Civil Remedy Notice of Insurer Violations
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Filing Number:     805014
Filing Accepted:  2/4/2025
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Complainant
Last/Business Name *  
KLOSTERMAN   First Name   LIZA
Street Address * 5434 TARA WOODS DR. S.
City, State Zip * JACKSONVILLE, FL 32210
Email Address * DJESS@FORTHEPEOPLE.COM
Complainant Type: * Insured
Insured
Last/Business Name*   KLOSTERMAN   First Name   LIZA
Policy # * ATH1053194 Claim #* AH114562
Attorney
Attorney is Applicable
Last Name* JESS First Name * DILLON Initial
Street Address* 501 RIVERSIDE AVE., SUITE 1200
City, State Zip* JACKSONVILLE , FL 32202
Email Address * DJESS@FORTHEPEOPLE.COM
Violation
Insurer Type *   Authorized Insurer Unauthorized Insurer
 
Insurer Name*   AMERICAN TRADITIONS INSURANCE COMPANY
NAIC Company Code 12359
 
Name of individual responsible for violation (if any):* UNKNOWN
Type of Insurance * Residential Property & Casualty   
Reason for Notice *
Unfair Trade Practice
Claim Denial
Claim Delay
* 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)(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.

COVERAGE A – Dwelling We cover: 1. The dwelling on the "residence premises" shown in the Declarations, including structures attached to the dwelling; and 2. Materials and supplies located on or next to the "residence premises" used to construct, alter or repair the dwelling or other structures on the "residence premises." * * * SECTION I – PERILS INSURED AGAINST COVERAGE A – DWELLING and COVERAGE B – OTHER STRUCTURES We insure against risk of direct loss to property described in Coverages A and B only if that loss is a physical loss to property. We do not insure, however, for loss: . . . 2. Caused by: . . . e. Any of the following: (1) Wear and tear, marring or deterioration; (2) Inherent vice, latent defect, defect or mechanical breakdown; (3) Smog, rust, decay or other corrosion, "fungi", mold, wet or dry rot; . . . If any of these cause water damage not otherwise excluded or limited elsewhere in the Policy, from a plumbing, heating, air condition or automatic fire protective sprinkler system or household appliance, we cover loss caused by the water including the cost of tearing out and repairing only that part of a building or only that part of an Other Structure covered under Coverage A or B on the “residence premises”, necessary to access and repair the system or appliance. The costs that we will pay for the tear out and repair above is only that cost necessary to access and repair only that portion or part of the system or appliance that caused the covered loss whether the system or appliance, or any part or portion of the system or appliance, is repairable or not. In the event that additional tear out and repair are required beyond the coverage provided for access and repair in the provision immediately above, we will still pay only for our portion of the access and repair cost required to repair only that portion or only that part of the system or appliance that caused the covered loss as described above. We do not cover loss to the system or appliance from which this water escaped. For purposes of this provision, a plumbing system or household appliance does not include: (a) A sump, sump pump, irrigation system, or related equipment; or (b) A roof drain, gutter, down spout, or similar fixtures or equipment. g. Accidental discharge or overflow of water or steam; unless loss to property covered under Coverage A or B results from an accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system or household appliance on the “residence premises”. Loss to property covered under Coverage A or B that results from an accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system or household appliance on the “residence premises” includes the cost to tear out and repair only that part of a building or only that part of an Other Structure covered under Coverage A or B, on the “residence premises”, necessary to access and repair the system or appliance. The cost that we will pay for the tear out and repair above is only that cost necessary to access and repair only that portion or part of the system or appliance that caused the covered loss, whether the system or appliance, or any part or portion of the system or appliance, is repairable or not. In the event that additional tear out and repair are required beyond the coverage provided for access and repair in this provision, we will still pay only for our portion of the access and repair cost required to repair only that portion or only that part of the system or appliance that caused the covered loss as described above.
 
* Facts and circumstances giving rise to the violation.
Enter all words or phrases (one at a time) that should be used to filter.

