Civil Remedy Notice of Insurer Violations
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Filing Number:     790016
Filing Accepted:  11/2/2024
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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*   C. STERLING QUALITY ROOFING, INC.   First Name  
Policy # * ATN-ATL1740313; ATN-ATL 1851179; ATN-ATL1964398; A Claim #* UNKNOWN DUE TO LACK OF RESPONSE FROM CARRIER
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*   UNITED SPECIALTY INSURANCE COMPANY
NAIC Company Code 12537
 
Name of individual responsible for violation (if any):* UNKNOWN DUE TO LACK OF RESPONSE FROM CARRIER
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.

C. Sterling Quality Roofing, Inc. (“C. Sterling”) purchased at least five commercial general liability (“CGL”) policies from United Specialty Insurance Company ("USIC") providing ongoing and products-completed operations coverage for liability because of property damage resulting from C. Sterling’s work, specifically Policy Numbers ATN-ATL1740313; ATN-ATL 1851179; ATN-ATL1964398; ATN-2076171; and ATN2187946 (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, C. Sterling, they also provide coverage to Lennar Homes, LLC (“Lennar”) as an additional insured. The Policies each contain the following endorsement in same or substantially similar part: ADDITIONAL INSURED – DESIGNATED PERSON OR ORGANIZATION [or OWNERS LESSEES OR CONTRACTORS – SCHEDULED PERSON OR ORGANIZATION] This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE FORM 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 As required by written contract The Policies also each contain an endorsement extending the additional insured coverage to C. Sterling’s Completed Operations. The subcontracts between C. Sterling and Lennar required that C. Sterling name “Lennar Corporation including its subsidiaries, partners, partnerships, affiliated companies, successors and assigns” as an additional insured on its policies of insurance. Lennar Homes, LLC is a subsidiary of Lennar Corporation.
 
* 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 United Specialty Insurance Company ("USIC") has failed to address Lennar Homes, LLC’s (“Lennar”) tenders of defense in good faith. The USIC policies implicated are Policy Numbers ATN-ATL1740313; ATN-ATL 1851179; ATN-ATL1964398; ATN-2076171; and ATN2187946 (the "Policies"). Lennar has been named as a defendant in a lawsuit styled as Bridgehaven at Citrus Park Homeowners Association, Inc. v. Lennar Homes, LLC, et al, Case No. 22-CA-009092, Hillsborough County, Florida (now pending before the American Arbitration Association) (the “Lawsuit”). The Lawsuit alleges property damage resulting from work performed at the Bridgehaven community (the “Project”), including the roofing work performed by Lennar’s subcontractor, C. Sterling Quality Roofing, Inc. (“C. Sterling”). During original construction, C. Sterling performed work at the Project pursuant to the terms and conditions of its subcontracts with Lennar. Included in the subcontracts between Lennar and C. Sterling was a requirement that C. Sterling would secure commercial general liability ("CGL") insurance and name Lennar as an Additional Insured. C. Sterling purchased at least five CGL policies, the Policies, from USIC, which provide ongoing and products-completed operations coverage for liability because of property damage resulting from C. Sterling’s work. This coverage extends to both the named insured, C. Sterling, and the additional insured, Lennar. As described supra, the Policies extend coverage to additional insureds where required by contract. Because the written subcontracts between Lennar and C. Sterling required C. Sterling to name Lennar Corporation and its subsidiaries as an additional insured on its policies of insurance, and Lennar Homes, LLC is a subsidiary of Lennar Corporation, Lennar is an additional insured under the Policies. Lennar tendered its defense to USIC on December 22, 2022 and March 15, 2024. For nearly two years, USIC has refused to issue a coverage determination as to Lennar’s tender of defense, nor has USIC provided Lennar with a defense in the Lawsuit. USIC’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. USIC’s failure to defend Lennar has prejudiced and damaged Lennar. Due to USIC’s unreasonable claims handling practices, Lennar has been and will be forced to incur significant defense costs in the Lawsuit, for which USIC is responsible. The Lawsuit includes allegations of losses covered under the Policies. Under Florida law, USIC’s duty to defend Lennar was triggered by the Plaintiff’s allegations, whether they are proven to be true or not. USIC appears to be employing a misguided strategy of simply ignoring the Lawsuit and Lennar’s tender of defense 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, USIC has greatly exposed its named insured, C. Sterling, to a much larger claim for Lennar’s defense costs in this matter pursuant to the contractual indemnification provisions in the subcontract. USIC 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, USIC 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. USIC’s obligations extend to all the insureds under the Policies and are not limited to the named insured. Thus, USIC’s obligations extend to additional insureds, like Lennar. To date, Lennar is unaware of USIC’s investigation, if any, of the claims against Lennar, or its efforts, if any, to seek to settle the claim within the policy limits. Likewise, USIC has never advised Lennar how, or if, it intends to minimize the magnitude of a possible excess judgment against Lennar. Given USIC’s lack of response for over two years and the other facts outlined above, USIC has failed or attempted to meet the standard for good faith in this matter. Lennar will be filing suit against USIC but is also filing this notice in an effort to provide USIC 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. USIC 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 mediation scheduled for December 10, 2024.
