Posted on February 11, 2010 by Lisa Magill

Supreme Court of Florida Issues New Foreclosure Rules

Amendments to the Florida Rules of Civil Procedure Largely Derived From Recommendations of the Task Force on Residential Mortgage Foreclosure Cases.

Some of the changes are as follows:

Verification of Mortgage Foreclosure Complaints:  This requires the Plaintiff (lender) to attest to the truthfulness of the allegations in the complaint.  It is intended to minimize erroneous filings, conserve judicial resources by reducing the number of cases with "lost note" issues and provide the court with greater authority to sanction lenders that make false allegations.

Changes the Affidavit of Diligent Search:  When the defendants cannot be served personally, the law allows the foreclosure case to proceed after publication of a notice.  This new form requires the person that conducted the search to sign the Affidavit (instead of the lender) and to provide more information about the search.

New Form - Motion to Cancel and Reschedule Foreclosure Sale:  Associations wait and wait for a lender to foreclose and then wait for the sale to bill the new owner (whether lender or third party) for the appropriate amount.  More importantly, Associations need the property to be sold to start collecting assessments from the new owner going forward.  The number of sales canceled at the last minute seems to be on the rise.  This new form requires the lender to explain why they want to cancel the sale.  It also directs the Court to set a new sale date, rather than keeping properties in an "extended limbo between final judgment and sale". [Quote from Task Force]

There are some slight changes to the Final Judgment of Foreclosure that weren't published before so interested persons have sixty (60) days to comment before they become final.  All of the other changes are final and in effect.

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Posted on January 26, 2010 by Lisa Magill

Does Your D&O Insurance Policy Exclude Property Damages?

There May be no Coverage Available for Claims Against the Association for Allegations that Include Failing to Maintain & Repair the Property, Negligence, Breach of Contract and Breach of Fiduciary Duty.

Eastpointe Condominium I Association, Inc. v. Travelers Casualty and Surety Company of America, United States District Court - order entered October 14, 2010.

 This recently decided case highlights several legal maxims that should be more widely known, such as:

Tangible Property Exclusion  - the "Non-Profit Management and Organizational Liability Insurance Policy" was for the purpose of covering "any loss ... incurred by the [Association] as the result of any claim ... made against the [Association] ... for a Wrongful Act."  The term "Wrongful Act" was defined in the typical way, as any error, act, omission, misleading statement or breach of duty that caused, or is alleged to cause, damages.  However, the policy excluded coverage for claims "arising out of any damage, destruction, loss of use or deterioration of tangible property".  The definition made sure to mention that damages from construction defects, mold, toxic fungus or mildew were specifically excluded.  Thus, the insurance carrier was right when it determined there was no coverage for defense or indemnification under the policy in light of an owner's claim for damages to her unit, personal property and common elements of the condominium that forced her to use alternative accommodations.

 Duty To Defend v. Duty to Indemnify - You may have heard or been aware of this maxim. 

Now you have a direct citation to authority for the proposition that that the duty to defend is distinct and broader than the duty to indemnify the insured.  In fact, the Court cites to the proposition that:

All doubts as to whether a duty to defend exists are resolved against the insurer and in favor of the insured.  As long as the complaint alleges facts which create potential coverage under the policy, a duty to defend is triggered. (Trizec Properties, Inc. v. Biltmore Const. Co., 767 F.2d 810 (11th Cir.1985).

Notice & Prejudice to Carrier - Insurance policies require the insured to notify the carrier of the claim or demand 'as soon as practicable'.  This case recites the principle of law that lack of notice merely shifts the burden to the insured to prove that the carrier hasn't been prejudiced by the delay.  In other words, while the insured's failure to notify the carrier of the claim in a timely manner may constitute a complete bar to recovery, if the insured can prove that the delay in notice did not prejudice the carrier (its position, defense to the claim, etc.) then it is still entitled to coverage. 

In this case the original claims were clearly related to damages to tangible property (including the loss of use).  The owner later amended the complaint to include economic damages, which ostensibly would have triggered coverage, but the Association did not notify the carrier of the new allegations.

What do we learn?

  • First - understand which policies cover which types of losses and discuss/compare exclusions with your agent.
  • Second - notify the carrier of the desire for coverage as early as you can and thereafter if allegations change; and
  • Third - investigate owner damage claims (especially water/mold).  Acting quickly (and/or having evidence of the conditions) will often reduce disputes.

 
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