This CRN continues a practice of Insurer of wrongful claim handling. A previous CRN was filed in this matter as stated below. Those facts remain true. Insurer has continued to fail to exercise good faith by refusing the engage with Complainant in investigation of the claim. Insurer claims it was not put on notice appropriately. Insurer has unilaterally determined that the punishment to do so, is forfeiture of coverage. Insurer has unilaterally determined that he punishment for failure to comply with a condition precedent is forfeiture of coverage. In fact, counsel for Insurer stated on June 19, 2024, that Insurer only intended to pursue additional litigation in response to Claimants offer to resolve the claim amicably. Additionally, on July 22, 2024, counsel for the Insurer reiterated that that Insurer was "not interested in investigating [the] claim". (Note: Insurer shall refer to the authorized insurance company identified above and its agents, whether employed, retained for the purposes of this claim, or otherwise acting as agents of the authorized insurance company. Insured shall refer to the above reference Claimant, Liza Klosterman. The name of the individual responsible for violation is listed as UNKNOWN to indicate the information is not available. More specifically, there is no one individual responsible for this violation as multiple employees and/or agents of Defendant were involved in the violations listed.)----------Insurer provided a Policy of insurance to Insured numbered ATH1053194. This Policy covered, among other things, loss caused by water. The Policy also covered the cost of tearing out and replacing any part of the building necessary to repair a plumbing system from which the water escaped. This coverage may be referred to as “tear out.”----------During the effective period of the Policy agreed to by Insured and Insurer, a covered type of water loss occurred. Specifically, the water loss was caused by deterioration of Insured’s cast iron plumbing system. Insurer assigned a specific date to the loss and numbered it AH114562. ----------Insurer is an expert in insurance. Specifically, Insurer’s expertise includes identifying loss, damage and coverage. Insured is not an expert in insurance. Insured relied upon Insurer to exercise its expertise on Insured’s behalf.----------Insurer’s expertise includes the identification of losses, damages, and coverage for water losses involving drain pipe plumbing systems. Insurer handles hundreds of similar claims. Insurer knows that water escaping a drain pipe system is filled with bacteria, pools under the floor, and creates an excess of moisture under the floor. In homes with a concrete slab, the water is absorbed by the backfill and concrete slab. Backfill is a construction material used to support the concrete floor and encase and support the plumbing system and hence it is structural. When water pools in and on top of backfill, the backfill becomes displaced. Thus, Insurer knows that this water causes damage anywhere it escapes above, at, or below the floor level.----------Insurer’s expertise more specifically includes identification of losses, damages, and coverage for water losses involving cast iron drain pipe plumbing systems. Insurer handles hundreds of similar claims. Insurer knows that cast iron drain pipe plumbing systems fail regularly. Insurer knows cast iron drain pipe plumbing systems have exceeded their useful life. Insurer knows that homes built during certain years are likely to have cast iron drain pipe plumbing systems. Insurer knows that these homes are likely to have failed cast iron drain pipe plumbing systems that can cause damage above, at, and below the floor level. Insurer knows that these plumbing systems in these homes need to be replaced.----------Insured’s home was built within a timeframe that makes it likely to have a cast iron drain pipe plumbing system. Insured’s home, in fact, does have a cast iron drain pipe plumbing system. This cast iron drain pipe plumbing system has failed.----------Insurer regularly receives reports of losses. Insurer received a report of a loss at Insured’s home involving a plumbing problem. Insured does not have expertise in loss, damages, and coverage determinations. Insured relied on Insurer’s expertise to determine the cause of the problem, the scope and price of damages caused by the problem, and coverage that applies.