Monaco Beach Club residents sue condo association over Hurricane Wilma damages

The following article was published in the Naples Daily News on April 21, 2011:

Monaco Beach Club residents sue condo association over Hurricane Wilma damages

By Laura Layden

After paying huge assessments for repairs after Hurricane Wilma, condo owners at the Monaco Beach Club have filed a class-action lawsuit, seeking damages for an insurance claim gone wrong.

The lawsuit, filed in Collier Circuit Court, is against the condo association and former members of its board of directors, who were in office when the insurance claim for hurricane damages was made.

Hurricane Wilma hit in 2005. Every owner at the time of the storm – whether they had damage or not to their condo – ended up with an assessment of more than $100,000 to pay for repairs to the 18-story building off Gulf Shore Boulevard in Naples.

QBE Insurance, the building’s insurer, paid nothing after it accused the condominium association of inflating its claim, which originally came in at more than $20 million. After a long legal battle in Collier Circuit Court, a jury sided with QBE.

“There is a serious problem with the way that claim was handled and there are people that made mistakes and there are people that may have known better,” said Naples attorney Chris Lombardo, who represents the condo owners who filed the suit.

Hurricane Wilma battered the Gulf-front condominium, breaking windows and doors, ripping screened porches, soaking carpets in hallways, knocking down shutters and tearing up parts of the roof.

When fraud is found in a claim, an insurer isn’t required to pay a penny, even when there are real damages that exceed the deductible. Condo owners had to pick up the tab for millions in repairs.

“Imagine if you lived in a place for the last 20-odd years and one year you receive a special assessment of $120,000 or $140,000,” Lombardo said. “I suspect you would be a little shocked.”

Many of the condo’s owners are elderly and retired, living on meager incomes.

“You had people who had to go out and get mortgages,” Lombardo said. “You had people who had to sell their units. There were individuals that were significantly harmed by this and I personally think it was avoidable.”

Lombardo wouldn’t say the amount of damages that will be sought.

“I’m not going to get into that,” he said.

The allegations in the lawsuit include breach of fiduciary duty, negligence and fraud. The lawsuit was brought on behalf of at least 130 people, who owned condos when Wilma hit.

Hillary Harding Cronin, whose father lives at Monaco Beach Club, said his life has been ruined because of the mess over the hurricane claim.

“I just hope that someone will pay,” she said.

Unable to pay the assessment, her 78-year-old father, Preston Harding, faces foreclosure. His condo had no damage from Hurricane Wilma, but he had a $138,000 assessment after QBE denied the condominium association’s inflated claim, Cronin said.

“He had his condo for sale for two years maybe,” she said. “Then he ran out of money.”

Initially, he listed the two-bedroom condo for a higher price, hoping to pay off the mortgage and the assessment. It’s now offered up as a short sale, for $465,000. In a short sale, the bank agrees to accept a price that is less than what’s owed on the mortgage.

Her father has been unable to pay any of his association fees so he’s not allowed to go to the pool, or use the beach club, Cronin said.

“He feels uncomfortable in his own home,” she said.

“It stinks,” said Cronin, a Realtor in Massachusetts. “If I think about it long and hard enough I could cry.”

Four owners at Monaco Beach Club filed the lawsuit on behalf of others who they say have been similarly hurt. The plaintiffs are Stefaan Bultinck, Bruce Tennyson, Roger DeMontravel and Mary Ellen Boyer. They either declined to comment or couldn’t be reached for this story.

A manager at Monaco Beach Club didn’t immediately return phone calls. The condo association’s attorney also couldn’t be reached.

In court, Tampa attorney Douglas Grose, who represented the condo association in its years-long legal battle with QBE, argued that board members couldn’t be expected to understand the claim and didn’t knowingly commit fraud.

The association, eager to start repairs, hired experts to put together a claim. The claim ran 2,500 pages long.

The former directors named in the suit are Ronald Klein, Thomas Thompson, Robert Borgstrom, Kenneth Jagger, Henry Beckman, John Sanders, James Riddle, Barbara Weiss and Nicholas Cullen. They either declined to comment or couldn’t be reached.

“I think there were board members who didn’t read the claim at all,” Lombardo said. “If they had taken the time to read it before it was filed they would have realized there were significant problems, or they should have realized there were significant problems in the way the claim was submitted.”

Find this article here:  http://www.naplesnews.com/news/2011/apr/21/Naples-condo-QBE-Insurance-homeowner-association/