Insurer must pay $9.2M after denying $1.2M claim for hurricane damage

A trio of federal judges from the U.S. Court of Appeals for the Eleventh Circuit ruled that a lower court jury verdict should stand, enabling a North Miami midrise apartment complex to collect on $9.28 million owed from an insurance company that denied coverage years ago.

Attorneys say the amount is nine times what the Florida litigation could have settled for six years earlier.

Rockhill Insurance Co., the defendant and counter claimant-appellant, refused the claim because it determined that the hurricane caused only minor damage to the property, and that the cost of any repairs was less than the insurance policy’s deductible, court records show.

Rockhill is listed as a multistate carrier of insurance with offices in Ohio and Missouri that writes policies in Florida.

According to the lawsuit, plaintiffs and counter defendants-appellees, AM Grand Court Lakes and AM 280 Sierra Drive, collectively known as AM Grand, are a group of buildings that were operating as an assisted-living facility.

In the wake of Hurricane Irma, AM Grand submitted a claim to Rockhill for damage the September 2017 storm caused, the ruling stated.

But the 22-page opinion by Chief Judge William H. Pryor Jr., along with Judges Kevin C. Newsom and Britt C. Grant, shows the insurer denied the claim, and AM Grand sued Rockhill for breach of the policy.

The case went to trial, where a jury found Rockhill had breached the terms of the insurance policy, and that AM Grand’s covered losses amounted to $9.28 million.

Based on the jury’s findings, the district court entered judgment in AM Grand’s favor. After the district court entered judgment, Rockhill filed a motion for a new trial, arguing that the jury’s damages award was excessive.

The district court denied the motion.

Read the Appeals Court Ruling Here

‘It should have known’

Fort Lauderdale attorney Blake V. Dolman of Krupnick, Campbell, Malone, Buser, Slama, Hancock is not connected with the litigation, but analyzed the outcome.

“Refusing to accept defeat, the carrier then asked the district court for a new trial because it didn’t like the jury’s decision,” Dolman said. “When the district court refused to grant a new trial and throw out the jury’s decision, it appealed to the Eleventh Circuit, when it should have known that an appellate court should not disturb a verdict under these circumstances.”

The case had already gone before the U.S. District Court for the Southern District of Florida, where Judge Kathleen Williams presided.

At the Eleventh Circuit, the panel agreed with Williams.

“Rockhill argues on appeal that the district court erred in denying its motion for a new trial, because there was no evidence in the record to support the jury’s finding that AM Grand sustained a loss of $9,280,000,” the panel wrote. “After careful consideration, and with the benefit of oral argument, we conclude that the evidence was sufficient to sustain the verdict. Thus, we affirm.”

‘Incredibly expensive litigation’

Rockhill speculated that the jury reached its verdict based on evidence showing that AM Grand’s parent company lost approximately $9 million in investments when it sold the property, according to a footnote in the ruling.

Rockhill argued that it would have been improper for the jury to consider the ultimate value of AM Grand’s investment to calculate its loss from the hurricane under the insurance policy, the appellate panel said.

“Because … the jury’s award was reasonable and supported by evidence about the loss that AM Grand sustained in the hurricane, we need not address Rockhill’s argument,” the jurists concluded.

Dolman, a plaintiffs lawyer analyzing the ruling, agreed.

“The Eleventh Circuit Court of Appeals and the District Court in Miami acted appropriately and honorably by refusing to invade the province of the jury,” he said. “The record indicates that when presenting its initial claim, AM Grand just wanted its roofs replaced due to the storm damage at a cost of $1.2 million, [but] the carrier waited eight months to deny the claim.“

As a result of the denial of coverage, the building continued to deteriorate and the damages grew exponentially, while water continued to penetrate into the building, Dolman said in his analysis of the ruling.

“The jury ultimately found that the combination of damage caused during the storm and the damage suffered thereafter as a result of water intrusion amounted to $9.28 million,” he said. “After adjustments, the carrier is going to end up paying out over $8.7 million on a claim that could have been resolved for $1.2 million, before engaging in incredibly expensive litigation.”

The policyowner is also seeking attorney fees and costs, which will likely be substantial, Dolman said.

“The plaintiffs attorneys in this case should be commended for standing up to the insurance company and beating back its attempts to shirk its obligations to the insured at every turn,” he said. “While most of us are just learning about this case, the plaintiff and its lawyers have been fighting this battle since suit was filed in July of 2018.”

Attorneys involved in the trial and appellate stages of the case were contacted for comment. None returned calls or emails by publication time.

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