Surfside Condo Families and Survivors Reach $1B Settlement with Insurers, Others

Insurance Journal

Families of the 98 victims of the 2021 condominium collapse near Miami Beach, along with injured survivors, could split hundreds of millions of dollars in payouts under a preliminary settlement agreement announced Wednesday.

The settlement will top $997 million, the plaintiffs’ lawyer said in Miami-Dade Circuit Court, according to reports in the Miami Herald and Sun Sentinel newspapers. How the money will be distributed among the families and injured victims, along with attorneys’ fees, has yet to be decided.

The judge in the case, who last year had charged the lawyers with reaching a speedy resolution, marveled at the results so far.

“The result achieved and the speed is beyond extraordinary,” Hanzman said, the Herald reported. “When this case first came in this court I told everyone this wouldn’t be business as usual. This was a tragedy of unspeakable proportions. If we didn’t have the right people handling this case, it would be a 10-year slog with tens of millions in attorneys’ fees.”

The judge must approve the settlement before it is finalized and he said he hopes to get it done before the one-year anniversary of the collapse on June 24.

Hanzman (AP photo)

The money will come from more than 10 sources, including insurers of the security company for the Champlain Towers South building in Surfside, on the northern edge of Miami Beach. The security firm was responsible for safety systems at the condo building and will pay the largest share, more than $450 million, according to news reports.

Other defendants include parties associated with the condominium association, engineers, architects, the town of Surfside, where the building was situated, and the developers and contractors at 87 Park, the condo next door to the collapsed tower.

Plaintiffs had argued that the construction of the adjacent condo in 2016 had contributed to the collapse by destabilizing the Champlain foundation and forcing runoff into the building’s underpinnings, according to news reports and lawsuit filings. The 87 Park owners and associated firms have not admitted fault in the case, and settled for an undisclosed amount. An engineering firm for 87 Park will pay about $8.5 million as part of the settlement.

Two other defendants have settled in recent weeks, including the powerhouse Florida condo law firm of Becker, which advised the Champlain Towers board. The firm’s professional liability insurer will pay an estimated $31 million in its part of a settlement.

The engineering firm hired to inspect the towers shortly before the collapse also has agreed to a $16 million settlement, paid by the engineering firm’s insurance company.

Repairs to the tower, which had been postponed by the Champlain condo association, were estimated to cost $15 million, and had just begun when part of the high-rise building crumbled, according to news reports. Investigations are continuing, but have raised questions about Champlain Towers’ construction techniques, modifications, water infiltration, unrepaired cracks in concrete and other deterioration since it was built more than 40 years ago.

The Champlain South condo association’s insurer also has paid out $50 million, according to reports.

Part of the proceeds from the sale of the property, where the remaining part of the condo has been demolished and removed, will eventually be added to the total settlement. That will increase the total for the settlement to more than $1 billion, the Herald reported.

Separately, Judge Hanzman in March approved a $83 million settlement for lawsuits brought by individual owners of units in the Champlain Towers condo building who lost property and belongings. The settlement money would come from the condo association’s property and liability insurers and from the sale of the property.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email

Montana: Unambiguous Exclusions Enforced Despite Lack of Table of Contents Required Under Statute

Alicia Gurries | Cozen O’Connor

A recent Supreme Court decision, High Country Paving, Inc. v. United Fire & Cas. Co., 2022 MT 72, ¶ 1, answered in the negative a question certified by a federal district court regarding tensions inherent in Montana’s  Property and Casualty Insurance Policy Simplification Act (“PSA”).  The Ninth Circuit had submitted the following state law question to this Court:

Whether, when an insurance policy does not include either a table of contents or a notice section of important provisions, in violation of Mont. Code Ann. § 33-15-337(2), the insurer may nonetheless rely on unambiguous exclusions or limitations to the policy’s coverage, given that § 33-15-334(2) provides that § 33-15-337(2) is “not intended to increase the risk assumed under policies subject to” its requirements?

The high court’s “no” response said that failure to meet formatting requirements in the PSA do not expand the risk assumed under a liability policy where unambiguous terms define it.  It, further delineated a boundary to its former holding, Mont. Petroleum Tank Release Comp. Bd. v. Crumleys, Inc., 341 Mont. 33, 174 P.3d 948, 959 (2008) (“Crumleys”), which it distinguished, and which held that an absence of a table of contents listing a contractual limitation period prohibited the insurer from enforcing that limitation.  The Court indicated that imposing CGL coverage here would represent changing the risk insured, whereas compliance with the contractual limitations provision in Crumleys has no impact on the scope of the underlying risk.

