Article Courtesy of The Palm Beach Post

By Jane Musgrave  

Published November 4, 2014

WEST PALM BEACH — Ten years after their homes were walloped by back-to-back hurricanes, residents of the Tiara condominium on Thursday lost their final court battle to recoup millions to cover unpaid bills for their devastating losses.

After deliberating for roughly six hours, a federal jury said Marsh USA can’t be forced to cough up the roughly $35 million residents claimed it should pay because its brokers didn’t make sure the high-rise, often described as the crown jewel of Singer Island, had adequate insurance coverage.

The verdict was a blow to residents, who paid roughly $146,000 each in special assessments to cover hurricane damage. Had the suit been successful, each would have recovered roughly $100,000.   “All the residents who suffered through Frances and Jeanne are bitterly disappointed,” said Eddie Kisco, a longtime member of the Tiara’s governing board. “I appreciate everything the jury did but to this day no one can convince me that we were not under-insured.”   Laura Lane, a spokeswoman for Marsh, said the jury concluded the company — the largest insurance broker in the nation — had done its job. “Marsh is satisfied that the jury confirmed that it honors its obligations to its clients,” she said   It’s been a long and litigious road for those who were living enviable lives in the luxurious 42-story oceanfront spire before the two storms slammed into the coast within three weeks of one another in September 2004.   After Hurricane Frances, some believed repairs could be made before snowbirds returned for the winter. That optimism was shattered when the building was declared uninhabitable after Hurricane Jeanne. Then, a year later, Hurricane Wilma struck, sucking a grand piano, refrigerators, washers, driers — and hope — out of recently replaced windows.

Ten years after the hurricanes: the Tiara on Singer Island in Riviera Beach on Wednesday, Aug. 6, 2014.

 
It would be another three years before anyone moved back in.
 
Throughout reconstruction, tempers flared. The contractor walked off the job for non-payment. A resident staged a coup, took over the condo board and persuaded residents to sue neighbors who had overseen the massive rebuilding project.

Then, as bills mounted, Citizens Property Insurance, the state-backed insurer of last resort, said it considered Frances and Jeanne one occurrence. That meant it would pay only $49 million — the policy limits for one event — to cover repair costs that already exceeded $100 million.

Ultimately, the condominium owners dropped their lawsuit against the board and Citizens relented. The insurer, however, only agreed to pay $89 million toward what turned out to be a $140 million reconstruction project. More than $4 million went to the lawyers, Kisco said.

Since U.S. District Judge Daniel Hurley had ruled that Marsh had met its obligations under its standard contract, the two-week trial turned on whether the insurance broker and the condominium board had a “special relationship.”

Michigan attorney Mark McAlpine, who represented the board, argued that Marsh did more than simply buy insurance. “If Marsh said it was so, it was so,” he told jurors. Since the broker didn’t recommend additional coverage, the board didn’t buy it, he said.

Marsh attorney Mitch Auslander countered that board members questioned every recommendation its broker made.

“The question you have to answer is, ‘Who was in the driver’s seat?’” Auslander said, insisting it was the board. “Except now they’re trying to sneak into the back seat if not the trunk.”

Marsh, he added, isn’t to blame because the Tiara, after receiving $89 million from Citizens, ran out of cash. “They had more than enough money to repair that building if other things didn’t go wrong,” he said.

Since the jury sided with Marsh and agreed it hadn’t called the shots, Tiara board members didn’t get to explain why costs soared out of control.

Kisco said he could have told them. Not only is it far more expensive to repair an existing 30-year old building than build a new one, but building materials and manpower were in short supply after the hurricanes.

No decision has been made as to whether Tiara will appeal, he said.

“Were there mistakes made? Probably,” Kisco said. “But we can only make decisions based on the word of our consultants. None of us were hurricane reconstruction experts.”