Civil Remedy Notice of Insurer Violations
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Filing Number:     787063
Filing Accepted:  10/15/2024
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Complainant
Last/Business Name *  
LENNAR HOMES, LLC   First Name  
Street Address * 5505 WATERFORD DISTRICT DRIVE
City, State Zip * MIAMI, FL 33126
Email Address * LKERR@COGBURNLEGAL.COM
Complainant Type: * Insured
Insured
Last/Business Name*   KARR BROTHERS DRYWALL, INC.   First Name  
Policy # * BGFL0021270000; BGFL0021808800; BGFL0021808801 Claim #* 20F86M153036
Attorney
Attorney is Applicable
Last Name* KERR First Name * LAUREN Initial D
Street Address* 777 S. HARBOUR ISLAND BLVD., SUITE 245
City, State Zip* TAMPA , FL 33602
Email Address * LKERR@COGBURNLEGAL.COM
Violation
Insurer Type *   Authorized Insurer Unauthorized Insurer
 
Insurer Name*   CLEAR BLUE INSURANCE COMPANY
NAIC Company Code 28860
 
Name of individual responsible for violation (if any):* UNKNOWN
Type of Insurance * Commercial Property & Casualty   
Reason for Notice *
Claim Delay
Unfair Trade Practice
* Statutory provision(s) which the insurer allegedly violated.
 
624.155(1)(b)(1) 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.
626.9541(1)(i)(3)(a) Failing to adopt and implement standards for the proper investigation of claims.
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.

Karr Brothers Drywall Inc. (“Karr”) purchased at least three commercial general liability (“CGL”) insurance policies from Clear Blue Insurance Company (“Clear Blue”) providing ongoing and products-completed operations coverage for liability because of property damage resulting from Karr’s work, specifically policy numbers BGFL0021270000; BGFL0021808800; BGFL0021808801 (the “Policies”). The insuring agreements of the Policies state: We will pay those sums that the insured becomes legally obligated to pay as damages because of … “property damage” … to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages … The Policies define “property damage” to include: a. Physical injury to tangible property, including all resulting loss of use of that property … or b. Loss of use of tangible property that is not physically injured … For coverage to be afforded, “property damage” must have been caused by an “occurrence,” which is defined under the Policies as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Not only do the Policies provide coverage to the named insured, Karr, they also provide coverage to Lennar Homes, LLC (“Lennar”) as an additional insured. The Policies contains the following endorsement, in same or substantially similar part: ADDITIONAL INSURED – OWNERS, LESSEES OR CONTRACTORS – SCHEDULED PERSON OR ORGANIZATION This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART A. Section II – Who Is An Insured is amended to include as an additional insured the person(s) or organization(s) shown in the Schedule… SCHEDULE Name of Additional Insured Person(s) Or Organization(s): All persons and organizations qualified under the terms of FCG 1001 (FCG 1001 extends coverage where required by written agreement) The Policies each contain another similar endorsement extending this coverage to Karr’s completed operations. The subcontract between Lennar and Karr required that Karr name Lennar as an additional insured on its CGL policies of insurance.
 
* Facts and circumstances giving rise to the violation.
Enter all words or phrases (one at a time) that should be used to filter.

