoing, it is patently clear that Castle Key also violated §§ 626.9541(1)(i)(4) and § 627.70131, Florida Statutes (2023), and the Policy in Castle Key’s handling of the Insureds’ claim.
8. Castle Key also Violated Section 624.155(1)(b)(1), Florida Statutes
Castle Key also violated Section 624.155(1)(b)(1), Florida Statutes in not attempting in good faith to settle the Insureds’ claim when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward the Insureds and with due regard for their interests.
Notably, Castle Key should have attempted to settle the Insureds’ claim after Mr. Perez communicated his disagreement with Mr. Cruz’s low-ball estimate dated January 18, 2024, which amongst other things: 1) applied incorrect measurements of the Property in calculating the amount of materials and supplies that were necessitated due to the Loss; 2) failed to account for any of the damages sustained to the Insureds’ venetian plaster, which runs continuous throughout the entire Property; 3) failed to acknowledge that any of the natural wood flooring or the underlayment in the Insureds’ Property required removal and replacement; 4) failed to acknowledge that any of the Insureds’ baseboards required detachment, resetting, staining and finishing; 5) failed to acknowledge that the cabinets and the appliances, other than the refrigerator, in the Insureds’ kitchen required detachment and resetting; 6) failed to account for the necessary removal and replacement of the terrazzo waterfall countertop and quartz countertops in the Insureds’ kitchen; 7) failed to account for the necessary removal and replacement of the door casings in the Property; 8) failed to account for the necessary removal and replacement of all of the Insureds’ closets, which lied atop of the continuous wood flooring in the Property; 9) failed to account for the cost of procuring the permits required to effectuate the repairs on the Property; 10) failed to account for the costs associated with complying with the rules and regulation of the Insureds’ condominium association, which regulate the time and manner of construction and debris removal in the Insureds’ building; 11) failed to account for labor minimums associated with the contractors required to effectuate the complete repair of the Property; 12) failed to account for the necessary priming and painting of the Property; 13) failed to account for damages not caused by direct physical loss but associated with “matching” as per § 626.9744(2), Florida Statutes (2004); and 14) failed to address the physical damages to the Insureds’ Property, which will be incurred in the repair and replacement of portions of the Insureds’ Property, that did sustain direct physical damage as per § 626.9744(1), Florida Statutes (2004). Notwithstanding the glaring deficiencies in Mr. Cruz’s low-ball estimate, Castle Key failed to even attempt to settle the Insureds’ claim.
Castle Key also should have attempted to settle the Insureds’ claim after Castle Key assigned another insurance adjuster, Marcos Tolentino to adjust the Insureds’ claim. Notably, Mr. Tolentino admitted to Mr. Perez that Mr. Tolentino “noticed discrepancies” in the prior estimates prepared by Mr. Cruz. Nevertheless, at no point did Mr. Tolentino or Castle Key even attempt to amicably settle those discrepancies either.
Castle Key also should have attempted to settle the Insureds’ claim upon receipt of the Insureds’ supplemental claim, which included a 6-page correspondence that comprehensively itemized the Insureds’ supplemental claim and included over 197 pages of supporting evidence that substantiated same. The latter documentation clearly evinced the deficiencies in Castle Key’s assessment of the Insureds’ covered damages. Once again, however, Castle Key did not even attempt to settle the Insureds’ claim.
Finally, Castle Key also should have attempted to settle the Insureds’ claim after Castle Key’s adjuster, Riley Weiss conducted a third inspection of the Insureds’ Property on behalf of Castle Key and prepared an estimate, which opined that the Loss caused $72,385.58 in damages on a RCV basis and $62,198.83 in damages on an ACV basis to the Insureds’ Property. Mr. Riley’s estimate was 276% greater than Mr. Cruz’s low-ball estimate that formed the basis of Castle Key’s initial undisputed payment to the Insureds. Clearly, at that juncture, if not sooner, Castle Key knew or should have known that its adjustment of the Insureds’ claim was completely deficient, and in the face of the Insureds’ supplemental claim, should have attempted to settle the disputed portion of the Insureds’ supplemental claim. Castle Key, once again, refused to do so.
Pursuant to the above referenced record, it is clear that Castle Key also violated Section 624.155(1)(b)(1), Florida Statutes in not attempting in good faith to settle the Insureds’ claim when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward the Insureds and with due regard for their interests.