Factual and Procedural Background

This coverage dispute arises from an accident involving the transportation of construction equipment with an insured’s truck and trailer.   High Country Paving, Inc. (“High Country”) purchased a liability insurance policy (the “Policy”) from United Fire & Casualty Company (“United Fire”).  The Policy provided commercial general liability (“CGL”) coverage in the amount of $1 million per occurrence; commercial auto liability coverage in the amount of $1 million; and an umbrella policy with coverage in the amount of $2 million. 

As a result of an accident caused by an employee of High Country, one person died and another was critically injured. United Fire asserted there was no coverage for the accident under the CGL policy based on two exclusions: the Aircraft, Auto, or Watercraft exclusion, and the Multiple Liability Coverages Limitation endorsement.  Thereafter, over High Country’s objection, United Fire paid the $3 million combined limits of the commercial auto and umbrella policies without a release. United Fire agreed to – and did – continue to provide High Country with a defense of the claims against it. High Country then paid an additional $1.275 million to the Claimants to get a release. 

High Country then brought an action against United Fire for breach of contract, which United Fire removed to the United States District Court for the District of Montana.  The district court granted partial summary judgment to High Country and partial summary judgment to United Fire.  2020 WL 42722.  The  district court decided that (1) the provisions were unambiguous and excluded coverage, but that (2) the provisions were unenforceable based on a plain reading of  Crumleys because the provisions were not listed in a table of contents or notice section of important provisions in violation of requirements of the PSA. 

Both parties appealed.  On United Fire’s motion, the Ninth Circuit certified to the Montana Supreme Court the question of whether, when an insurance policy does not include either a table of contents or notice section of important provisions, in violation of state statute, the insurer may nonetheless rely on unambiguous exclusions or limitations to coverage.


In Crumleys, the commercial liability policy provision required the insured to report any damage or loss to the insurer within 120 hours of the of the occurrence or loss. Crumleys, 174 P.3d at 954. The insured had denied coverage based on the insured’s failure to meet this requirement. Crumleys, 174 P.3d at 954.  On appeal, the court concluded the provision was void and unenforceable because it was not included in a table of contents or notice section and thus failed to conform with the requirements of the PSA.

United Fire argued, and the Montana Supreme Court agreed, that Crumleys was distinguishable from the issue presented under the United Fire Policy because Crumleys concerned a notice provision that did not impact the extent of the risk insured under the policy, while reading the exclusions out of the United Fire Policy would result in a substantively different risk than was contemplated upon the issuance of the Policy.  The reason that the scope of the risk was relevant is that the PSA itself “expressly limits policies subject to its requirements from increased risk.”  To invalidate an express exclusion for “a technical violation of the PSA’s requirements” would undermine one of the PSA’s express limitations.  Thus, “High Country’s coverage unambiguously excludes the risk it now asks this Court to impose upon United Fire” which would “increase the risk assumed” by United Fire in contravention to the state’s PSA.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email

Surety Duty To Investigate Triggered After Filing Of Bond Claim

Colin J. Troy | Wood, Smith, Henning & Berman

Although surety companies are generally not liable for tort damages to a third party, Washington’s legislature has carved out a limited exception for the setting up and sitting of mobile homes. The Revised Code of Washington (RCW) establishes a per se violation of the Consumer Protection Act in situations where a bonding company does not perform a reasonable investigation to resolve the claims of third parties who have sustained injuries or other damages as a result of a faulty set-up of a mobile home. However, to access this exception, the injured party must make a claim against the bond by filing a lawsuit in superior court. A surety’s duty to investigate and resolve the claim is not triggered until such suit is filed.

Background Facts

Joann Caskey purchased a mobile home and hired a bonded contractor, Bud & Doug’s Mobile Home Service, to install it on her property in Kettle Falls. The contractor was registered with the Department of Labor & Industries and bonded through Old Republic Surety Co. Caskey claimed that the install work was done incorrectly, resulting in damages. Due to the contractor’s faulty installation of the mobile home, it failed review and she was denied occupancy. The contractor offered to complete repairs in exchange for further payment, but Caskey hired an alternate contractor to finish the installation. At no time did Caskey file a lawsuit against Bud & Doug’s.