This civil remedy notice is being filed because Clear Blue Insurance Company (“Clear Blue”) has failed to address Lennar Homes, LLC’s (“Lennar”) tender of defense in good faith. The Clear Blue policies of insurance implicated are policy numbers BGFL0021270000; BGFL0021808800; BGFL0021808801 (the “Policies”). Lennar has been named as a defendant in a lawsuit filed by the Villas II at Gran Paradiso, Inc. homeowners’ association (the “Association”), styled as Villas II at Gran Paradiso, Inc. v. Lennar Homes, LLC, Circuit Court of Sarasota County, Florida, Case No. 2022 CA 005629 NC (now pending before the American Arbitration Association) (the “Lawsuit”). The Lawsuit alleges property damage resulting from work performed at the Villas II at Gran Paradiso community (the “Project”), including the stucco work performed by Lennar’s subcontractor, Karr Brothers Drywall, Inc. (“Karr”). During original construction, Karr performed work at the Project pursuant to the terms and conditions of its subcontract with Lennar. Included in the subcontract between Lennar and Karr was a requirement that Karr would secure liability insurance and name Lennar as an Additional Insured. Karr purchased at least three liability insurance policies, the Policies, from Clear Blue providing coverage for liability resulting from Karr’s work. This coverage extends to both the named insured, Karr, and the additional insured, Lennar. As described supra, the Policies contain endorsements providing additional insured coverage under the Policies when required by a written agreement, as Lennar and Karr have here. Because the written subcontract between Lennar and Karr required Karr to name Lennar as an additional insured on its policies of insurance, Lennar is an additional insured under the Policies. Lennar tendered its defense to Clear Blue on May 30, 2024, and notified Clear Blue of the Lawsuit. Since that time, Clear Blue has refused to issue a coverage determination as to Lennar’s tender of defense, nor provide Lennar with a defense in the Lawsuit. Clear Blue’s refusal to provide a defense to Lennar is knowingly wrongful because the Lawsuit, as pled, implicates coverage under the Policies and does not clearly implicate any exclusions under the Policies. "Under Florida law, an insurer's duty to defend its insured against legal action is quite broad, and 'is determined by comparing the allegations contained within the four corners of the underlying complaint with the language of the policy.'" Zurich Am. Ins. Co. v. Southern- Owners Ins. Co., 314 F. Supp. 3d 1284, 1299 (M.D. Fla. 2018) (Howard, J.) citing Addison Ins. Co. v. 4000 Island Blvd. Condo. Ass'n, Inc., 263 F. Supp. 3d 1266, 1269 (S.D. Fla. 2016) (quoting Jones v. Fla. Ins. Guar. Ass'n Inc., 908 So. 2d 435, 443 (Fla. 2005)). That is, an insurer's duty to defend is determined solely by the allegations in the underlying complaint. Zurich, 314 F. Supp. 3d at 1299 citing Category 5 Mgmt. Grp., LLC v. Companion Prop. & Cas. Ins. Co., 76 So. 3d 20, 23 (Fla. 1st DCA 2011); Lawyers Title Ins. Corp. v. JDC (Am.) Corp., 52 F. 3d 1575, 1580 (11th Cir. 1995). "The duty arises when the relevant pleadings allege facts that 'fairly and potentially bring the suit within policy coverage.'" Id. citing Lawyers Title Ins. Corp., 52 F. 3d at 1580 (quoting Lime Tree Vill. Cmty. Club Ass'n, Inc. v. State Farm Gen. Ins. Co., 980 F. 2d 1402, 1405 (11th Cir. 1993)). The actual facts of the situation are not relevant, such that "the insurer must defend even if facts alleged are actually untrue or legal theories unsound." Id. As a result, "an insurer's duty to defend is distinct from, and broader than, the duty to indemnify," Id. citing Sinni v. Scottsdale Ins. Co., 676 F. Supp. 2d 1319, 1323 (M.D. Fla. 2009), which "must be determined by analyzing the policy coverage in light of the facts in the underlying case," J.B.D. Constr., Inc. v. Mid-Continent Cas. Co., 571 F. App'x 918, 927 (11th Cir. 2014) (emphasis added). In addition, where an injured party "alleges facts partially within and partially outside the coverage of the policy, the insurer is obligated to defend the entire suit." Category 5 Mgmt. Grp., LLC, 76 So. 3d at 23. The only way an insurer can avoid its duty to defend based on an exclusion is by showing that the allegations in the underlying complaint fall solely and entirely within that exclusion. See Lime Tree Vill. Cmty. Club Ass’n, Inc. v. State Farm Gen. Ins. Co., 980 F.2d 1402, 1405-07 (11th Cir. 1993); see also Northland Cas. Co. v. HBE Corp., 160 F. Supp. 2d 1348, 1359 (M.D. Fla. 2011). “If the allegations of the complaint leave any doubt