Comments
User Id Date Added Comment
mallory.taylor@phelps.com 12-19-2024 Phelps Dunbar LLP 100 South Ashley Drive Suite 2000 Tampa, FL 33602 Phone 813 472 7550 Fax 813 472 7570 Bret M. Feldman Partner bret.feldman@phelps.com Direct 813 472 7879 December 19, 2024 VIA ELECTRONIC SUBMISSION Florida Department of Financial Services Division of Consumer Services Civil Remedy Section Larson Building 200 East Gaines Street Tallahassee, FL 32299-0322 Re: Civil Remedy Notice of Insurer Violation Company: United Specialty Insurance Company Insured: C. Sterling Quality Roofing, Inc. Complainant: Lennar Homes, LLC Policy Nos.: ATN-ATL1740313, ATN-ATL1851179, ATN-ATL1964398, ATN2076171, and ATN2187946 DFS File No.: 790016 Accepted by DFS: November 2, 2024 To Whom It May Concern: We write on behalf of United Specialty Insurance Company (“USIC”), which provided commercial general liability coverage to C. Sterling Quality Roofing, Inc. (“C. Sterling”) under Policy No. ATN-ATL1740313 for the policy period of May 1, 2017 to May 1, 2018 (the “2017 Policy”), Policy No. ATN-ATL1851179 for the policy period of May 1, 2018 to May 1, 2019 (the “2018 Policy”), Policy No. ATN-ATL1964398 for the policy period of May 1, 2019 to May 1, 2020, (the “2019 Policy”), Policy No. ATN2076171 for the policy period of May 1, 2020 to May 1, 2021 (the “2020 Policy”), and Policy No. ATN2187946 for the policy period of May 1, 2021 to May 1, 2022 (the “2021 Policy”) (collectively, the “Policies”). The Policies provide commercial general liability coverage to C. Sterling subject to the Policies’ terms, conditions, limitations, definitions, and exclusions therein. We write on USIC’s behalf in response to the Civil Remedy Notice of Insurer Violations File Number 790016 (the “Notice”) that attorney Lauren D. Kerr, Esq. filed with the Department of Financial Services (the “Department”) on behalf of Lennar Homes, LLC (the “Complainant”) regarding its tender for defense and indemnity as a purported additional insured under the Policies for the civil proceeding filed by Bridgehaven at Citrus Park Homeowners Association, Inc. (the “Association”) against the Complainant styled, Bridgehaven at Citrus Park Homeowners Association, Inc. v. Lennar Homes, LLC, Case No. 22-CA-009092 (the “Lawsuit”). The Lawsuit concerns alleged construction defects at the Bridgehaven Citrus Park Homeowners Association community (the “Project”). The Notice was electronically filed with and accepted by the Department on November 2, 2024. In the Notice, the Complainant alleges that USIC committed statutory violations with regard to the handling of its tender and the Lawsuit. The Complainant alleges that USIC violated sections 624.155(1)(b)(1), 626.9541(1)(i)(3)(a), 626.9541(1)(i)(3)(c), 626.9541(1)(i)(3)(f), and 626.9541(1)(i)(3)(g) Florida Statutes. In the Section of the Notice purporting to describe the alleged facts and circumstances giving rise to the alleged violations, the Complainant alleges that it was named as a defendant in the Lawsuit filed by the Association. According to the Notice, the Lawsuit alleges property damage resulting from alleged construction defects due to work performed by the Complainant’s subcontractors, including C. Sterling who allegedly performed work on the Project pursuant to a subcontract with the Complainant. The Notice alleges that per the terms of said subcontract, the Lawsuit’s allegations, and the Policies, the Complainant allegedly qualifies as an additional insured under the Policies. The Notice further alleges that USIC’s refusal to provide a defense to the Complainant is knowingly wrongful, because the Lawsuit, as pled, implicates coverage under the Policy and does not implicate any