----------Insurer regularly inspects homes to identifying the causation and damages resulting from reported losses. Insurer knows that inspection is a vital action to identify all losses and damages. Insurer has a multitude of professionals, either in their employ or regularly retained, to conduct inspections. Insurer inspected Insured’s home.----------What, specifically, Insurer did wrong in the investigation and handling of this claim is as follows:----------At the time of the inspection, Insurer was aware of the age of Insured’s home and that Insured’s home had a cast iron drain pipe plumbing system. Alternatively, Insurer was not aware of one or both of the above but should have been. This information was or should have been discovered during Insurer’s underwriting process.----------No later than its inspection, Insurer became aware that the drain pipe plumbing system was not functioning properly. Insured reported a plumbing problem. Insurer inspected the plumbing problem. If Insurer did not know the drain pipe plumbing system was not functioning properly, it was failing to exercise its expertise and willfully disregarding the interests of Insured.----------Because Insurer knew or should have known the age of the home, the type of plumbing system, and the type of problem associated with the loss, it also knew or should have known 1) that water had escaped the drain pipe plumbing system and that that water caused damage to Insured’s home and 2) that the cast iron drain pipe plumbing system was failed and needed to be replaced.----------Insurer also knew or should have known that the cast iron drain pipe plumbing system was failed by performing certain tests. A video scope of the cast iron drain pipe plumbing system would have revealed severe deterioration throughout the system. Moisture readings would have revealed elevation moisture levels at or near the floor level, especially in the areas nearest the cast iron drain pipe system. 'Hydrostatic' testing would have revealed a failure of the cast iron drain pipe system to hold water. Insurer did not perform these tests in its inspection. The reasonable and necessary steps were not taken to investigate the claim.----------Insurer did not cover and fully pay, less the deductible, Insured for the water loss. Insurer did not cover and fully pay Insured for the access to tear out the failed cast iron pipe plumbing system.----------Insurer has not attempted 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 it insured and with due regard for their interests.----------Specifically, in failing to provide all due coverage and payment, Insurer has misrepresented to Insured pertinent facts regarding the condition of home after sustaining water damages and the condition of the failed cast iron pipe plumbing system. Insurer has misrepresented coverage for those damages.. ----------As evidenced by the incomplete investigation that led to the failure to cover and pay the claim in full, Insurer has failed to adopt and implement standards for the proper investigation of claims. Had Insurer adopted and implemented proper standards for the investigation of claims, the nature and scope of damages would have been revealed and the water loss would have been covered and paid in full, including 'tear out.'----------Whether purposeful misrepresentation to Insured or improper inspection, investigation, and adjustment, these tactics are believed to be a business practice of Insurer and a violation of Insurer’s duties regardless.----------The result of Insurers action and/or failures is unfair to Insured and delayed Insured’s claim. Insured cannot afford to repair the damages until Insurer tenders payment for the coverage owed. Given the nature of the problem with the failed cast iron pipe plumbing system, this loss is ongoing. Insured has also been forced to obtain legal counsel with expertise in insurance to assist in determining those aspects of the claim that Insurer should have and asserting Insured’s rights.----------Insurer may cure the violation by affording coverage and making payment for Insureds' losses, including water damage and “tear out.” Additionally, Insurer must make payment in accordance with Florida Statutes, including, but not limited to, interest payments (F.S. §627.70131(5)(a)). Insurer should, but is not required to do so as a cure to their violations in this claim, change its business practices to properly investigate claims.
