Florida Condominium Damage Claims for the Association’s Failure to Maintain the Building’s Common Elements – Is Alternative Dispute Resolution Required Prior to Filing a Lawuit?

Under Florida law, when a unit owner sustains damage to their condominium whether by water or mold, due to the Association’s negligence in failing to maintain a common element (to wit, the exterior wall of the building, roof, interior wall pipe that services multiple units, air conditioning stack that services multiple units, sewage pipe/stack that services multiple units, windows (if the Declaration states this is a common element), etc.), they are not required to seek or submit to alternative dispute resolution (ADR) avenues prior to filing suit.

According to Florida Statute §718.1255,  a statute governing condominiums and alternative dispute resolution, voluntary mediation and/or mandatory nonbinding arbitration, if a unit owner and its Association are involved in a “dispute” as defined under this statute, they are required to file a petition with the Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business and Professional Regulation, and seek an alternative dispute resolution avenue (non-binding arbitration, to which the arbitrator can refer the parties to mediation) prior to filing a lawsuit for damages, injunctive relief, etc.

Under §718.1255(1), a “dispute” means any disagreement between two or more parties that involves:

(a) The authority of the board of directors, under this chapter (Chapter 718) or association document to:

1. Require any owner to take any action, or not to take any action, involving that owner’s unit or the appurtenances thereto.

2. Alter or add to a common area or element.

(b) The failure of a governing body (ie., association), when required by this chapter or an association document, to:

1. Properly conduct elections.

2. Give adequate notice of meetings or other actions.

3. Properly conduct meetings.

4. Allow inspection of books and records.

Of note, a “dispute” does not include any disagreement that primarily involves: title to any unit or common element; the interpretation or enforcement of any warranty; the levy of a fee or assessment, or the collection of an assessment levied against a party; the eviction or other removal of a tenant from a unit; alleged breaches of fiduciary duty by one or more directors; or claims for damages to a unit based upon the alleged failure of the association to maintain the common elements or condominium property.

Moral of the Story: Whether you are a condo owner that lives in Coral Springs, Cooper City, Hallandale, Boca Raton, Homestead, Brickell, South Beach, Key Biscayne, Weston, Pompano Beach, Tamarac, Plantation, Delray, Deerfield Beach or another area within Miami, Fort Lauderdale or Palm Beach, if your unit sustains water, mold or any form of property damage due to the Association’s negligence in failing to maintain a common element, you are not required to seek or submit to alternative dispute resolution (ADR) avenues prior to filing suit.  While it is certainly recommended to attempt to resolve a property damage dispute with your Association (or another unit owner), if you are unsuccessful, you can simply file a lawsuit and recover your damages via the court process.

Florida Condo Owner Homeowners Insurance Claims – The Condo Above Me (Second Floor Unit Upstairs) Leaked, What Are My Options?

As South Florida Condominium owners know, many things can go wrong to cause water damage (and resultant mold) to their condominium unit.  One of the most common water intrusion events that can occur is when a neighbor’s condominium unit above yours  has a water loss or water leak, which then gets into your unit through the common elements.   Whether you live in Hollywood, Dania, Weston, Plantation, Aventura, Miami Beach, Bal Harbour, Coral Gables, Kendall, Pinecrest or another area within Miami, Fort Lauderdale or Palm Beach, many unit owners are seasonal (ie., snow birds) and are thus not around to maintain their units on a monthly basis.  As such, it is not uncommon, especially during the Summer, for a neighbor’s condominium unit above yours, the unit on the second floor, the unit next to yours (unit to unit), or the unit upstairs, to experience pipe leaks, burst pipes and plumbing, broken water heaters, shower pan leaks, a pipe burst in the washer, failed pipe in the dishwasher, failed toilet seals, toilet tank leaks, window leaks and/or other types of water intrusions and condo water leaks.  Reason being, no one is living in the unit for months on end to fix any problems that may arise.  When these types of losses occur, one may seek out a Florida condominium water damage insurance claim attorney or Florida condo leak lawyer to get some guidance on how to proceed in resolving Florida condo insurance claims of this type.

The first thing the lawyer will likely do is have you put your own homeowners insurance carrier on notice.  While there are certain exclusions in the policy, your insurance company may cover some or all of the damage such as providing payments for temporary/alternative living arrangements (ALE/loss of use), as well as temporary repairs like mold remediation (one has a duty to mitigate their damages).

As for the lawyer’s investigation,  the source of the water intrusion needs to be determined. Reason being, while the unit owner above may bear some responsibility, the Condominium Association may also bear some responsibility.  Thus, the attorney will probably direct his or her investigation as to whether the upstairs water loss originated from a common element or an item that is the responsibility of the unit owner.  A Declaration of Condominium typically classifies a common element (in relation to items which are a unit owners responsibility) as as anything not touching air, ie., everything behind the walls and ceilings minus the coverings.  As for the Florida Statutes,  718.108(1) states that common elements include: (a) The condominium property which is not included within the units; (b) Easements through units for conduits, ducts, plumbing, wiring, and other facilities for the furnishing of utility services to units and the common elements; (c) An easement of support in every portion of a unit which contributes to the support of a building; and (d) The property and installations required for the furnishing of utilities and other services to more than one unit or to the common elements.  Items which are not common elements and which would be the responsibility of the second floor unit owner, would include pipes underneath the kitchen or bathroom sinks,  a toilet seal that fails or a water heater that explodes.

