Civil Remedy Notice of Insurer Violations
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Filing Number:     795239
Filing Accepted:  12/4/2024
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Complainant
Last/Business Name *  
CALATLANTIC GROUP, 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*   BRAD MCDONALD ROOFING & CONSTRUCTION, INC   First Name  
Policy # * FLGLN02642AX Claim #* SDAX23070038
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*   AXIS SURPLUS INSURANCE COMPANY
NAIC Company Code 26620
 
Name of individual responsible for violation (if any):* HARRISON JONES
Type of Insurance * Commercial Property & Casualty   
Reason for Notice *
Claim Denial
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)(b) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue.
626.9541(1)(i)(3)(d) Denying claims without conducting reasonable investigations based upon available information.
* Specific policy language that is relevant to the violation.
Enter all words or phrases (one at a time) that should be used to filter.

Brad McDonald Roofing & Construction, Inc (“Brad McDonald”) purchased at least one commercial general liability (“CGL”) policy from AXIS Surplus Insurance Company ("AXIS") providing ongoing and products-completed operations coverage for liability because of property damage resulting from Brad McDonald’s work, specifically Policy Number FLGLN02642AX (the "Policy"). The insuring agreement of the Policy states: 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 Policy defines “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 Policy as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions. Not only does the Policy provide coverage to the named insured, Brad McDonald, it also provides coverage to CalAtlantic Group, LLC (“CalAtlantic”) as an additional insured. Note that CalAtlantic Group, LLC was formerly known as CalAtlantic Group, Inc. until it converted to a limited liability company on February 28, 2022. The Policy contains the following endorsement in relevant part: ADDITIONAL INSURED – OWNERS, LESSEES OR CONTRACTORS – SCHEDULED PERSON OR ORGANIZATION – PRIMARY AND NON-CONTRIBUTORY COVERAGE This endorsement modifies insurance provided under the following: … COMMERCIAL GENERAL LIABILITY COVERAGE PART Section II – Who Is An Insured is amended to include as an additional insured the person(s) or organization(s) shown in the Schedule . . . SCHEDULE Named of Additional Insured Person(s) Or Organization(s): Any person or organization for which you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. The Policy also contains a similar endorsement extending the above-described additional insured coverage to Brad McDonald’s Completed Operations. On March 21, 2011, Brad McDonald entered into a subcontract agreement with Standard Pacific of Florida GP, Inc to perform roofing work at certain projects, including the project at issue in the below-described lawsuit. The contract required Brad McDonald to name Standard Pacific of Florida GP, Inc and its affiliated entities as an additional insured on its policies of insurance. CalAtlantic Group, LLC (f/k/a CalAtlantic Group, Inc.) is an affiliated entity and the sole member of Standard Pacific of Florida GP, Inc. Pursuant to the above, CalAtlantic is an additional insured under the Policy.
 
* Facts and circumstances giving rise to the violation.
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This civil remedy notice is being filed because AXIS Surplus Insurance Company ("AXIS") has failed to address CalAtlantic Group, LLC’s (“CalAtlantic”) tenders of defense in good faith. The AXIS policy implicated is Policy Number FLGLN02642AX (the "Policy"). CalAtlantic Group, Inc. (n/k/a CalAtlantic Group, LLC) 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 CalAtlantic’s subcontractor, Brad McDonald Roofing & Construction, Inc (“Brad McDonald”). During original construction, Brad McDonald performed work at the Project pursuant to a subcontract agreement with Standard Pacific of Florida GP, Inc (“StanPac”). Included in the subcontract between StanPac and Brad McDonald was a requirement that Brad McDonald would secure commercial general liability ("CGL") insurance and name StanPac and its affiliated entities as an additional insured on its policies of insurance. CalAtlantic Group, LLC (f/k/a CalAtlantic Group, Inc.) is an affiliated entity and the sole member of StanPac. Brad McDonald purchased at least one CGL policy, the Policy, from AXIS, which provides ongoing and products-completed operations coverage for liability because of property damage resulting from Brad McDonald’s work. This coverage extends to both the named insured, Brad McDonald, and the additional insured, CalAtlantic. As described supra, the Policy extends coverage to CalAtlantic Group, Inc. (n/k/a CalAtlantic Group, LLC) as a named additional insured. The Policy also extends coverage to additional insureds where required by contract. Because the written subcontract between StanPac and Brad McDonald required Brad McDonald to name StanPac and its affiliates as an additional insured on its policies of insurance, and CalAtlantic is an affiliate of StanPac, CalAtlantic is an additional insured under the Policy. CalAtlantic tendered its defense to AXIS on March 30, 2023. In September 2023, AXIS responded and denied the claim. CalAtlantic tendered its defense, again, to AXIS on March 15, 2024. To date, AXIS has refused to provide CalAtlantic with a defense in the Lawsuit. Yet, notably, AXIS is defending its named insured, Brad McDonald. AXIS’s refusal to provide a defense to CalAtlantic knowingly wrongful because the Lawsuit, as pled, implicates coverage under the Policy and does not clearly implicate any exclusions under the Policy. "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. AXIS’s failure to defend CalAtlantic has prejudiced and damaged CalAtlantic. Due to AXIS’s unreasonable claims handling practices, CalAtlantic has been and will be forced to incur significant defense costs in the Lawsuit, for which AXIS is responsible. The Lawsuit includes allegations of losses covered under the Policy. Under Florida law, AXIS’s duty to defend CalAtlantic was triggered by the Plaintiff’s allegations, whether they are proven to be true or not. AXIS appears to be employing a misguided strategy of simply ignoring the Lawsuit and CalAtlantic’s tenders of defense in an effort to avoid paying the defense costs to which CalAtlantic is entitled. The attorneys' fees and costs that CalAtlantic has incurred have unjustly burdened CalAtlantic. Moreover, by refusing to defend CalAtlantic, AXIS has greatly exposed its named insured, Brad McDonald, to a much larger claim for CalAtlantic’s defense costs in this matter pursuant to the contractual indemnification provisions in the subcontract. AXIS must exercise its duty of good faith to CalAtlantic 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, AXIS 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. AXIS’s obligations extend to all the insureds under the Policy and are not limited to the named insured. Thus, AXIS’s obligations extend to additional insureds, like CalAtlantic. To date, CalAtlantic is unaware of AXIS’s investigation, if any, of the claims against CalAtlantic, or its efforts, if any, to seek to settle the claim within the policy limits. Likewise, AXIS has never advised CalAtlantic how, or if, it intends to minimize the magnitude of a possible excess judgment against CalAtlantic. Given AXIS’s refusal to defend CalAtlantic and the other facts outlined above, AXIS has failed or even attempted to meet the standard for good faith in this matter. CalAtlantic will be filing suit against AXIS but is also filing this notice in an effort to provide AXIS with a last opportunity to deal with CalAtlantic in good faith as well as to perfect its right to pursue the remedies provided under Section 624.155, Florida Statutes. AXIS can cure by acknowledging its duty to defend CalAtlantic, reimbursing CalAtlantic for its reasonable defense costs, and working together with CalAtlantic to resolve this claim, including without limitation participating at the mediation scheduled for December 10, 2024.
Comments
User Id Date Added Comment
kgoss@butler.legal 01-30-2025 AXIS Surplus Insurance Company ("AXIS") expressly denies all of the allegations raised in this Civil Remedy Notice. AXIS previously responded to the Civil Remedy Notice filed by CalAtlantic Group, LLC (the "Complainant") in a letter to counsel for the Complainant dated January 30, 2025. The contents of that response/letter are fully incorporated by reference as if duly stated herein.
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