Comments
User Id Date Added Comment
bgarofalo@bressler.com 03-07-2025 Via U.S. Mail, Certified Mail and E-mail: DJESS@FORTHEPEOPLE.COM Dillon Jess, Esq. Morgan & Morgan, P.A. 501 Riverside Ave., Suite 1200 Jacksonville, FL 32202 Complainant(s): Liza Klosterman Policy #: ATH1053194 Claim #: AH114562 DFS Filing #: 805014 Dear Mr. Jess: Please accept this response on behalf of American Traditions Insurance Company (hereinafter “American Traditions”) to the Civil Remedy Notice of Insurer Violations (hereinafter “CRN”) No. 805014, filed on behalf of Liza Klosterman (hereinafter, the “Complainant” or the “Insureds”), and accepted by the Florida Department of Financial Services on February 4, 2025. The CRN alleges that American Traditions violated the following statutes: • 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)(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. Please accept this as American Traditions’ response to the above-referenced CRN filed with the Department of Financial Services by the Complainant, Liza Klosterman. First and foremost, on February 5, 2025, following a private mediation conference, the parties reached an amicable resolution to this claim in exchange for a full release, that includes any and all allegations listed in the Notice. Additionally, the Insureds withdrew the CRN. To summarize the below, American Traditions hereby denies any allegation of not attempting to settle claims in good faith when it could and should have done so; misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue; and states that it has at all times handled and adjusted the Complainant’s claim with utmost good faith. Simply put, American Traditions denies any acts or omission that could be construed or found to be deemed bad faith and/or a violation of Florida Statutes § 624.155 and § 626.9541, whether expressly stated in the Civil Remedy Notice or implied. Any and all allegations of bad faith are hereby denied and rejected in their entirety by American Traditions. American Traditions denies and rejects the instant CRN as it fails to comply with the requirements of Florida Statute § 624.155. The CRN is therefore deficient and fails to preserve any and all claims for statutory bad faith under Florida Law. Florida Statute § 624.155 requires a complainant to file with the Department of Financial Services a Civil Remedy Notice which shall be “on a form provided by the [Department] and shall state with specificity…such other information as the Department may require.” The Department created a CRN form, Form DFS-10-363, which lays out 15 requirements, including in part, the Complainant’s e-mail address, Complainant type, claim number, attorney’s name, attorney’s address, attorney’s e-mail address, type of insurer, the person with knowledge of the facts giving rise to the allegations, and the reason for notice. According to § 624.155, these mandates are required by the Department, and they must be stated with specificity. The instant CRN fails to provide the specificity required by § 624.155 and fails to comply with the form requirements as a whole. Therefore, the instant CRN is facially deficient. See Bay v. United Servs. Auto. Ass’n, No. 4D19-3332, 2020 WL 6154256 (Fla. 4th DCA Oct. 21, 2020). Specifically, the instant CRN filing makes no attempt to respond to several of the Department’s required fields. The instant CRN filing lists the Complainant’s e-mail address as “DJESS@FORTHEPEOPLE.COM,” the same e-mail address listed for the Complainant’s attorney and obviously not the Complainant’s true e-mail address. Withholding the Complainant’s e-mail address, and/or including the same one for the Complainant as for their counsel, provides separate and equally valid grounds for dismissal of the instant CRN. Whether the Complainant misread the Department’s prompt or simply dismissed what the Department had requested, the Complainant’s failure to comply with the requisite baseline form requirements is insufficient under Florida law to support any action for bad faith against American Traditions without speculation on its part. Similarly, the Complainant entirely dismissed the Department’s prompt requesting “… the person or persons representing the insurer who are most responsible for/knowledgeable of the facts giving rise to the allegations in this notice.” Rather, the Complainant replied “UNKNOWN” to this required field. Due to this intentional withholding of mandated information, the CRN is facially deficient as it fails to comply with the form requirements set forth in Florida Statute § 624.155, and specifically § 624.155(3)(b)(3). See Bay v. United Servs. Auto. Ass’n, No. 4D19-3332, 2020 WL 6154256 (Fla. 4th DCA Oct. 21, 2020). Furthermore, the CRN’s attempt to identify the specific policy language relevant to the violation is woefully deficient. “Courts have found that listing whole sections of the insurance policy constitutes insufficient specificity.” See Fox v. Starr Indem. & Liab. Co., No. 8:16-CV-3254-T-23MAP, 2017 WL 1541294 at *2 and Julien v. United Property & Casualty Insurance Company