regarding the duty to defend, the question must be resolved in favor of the insured requiring the insurer to defend.” Baron Oil Co. v. Nationwide Mut. Fire Ins. Co., 470 So. 2d 810, 814 (Fla. 1st DCA 1985); see also Higgins v. State Farm Fire & Cas. Co., 894 So. 2d 5, 10 (Fla. 2004) (approving standard articulated in Baron Oil); Voeller Constr., Inc. v. Southern-Owners Ins. Co., No. 8:13-cv-3169, 2014 U.S. Dist. Lexis 61862 at *4 (M.D. Fla. May 5, 2014). Clear Blue’s failure to defend Lennar has prejudiced and damaged Lennar. Due to Clear Blue’s unreasonable claims handling practices, Lennar has been and will be forced to incur significant defense costs in the Lawsuit, for which Clear Blue is responsible. The Lawsuit includes allegations of losses covered under the Policies. Under Florida law, Clear Blue’s duty to defend Lennar was triggered by the Association’s allegations, whether they are proven to be true or not. Clear Blue appears to be employing a misguided strategy of simply ignoring the Lawsuit and Lennar’s tender of defense of the same in an effort to avoid paying the defense costs to which Lennar is entitled. The attorneys' fees and costs that Lennar has incurred have unjustly burdened Lennar. Moreover, by refusing to defend Lennar, Clear Blue has greatly exposed its named insured, Karr, to a much larger claim for Lennar’s defense costs in this matter pursuant to the contractual indemnification provisions in the subcontract. Clear Blue must exercise its duty of good faith to Lennar and must employ “the same degree of care and diligence as a person of ordinary care and prudence should exercise in the management of his own business.” Farinas v. Florida Farm Bureau Gen. Ins. Co., 850 So. 2d 555 (Fla. 4th DCA 2003) (internal citations omitted). Under Farinas, Clear Blue is obligated to (1) fully investigate all claims at hand to determine how to best limit its insured’s liability; (2) seek to settle as many claims as possible within the policy limits; (3) minimize the magnitude of possible excess judgments against its insureds by reasoned claim settlement; and (4) keep the insureds informed of the claim resolution process. Clear Blue’s obligations extend to all the insureds under the Policies and are not limited to the named insured. Thus, Clear Blue’s obligations extend to additional insureds, like Lennar. To date, Lennar is unaware of Clear Blue’s investigation, if any, of the claims against Lennar. Likewise, Clear Blue has never advised Lennar how, or if, it intends to minimize the magnitude of a possible excess judgment against Lennar. Given Clear Blue’s lack of response and the other facts outlined above, Clear Blue has failed or attempted to meet the standard for good faith in this matter. Lennar will be filing suit against Clear Blue but is also filing this notice in an effort to provide Clear Blue with a last opportunity to deal with Lennar in good faith as well as to perfect its right to pursue the remedies provided under Section 624.155, Florida Statutes. Clear Blue can cure by acknowledging its duty to defend Lennar, reimbursing Lennar for its reasonable defense costs, and working together with Lennar to resolve this claim, including without limitation participating at the upcoming mediation and any subsequent opportunities for resolution.
Comments
User Id Date Added Comment
karend@fwcrum.com 12-16-2024 VIA ELECTRONIC FILING: Florida Department of Financial Services Civil Remedy Section 200 East Gaines Street Tallahassee, FL 32399-0322 Re: Civil Remedy Notice of Insurer Violation Complainant: Lennar Homes, Inc. Insured : Karr Brothers Drywall, Inc. Policy Number: BGFL00212700; BGFL0021808800; BGFL00218088001 Claim No.: 20F86M153036 DFS File Number: 787063 Acceptable Date: December 16, 2024 Insurer: Clear Blue Insurance Company To Whom It May Concern: Kindly consider this to be Clear Blue’s report to the Department on the disposition of the alleged violations. Clear Blue maintains that it has not been in any violation of the law and that the Civil Remedy Notice of Insurer Violation (“CRN”) filed by Lennar Homes, Inc. is defective on its face and fails to comply with the specificity requirements under Florida Statute 624.155. Notwithstanding, the parties have reached an amicable resolution of this matter in its entirety. As such, while Clear Blue maintains that it is not in violation of the law and that the CRN is defective, this matter has been globally resolved during the statutory “cure” period. Should the Department require additional information, please do not hesitate to contact us.
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