Certainly, if it is determined that the unit owner above had been out of the condo unit for months on end and a water leak resulted due to to their failure to maintain the inside of their property, the unit owner above will likely have some responsibility.  In this scenario, hopefully they had homeowners insurance, such that a claim can be made to their insurance company.  Even in this scenario, the condominium association still may bear some responsibility for the damage to your unit.  Where water losses are caused by sudden and unforeseeable events (the condominium association will likely argue this type of event was sudden and unforeseeable), these types of losses are considered casualties.  When a casualty occurs, a condominium association’s insurance could come into play.  Pursuant to the Declaration of Condominium, the Association will have a responsibility to maintain, repair and replace common elements.  Pursuant to Florida Statute 718.113(1), maintenance of the common elements is the responsibility of the association.  As such, if you sustained damage to your drywall or ceilings due to a water leak from the upstairs condominium unit above yours (or your neighbor’s, ie.,unit to unit), the association may be responsible for repairing these, minus the “wall coverings” such as paint or wall paper, which would still be the unit owner’s responsibility.

Another area the Association may bear some responsibility, is whether they inspected the wall crevices to see if any mold is growing due to the water loss.  Since the insides of the walls or ceilings would be considered common elements, if the association failed to make sure that these areas are mold free, and mold growth was exacerbated inside your unit as a result, the association may bear some responsibility.

As you can see, this simple situation can actually turn into a complex legal issue, where the unit owner above and the condominium association may disclaim any liability.   This is the reason it is so important for a South Florida condominium owner to have homeowners insurance to cover losses that may arise.  A homeowners insurance claim can always be made against your own insurance, with the assistance of a homeowners insurance property damage lawyer.

For additional analysis on condo issues and Florida condo insurance claims, see my previous post.

Florida Hurricane/Storm Damage Claims – Implied Warranty of Good Faith and Fair Dealing: Does it apply in claim by an Insured Against its Insurer for Failing to Investigate a Hurricane Loss in a Timely Manner?

It does not, so says the Florida Supreme Court in the case of QBE Ins. Corp. v. Chalfonte Condominium Apartment Ass’n, Inc. (May 2012), where Chalfonte Condominium sued their insurance company, QBE, arising out of a property damage loss from Hurricane Wilma.  Chalfonte submitted an estimate of damages to QBE on December 18, 2005, and then submitted a sworn proof of loss to QBE on July 12, 2006.  Not satisfied with QBE’s investigation and processing of its claim, Chalfonte filed suit in the United States District Court for the Southern District of Florida for among other things, breach of contract (breach of the implied warranty of good faith and fair dealing).

The jury found for Chalfonte on all of its claims, including the awarding of moneys for QBE’s breach of the implied warranty of good faith and fair dealing.  QBE would end up appealing the judgement to the Eleventh Circuit Court of Appeals, to which the Eleventh Circuit certified five questions to the Florida Supreme Court, one of which was the following:

Did Florida law recognize a claim for breach of the implied warranty of good faith and fair dealing by an insured against its insurer based on the insurer’s failure to investigate and assess the insured’s claim within a reasonable period of time?

Of note, the Florida Supreme Court recognized that “Florida courts imposed an independent duty on liability insurers to act in good faith when defending insureds against third-party claims,” and recognized a common law cause of action for bad faith within the context of third-party actions.  These  third-party bad-faith actions would involve a claim “in which an insured sues his liability insurance company for bad faith in failing to settle a claim which ultimately results in a third-party judgment against him in excess of the policy limits.”  The Florida Supreme Court then noted section 624.155 of the Florida Statutes (2009), specifically,  section 624.155(1)(b)(1), which created a statutory first-party bad-faith cause of action.    Section 624.155(1)(b)(1) states that “any person may bring a civil action against an insurer when such person is damaged…by the commission of any of the following acts by the insurer..not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests…”

After reviewing the current status of “bad faith” law, the Florida Supreme Court, while acknowledging that “Florida contract law does recognize an implied covenant of good faith and fair dealing in every contract,” concluded that this implied covenant did not create a separate first-party action against an insurance company based on its bad-faith refusal to pay a claim.  Moreover, the Court held that “such first-party claims [by Chalfonte] are actually statutory bad-faith claims that must be brought under section 624.155 of the Florida Statutes.”

Moral of the story:  Florida does not recognize a claim for breach of the implied warranty of good faith and fair dealing by an insured against its insurance company for failing to investigate a hurricane loss, as such a claim is actually a statutory bad-faith claim that must be brought under section 624.155 of the Florida Statutes.  As such, Florida Hurricane/storm damage claims lawyers in Hollywood, Dania, Weston, Plantation, Aventura, Miami Beach, Bal Harbour, Coral Gables, Kendall, Pinecrest or other areas throughout Miami, Fort Lauderdale and Palm Beach, will now have to bring such a claim as a statutory bad-faith claim.