No. 4D19-2763 (Fla. 4th DCA 2020).” When prompted to reference the policy language that is relevant to the alleged violation, the Complainant simply copied and pasted an entire section of the subject insurance policy. The Complainant again failed respond to the Department’s prompt, again dismissing the mandated information needed to submit a valid CRN against an insurer, by failing to identify any specific policy language which is being alleged in violation by American Traditions. Accordingly, the CRN does not provide the contemplated and mandated notice of alleged bad faith that is required as a condition precedent to any civil claim for bad faith pursuant to Florida Statute § 624.155. Julien v. United Property & Casualty Insurance Company No. 4D19-2763 (Fla. 4th DCA 2020). Failure to provide specific reference to any relevant policy language is direct and clear noncompliance with the requirements of Florida Statute § 624.155, and therefore renders the CRN deficient on its face as to form and substance. For these reasons alone, the CRN fails at its inception. Additionally, the CRN fails to provide a complete description relating to the facts and/or circumstances which give rise to the alleged statutory violations, thus, prejudicing American Traditions from providing any meaningful or complete response. In summary, the CRN is hardly more than a recitation of a number of Florida statutory provisions, with minimal factual allegations in support of the conclusory statutory recitations. A Civil Remedy Notice must state the facts and circumstances that give rise to an alleged violation with specificity sufficient to allow an insurer to cure the alleged violation within the sixty-day statutory period. Lane v. Westfield Insurance Company, 862 So.2d 774 (Fla. 5th DCA 2003). The instant CRN therefore fails to comply with the requirements of Florida Statute § 624.155(3), which requires that a CRN of insurer violation “state with specificity,” inter alia, the facts and circumstances giving rise to the violation and the “specific” language of the subject insurance policy that is relevant to the violation. The CRN fails to specify what was lacking in American Traditions’ investigation and fails to specify facts which support that its investigation was unfair or merits additional steps. To American Traditions’ knowledge, the instant claim for insurance benefits has been adjusted and/or repaired properly. The CRN further lacks any specificity, facts, or rationale which indicate that American Traditions’ coverage determination should have been different. Generally, the CRN lacks the requisite facts and/or specificity, as ruled on numerous times and cited to throughout this response, to put American Traditions on notice as to the allegations against it. Moreover, the few facts that are stated in the CRN are contrary to the facts of the underlying claim or are at best misleading. The CRN states that “[American Traditions] claims it was not put on notice appropriately. [American Traditions] has unilaterally determined that the punishment to do so, is forfeiture of coverage.” However, this first claimed fact in the Complainant’s CRN is immediately false and damaging. Also, the CRN claims that, “This CRN continues a practice of Insurer of wrongful claim handling.” Again, this statement is untrue and unfounded and mischaracterizes the claims handling process pertaining to the subject claim. Rather, American Traditions received notice of the claim 496 days (!) after the purported date of loss. Such extreme late reporting could have justified an immediate claim denial as it is not compliant with the Policy’s duties after loss. American Traditions, however, adjusted the claim in good faith and inspected the insured Complainant’s property with an independent licensed adjuster, Mike Saba of Norton Adjusting Company, on October 10, 2018. American Traditions then paid the Complainant for what was determined to be covered damages. Meanwhile, the Complainant has provided no facts or evidence to support their allegations in support of the instant CRN or in any other context throughout the entirety of their claim. Despite the timing and extreme late reporting of the claim, American Traditions promptly and thoroughly investigated the subject claim and has acted in good faith based upon its understanding of the facts. The subject CRN makes egregious and baseless allegations that “… [American Traditions] has misrepresented to Insured pertinent facts regarding the condition of home…,” and “Whether purposeful misrepresentation to Insured or improper inspection, investigation, and adjustment, these tactics are believed to be a business practice of [American Traditions] and a violation of [American Traditions’] duties regardless.” These are serious blanket allegations made without one scintilla of factual evidence in support of any of such claims. As demonstrated by the facts outlined above, American Traditions diligently investigated the subject loss within one day of it being reported over sixteen months after the purported date of