exclusions. Specifically, the Notice alleges that “USIC’s duty to defend Lennar was triggered by the Plaintiff’s allegations” with USIC subsequently ignoring “the Lawsuit and Lennar’s tender of defense in an effort to avoid paying the defense costs . . . .” USIC categorically denies that it or any of its representatives violated any of the statutes referenced in the Notice or committed any wrongdoing in its handling of the Complainant’s claim. Despite the Notice’s contentions, USIC has not been provided with a complete copy of a written agreement between the Complainant and C. Sterling requiring additional insured coverage regardless of numerous requests (with USIC’s most recent request being on December 10, 2024 at the mediation which took place in this matter). The Notice specifically provides that “in the subcontracts between Lennar and C. Sterling was a requirement that C. Sterling would secure commercial general liability ("CGL") insurance and name Lennar as an Additional Insured.” Despite the above allegation, USIC has not been provided with a copy of a written agreement between the Complainant and C. Sterling requiring additional insured coverage. Specifically, paragraph fourteen (14) of the written agreement states that the “Insurance Requirements” will be included in a “Schedule ‘B’,” which the Complainant never provided to USIC. In other words, the Complainant has not provided sufficient documentation to support a contractual obligation to afford additional insured status to the Complainant. Given that additional insured status is only afforded where a written contract requires such coverage, USIC has no obligations to the Complainant. Furthermore, National Claim Services LLC (“NCS”), as third-party administrator for USIC, issued a coverage position letter on behalf of USIC to the Complainant on February 15, 2023, citing no property damage from C. Sterling’s work, no contract requiring additional insured coverage, and the Self-Insured Retention not having been satisfied. Therefore, USIC denied additional insured coverage for the Complainant and reserved that its denial is not limited to these positions and may include other grounds as determined by the Policies’ terms and conditions. Additionally, the 2021 Policy contains a Condominium and Townhome Exclusion (“Condo/TH Exclusion”), which provides that “[t]his insurance does not apply to, and the Company shall have no obligation to provide indemnity or defense to any insured for, any claim or ‘suit’ for any … ‘property damage,’ … arising from any work or operations performed by you, or any contractors or subcontractors working directly or indirectly on your behalf, involving, related to, or performed on or about the premises of … any ‘Condominiums or Townhomes’ project.” As the Lawsuit alleges that it is an “action for damages arising from the negligent and defective development, construction, and sale of the townhomes,” there is no coverage available under the 2021 Policy. Given that additional insured status is only afforded where a written contract requires such coverage, USIC’s denial of the Complainant’s demand for recognition as an additional insured was not improper. Accordingly, USIC did not violate any of its duties under the Policies in its refusal to defend the Complainant nor did USIC act in bad faith when handling the Complainant’s claim. If the Department has any questions or requires any additional information, please contact us. Very truly yours, /s/ Bret M. Feldman Bret M. Feldman, Esq. BMF/GG cc: Via U.S. Mail & E-mail Lauren D. Kerr, Esq. Cogburn Law Firm, P.A. 777 S Harbour Island Blvd, Ste 245 Tampa, FL 33602-5744
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