Approximately one year after the contractor stopped work on the home, Caskey’s attorney sent a demand letter to Old Republic — the surety company that issued the contractor’s licensing bond — requesting the bond proceeds. Old Republic responded by stating that any claims against the bond must be brought by lawsuit filed in the superior court pursuant to RCW 18.27.040. Caskey did not file a lawsuit in superior court against either the contractor or the bond. Instead two and a half years after the contractor had stopped work at her home, she filed a claim against Old Republic alleging violations of the Washington Insurance Fair Conduct Act (IFCA), RCW 48.30.010-.015, and the Consumer Protection Act (CPA). She claimed to be the obligor of the surety as a first party claimant. The superior court dismissed all of Caskey’s claims on summary judgment. The Court of Appeals affirmed that decision.

The Registration of Contractor’s Act & Licensing Bonds

The Registration of Contractor’s Act (RCA) regulates contractor business practices. Its purpose is to “afford protection to the public from unreliable, fraudulent, financially irresponsible, or incompetent contractors.” RCW 18.27.140. The RCA requires that contractors register with the Department of Insurance (Department). The statute also requires contractors to maintain a surety bond. In Washington, a licensing bond contains several conditions including the requirement that contractors will pay all amounts adjudged against them due to any breach of contract or faulty work. A surety’s liability is limited to the amount of damages covered by the bond.

RCW 18.27.040(1) requires a noncontractual license bond, which is characterized as a performance bond. A licensing bond creates a “tripartite relationship between the surety, principal (contractor) and the obligee.” Colorado Structures, Inc. v. Ins. Co. of the W., 161 Wn.2d 577, 605 n.15, 167 P.3d 1125 (2007). The obligee of this type of license bond is the State of Washington under the provisions of this statute.

Performance bonds are similar, but not identical, to insurance policies. “While Washington recognizes that insurance companies have a good faith obligation to investigate and handle claims of their insureds, this duty of good faith has never been extended to sureties.” Tank v. State Farm Fire & Cas. Co., 105 Wn.2d 381, 394, 715 P.2d 1133 (1986). In the case at hand, Old Republic is a surety, not an insurance company. Because Caskey is not a party to the bond, normally her case would be dismissed outright. However, because the Washington legislature carved out an exception for mobile home set-up, further examination of her particular circumstances were warranted.

Statutory Carve-Out for Mobile Homes

Generally, sureties are not responsible for tort damages claimed by third parties, but Washington’s legislature has codified an exception for mobile homes. In RCW 18.27.117, the legislature declared that the “setting up and siting mobile/manufactured homes must be done properly for the health, safety, and enjoyment of the occupants:” Therefore, when any of the following cause a health and safety risk to the occupants of a mobile/manufactured home, or severely hinder the use and enjoyment of the mobile/manufactured home, a violation of RCW 19.86.020 shall have occurred:

  • The mobile/manufactured home has been improperly installed by a contractor registered or a mobile/manufactured dealer or licensed manufacturer.
  • A warranty given has not been fulfilled by the person or business giving the warranty.
  • A bonding company that issues a bond does not reasonably and professionally investigate and resolve claims made by injured parties.

May Caskey Assert a Private Cause of Action?

To determine whether the plaintiff in this case has a private cause of action, the court will look to the legislature’s intent in crafting the statute and employ the following three-part test:

  • Is the plaintiff within the class for whose “especial” benefit the statute was enacted?
  • Does explicit or implicit legislative intent support creating or denying a remedy?
  • Would implying a remedy be consistent with the legislation’s underlying purpose ?

Bennett v. Hardy, 113 Wn.2d 912, 920-21, 784 P.2d 1258 (1990).

Although one section of the RCW clearly states that it meant to benefit persons living in mobile and manufactured housing, another section also states that surety bonds shall
not be liable for violations of the statute. Old Republic asserts that third party torts against an insurance company or surety in Washington are not permitted. Looking to the Tank case, Old Republic relied upon the holding in the Tank case, which found that, “Under common law, third party claimants may not sue an insurance company directly for alleged breach of duty of good faith under a liability policy.” 105 Wn.2d at 391. However, Tank was decided in 1986, a year before the statute at issue was enacted.

Is Caskey Entitled to Bring a Private Cause of Action for a CPA violation?

It is a per se violation of the CPA when, “a bonding company that issues a bond under chapter 18.27 RCW or chapter 46.70 RCW does not reasonably and professionally investigate and resolve claims made by injured parties.” Here Old Republic contends that even if the statute creates a private cause of action, Caskey’s lawsuit cannot proceed because she failed to make a claim against the bond. Old Republic was the surety in this case who issued the contractor’s licensing bond. In its role as the surety, Old Republic was not required to investigate Caskey’s claim, or resolve any issues against the contractor that the bond did not cover. Old Republic’s only obligation to investigate arises from claims made against the bond.

