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