loss, issued payment to the insured Complainant for the covered damages, has actively engaged in open communication with the insured Complainant and their representative(s), and has acted accordingly based upon the facts and according to the terms of the insurance contract. Conversely, the Complainant has continued to act without communicating with American Traditions nor notifying of its intentions, thereby leaving American Traditions to act unilaterally. Specifically, American Traditions was served with a lawsuit related to the subject insurance claim without receiving any notice of a dispute from the insured Complainant. The Complainant’s cure demand is indiscernible and as such American Traditions is not given a fair opportunity to cure the CRN. The CRN states: [American Traditions] may cure the violation by affording coverage and making payment for Insureds’ losses, including water damage and “tear out.” Additionally, Insurer must make payment in accordance with Florida Statutes, including, but not limited to, interest payments (F.S. 627.70131(5)(a)). [American Traditions] should but is not required to do so as a cure to their violations in this claim, change its business practices to properly investigate claims. This is the functional equivalent of “Pay me everything I’ve asked for.” Rousso v. Liberty Surplis Ins. Co., 2010 WL 736059, *5 (S.D. Fla. 2010). “Insurers are not required to pay any amount demanded by their insureds to avoid a bad-faith claim.” Id. (citing 316, Inc. v. Maryland Cas. Co., 625 F. Supp. 2d 1187, 1194 (N.D. Fla. 2008)). However, regardless of its legitimacy, the CRN itself contains a cure in the form of an admission of liability and American Traditions cannot even begin to attempt to cure the instant CRN on such unclear terms. In addition to demanding “everything I’ve asked for,” the cure is unclear as to what it’s asking for. The cure provides no specified demand nor any basis for American Traditions to even attempt to calculate what it seeks when demanding some unclear payment to the insured Complainant, and then some unknown amount of interest purportedly owed on top of those indeterminate payment. Rather, the cure demand is merely an attempt to deceive American Traditions into issuing some ambiguous payment rather than defending itself against a threat of bad faith when no bad faith is remotely existent anywhere throughout the instant claim. Given the cure, American Traditions affirmatively asserts that the CRN is deficient. Since no other distinct basis for a cure has been set forth by the Civil Remedy Notice, American Traditions was not provided with a reasonable opportunity to purge any alleged violations. See Kafie v. NorthWestern Mut. Life Ins. Co., 834 F. Supp. 2d 1354, 1359 (S.D. Fla. 2011) (“In order to demonstrate good faith, ‘[t]he insurer must investigate the facts, [and] give fair consideration to a settlement offer that is not unreasonable under the facts…’”). Based on the facts provided, it is impossible for American Traditions to satisfy the Complainant without significantly prejudicing itself, and therefore the CRN fails to provide a true and feasible cure method. Accordingly, the CRN does not provide the contemplated and mandated notice of alleged bad faith that is required as a condition precedent to any civil claim for bad faith pursuant to Florida Statute § 624.155. Similarly, for these reasons, the CRN fails. As outlined above, contrary to the allegations made by the CRN, American Traditions sufficiently and diligently investigated the loss. American Traditions maintains that it has acted fairly and honestly toward the Complainant, and any other person having an interest in the subject policy or assisting the Complainant in connection with the instant claim. American Traditions consistently and promptly communicated with the Complainant and/or their agents throughout all stages of the investigation and conducted a thorough investigation in good faith. To the extent that the instant CRN is intended to address any other facts or circumstances which purport to establish additional coverage for the reported losses, the CRN provides insufficient identification of any such facts or circumstances and therefore prevents American Traditions from addressing any other aspect herein. Notwithstanding, American Traditions believes that the above facts demonstrate beyond dispute that it has at all times acted in good faith with regard to its investigation of the subject claim and further believes that the facts provided to date fail to establish that it has not adjusted the reported loss in accordance with the express terms, provisions, limitations and exclusions contained within the policy. If we can provide any additional information, or be of any further assistance, please do not hesitate to contact us at your earliest convenience. Very truly yours, /s/ Bruno A. Garofalo, Esq. Bruno A. Garofalo, Esq.
djess@forthepeople.com 02-05-2025 This matter has resolved via negotiated settlement. This CRN is withdrawn.
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