9. Castle Key Also Violated Section 626.9541(1)(i)(3)(a)
Finally, the foregoing record also evinces Castle Key’s violation of § 626.9541(1)(I)(3)(a), Florida Statutes in falling to adopt and implement standards for the proper investigation of claims. Simply put, if Castle Key did possess and implement standards for the proper investigation of claims, then at a minimum:
1. Castle Key would have provided some type of explanation, in writing to the Insureds of the basis in the insurance policy, in relation to the facts or applicable law, for: 1) Castle Key’s refusal to remit any indemnity to the Insureds for the Insureds’ claimed ALE damages; 2) Castle Key’s refusal to compensate the Insureds for the necessary cost of staining and finishing the Insureds’ baseboards due to the Loss; 3) Castle Key’s refusal to compensate the Insureds for the necessary cost of removing and replacing the quartz countertop in the Insureds’ kitchen due to the Loss; 4) Castle Key’s refusal to compensate the Insureds for the necessary cost of removing and replacing all of the Insureds’ closets due to the Loss; 5) Castle Key’s refusal to compensate the Insureds for the necessary cost associated with the removal and replacement of all of the door casings in the Property due to the Loss; 6) Castle Key’s refusal to compensate the Insureds for the cost of procuring the permits necessary to restore the Property to pre-loss condition; 7) Castle Key’s refusal to compensate the Insureds for costs associated with complying with the rules and regulation of the Insureds’ condominium association, which regulate the time and manner of construction and debris removal in the Insureds’ building; and 8) Castle Key’s refusal to compensate the Insureds for the correct pricing associated with the removal and replacement of the flooring, the venetian plaster, and the terrazzo waterfall in the Insureds’ Property;
2. Castle Key, after receiving the Insureds’ supplemental claim, would have attempted to confer with: 1) the Insureds’ expert loss consultant, Suissa Loss Consulting; 2) the Insureds’ flooring contractor, LD&D; 3) the Insureds’ cabinet contractor, International Cabinet’s Contractors; and 4) the Insureds’ venetian plaster contractor, Miami Venetian Plaster Corp., all of whom provided quotes and estimates that formed the basis for the Insureds’ supplemental claim. Additionally, Castle Key would have reviewed and taken into account: 1) the Rules and Regulations of the Insureds’ condominium association; 2) the applicable building code for Miami Beach; and 3) the listings on Air BNB and VRBO, which reflected the fair rental value of comparable luxury accommodations in Miami Beach prior to rendering Castle Key’s “coverage determination;”
3. Castle Key would have paid undisputed amounts of partial or full benefits owed to the Insureds within 60 days after Castle Key received notice of the Insureds’ residential property insurance claim, determined the amounts of partial or full benefits, and agreed to coverage; or Castle Key would have paid interest to the Insureds on Castle Key’s undisputed payment of July 29, 2024, which was remitted 200 days after the Insureds reported the Loss to Castle Key and 95 days after Mr. Cruz prepared the estimate that formed the basis for Castle Key’s undisputed payment;
and
4. Castle Key would have attempted in good faith to settle the Insureds’ claim: a) after Mr. Perez communicated his disagreement with Mr. Cruz’s low-ball estimate dated January 18, 2024; b) after Mr. Tolentino “noticed discrepancies” in the prior estimates prepared by Mr. Cruz; c) after Castle Key received the Insureds’ supplemental claim; and d) after Castle Key’s adjuster, Riley Weiss conducted a third inspection of the Insureds’ Property on behalf of Castle Key and prepared an estimate, which opined that the Loss caused 276% greater damage than previously calculated by Castle Key.
Once the Insureds prosecute a bad faith action against Castle Key, the Insureds shall seek discovery regarding what standards, if any, Castle Key does in fact possess and implement in their claims handling practices. As it stands, Castle Key’s claim handling standards appear non-existent or wholly inadequate.
Castle Key may cure the above referenced violations of Florida law and bad faith conduct by issuing payment to the Insureds in total the amount of $121,801.17 within the time afforded under Florida law.
Should Castle Key fail to timely cure the violations enumerated above, then the Insureds shall institute an action against Castle Key pursuant to § 624.155, Florida Statutes, wherein the Insureds shall seek all damages which are a reasonably foreseeable result of Castle Key’s violations of the Florida Unfair Insurance Trade Practices Act. Additionally, the Insureds shall also seek punitive damages against Castle Key as the acts which give rise to the violations referenced in this CRN occur with such frequency as to indicate a general business practice on the part of Castle Key, and these acts are in reckless disregard for the rights of Castle Key’s insureds.
Nothing stated herein should be construed as a waiver of any of the lnsureds’ rights. The Insureds expressly reserve any and all rights afforded under the Policy and Florida law.
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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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