How is a Claim Against the Bond Made?

A claim by a plaintiff against a licensing bond must be made pursuant to the procedures set forth in RCW 18.27.040 and requires the plaintiff to file a lawsuit. Licensing bonds are in place to protect the public from wayward contractors not a specific obligee. The statute seeks to accomplish this purpose by requiring claimants to provide the Department of Insurance with a means to supervise a contractor’s registration as well as notifying the public of claims against the contractor or the bond.

The RCA requires contractors to register with the Department and provide proof of securing a bond. The bond’s obligee is the State of Washington. RCW 18.27.040(3) The bond is a guarantee that if the contractor fails to pay an adjudicated claim, the bond can be applied toward the judgment amount. When a lawsuit is filed directly against the surety against the bond, service of process is completed though the Department, which serves both the contractor and the surety. “Unless the suit is filed in superior court, the Department will not be able to direct payment on an unsatisfied final judgment against a secured contractor.” WAC 296-200A-080(1). “In Washington, the only way to bring an action upon a bond is to file a lawsuit in superior court, naming the principal contractor and the surety.” RCW 18.27.40

Did Caskey’s Demand Letter Suffice as a Claim Against the Bond?

Caskey asserts that she effectively filed against the bond by sending a demand letter to Old Republic. Her main argument on this front stems from the statute’s use of the word “may”, which she takes to mean that filing a lawsuit in superior court is an option, but not a mandatory action that a plaintiff must take in this situation. Old Republic and briefs filed by amicus curie, state that the word “may” actually refers to venue selection and not to the procedure required to make a claim against the bond. The court looked to precedent found in Stenge v. Clark, 89 Wn.2d 23, 28, 569 P.2d 60(1977), which held that “the word ‘may’ merely permits the petitioner to make a choice of forum because a prospective litigant may always choose whether or not to pursue a civil action.” Based on this opinion, the court found that the word “may” here did not refer to how to an action against a bond can be brought, but rather applied to venue issues. It was therefore, unpersuaded by Caskey’s argument.

The court also found fault with Caskey’s argument that her demand letter sufficed as a claim against the bond. It noted that without a formal lawsuit being filed in superior court, the statute’s procedures are not triggered and the State of Washington is unable to direct any funds to the claimant. Cutting the Department out of the process, also prevents it from suspending the contractor’s license or informing the public of any issues in regard to that contractor, which goes against the law’s purpose.

Court of Appeals Conclusions

RCW 18.27.117(3) creates a derivative cause of action for a consumer protection violation claim against a surety separate from the bond, but a claim against the bond requires that a lawsuit be filed in superior court. After the Department has successfully served the surety, then the obligation to investigate and resolve the claims falls to the surety. Since Caskey never filed a claim against the bond in court, Old Republic’s duty to investigate her claim against the contractor was never triggered.

The court affirmed the superior court’s dismissal of all of Caskey’s claims against Old Republic. Caskey failed to properly file a lawsuit against the bond, which is statutorily required to trigger Old Republic’s duty to investigate and resolve the claim. In addition, Caskey’s CPA claim, based on Old Republic’s response letter, was not misleading or an unfair or deceptive trade practice. Therefore, the trial court was correct in its determination.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email

Arizona Appellate Court to Consider Standard for Aiding and Abetting Bad Faith Claims

Patrick Gorman | Jones, Skelton & Hochuli

Iglesia v. Brotherhood
Arizona Court of Appeals
April 12, 2022

In cases alleging bad faith against an insurance carriers, policyholders will often sue employee adjusters or contractors (independent adjusters, engineers, experts) of the insurance carrier to keep the case out of federal court. In a legal sense, policyholders sue the employee adjusters or contractors to defeat “diversity jurisdiction” necessary for the federal court to hear the case. The most common legal claim alleged against the employee adjuster or contractor is “aiding and abetting” the breach of the duty of good faith and fair dealing. In Iglesia v. Brotherhood[1], the Arizona Court of Appeals will address the standard to state a claim against the employee adjuster or contractor for aiding and abetting the breach of the duty of good faith and fair dealing.

Iglesia arises out of a hail loss at a church in Phoenix, Arizona. After the loss, the insurer retained an engineering firm to evaluate the damages. After the insurer denied the claim, Iglesia filed suit against the insurer for breach of contract and breach of the duty of good faith and fair dealing, and against the engineering firm for aiding and abetting the breach of the duty of good faith and fair dealing. The trial court granted the engineering firm’s Motion to Dismiss, finding that Iglesias failed to state a claim upon which relief could be granted. The church appealed.

On appeal, the engineering firm is not challenging the state of the law for aiding in abetting in Arizona, which was pronounced in the case Federico v. Maric[2]. According to Federico, aiding and abetting tortious conduct requires three elements: (1) the primary tortfeasor must commit a tort that causes injury to the plaintiff; (2) the defendant must know that the primary tortfeasor’s conduct constitutes a breach of duty; and (3) the defendant must substantially assist or encourage the primary tortfeasor in the achievement of the breach. Rather, in Iglesia, the Court of Appeals will address what is necessary under Arizona’s pleading rules to state a claim for aiding and abetting. In other words, what a plaintiff must allege in the complaint to defeat a motion to dismiss on an aiding and abetting claim.

Iglesia could prove to be an important case for insurance carriers, who typically prefer to litigate coverage and bad faith claims in federal court. If an employee adjuster or contractor is named in the suit, insurers often file motions to dismiss to remove that particular defendant, and if granted, remove the case to federal court. Iglesia will give both policyholders and insurance carriers better guidance on what claims can be dismissed, and consequently, what cases can be removed to federal court.

The Court of Appeals heard oral argument on April 12, 2022. (Watch oral argument here.) A decision is expected in the next several months.

[1] 1 CA-CV 20-0358
[2] 224 Ariz. 34, 226 P.3d 403 (App. 2010)

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email

Federal Courts Reject Insurers’ Attempts to Recoup Defense Costs Expended Under Reservation of Rights

Anthony L. Miscioscia and Margo Meta | White and Williams

In situations where there is a dispute over a duty to defend, an insurer may provide a defense to its insured, subject to a reservation of rights, to not only deny coverage for a defense, but also to file a declaratory judgment action and recoup defense costs in the event it is determined there is no duty to defend. But are defense costs recoupable? Last week, federal trial courts in Georgia and Pennsylvania answered this question with a resounding “no”.

In Chemical Equipment Labs, Inc. v. Travelers Property Casualty Company of America, Case No. 19-3441, 2022 U.S. Dist. LEXIS 61298 (E.D.Pa. Mar. 31, 2022), the United States District Court for the Eastern District of Pennsylvania was called to determine whether Travelers Property Casualty Company of America (Travelers) was entitled to reimbursement of defense costs after it was determined that it had no duty to defend its insured in an arbitration for breach of a charter agreement. The Travelers’ policies did not contain an express reimbursement provision. The court found that Travelers was not entitled to reimbursement because under Pennsylvania law, “[r]eimbursement of defense costs requires an express provision in the written insurance contract.”

Similarly, in Mt. Hawley Insurance Company v. East Perimeter Pointe Apartments LP, Case No. 20-cv-3529, 2022 U.S. Dist. LEXIS 61885 (N.D. Ga. Apr. 1, 2022), the United States District Court for the Northern District of Georgia considered whether Mt. Hawley Insurance Company (Mt. Hawley) was entitled to reimbursement of defense costs after it was determined that it had no duty to defend its insured against a lawsuit for negligent management and security. Mt. Hawley’s reservation of rights explicitly reserved the right to seek reimbursement of defense costs in the event it was determined that there was no coverage available under its commercial general liability policy; however, the policy did not contain a reimbursement provision.

The East Perimeter court acknowledged that the recoupment of defense costs in the absence of an express reimbursement provisions was an unsettled issue in Georgia, as “Georgia courts have not decided the issue and federal courts are split.” In Illinois Union Insurance Company v. NRI Construction, Inc., 846 F. Supp. 2d 1366 (N.D. Ga. 2012), the court permitted reimbursement, finding it was justified under an unjust enrichment or implied in fact contract theory. However, in American Family Insurance Company v. Almassud, 522 F. Supp. 1263 (N.D. Ga. 2016), the court required an express reimbursement provision in the contract, finding that “if a right to recoupment is a benefit that the insurer deems sufficiently important, it can easily secure that right by including it in the policy agreement.”

The East Perimeter court ultimately concluded that Almassud was more persuasive, on the basis that permitting a right to recoupment absent a policy provision would permit insurers to unilaterally impose post hoc conditions on their contractual obligations.  

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email