Tiara Condominium Association is involved in a lawsuit filed against its insurance broker, Marsh & McLennan Companies, Inc.

The association which manages the Tiara condominium tower in Palm Beach County is suing Marsh alleging that the broker failed to secure an adequate insurance policy to cover damages to the condo tower.

Case Background

Tiara hired Marsh to obtain an insurance policy to cover its entire building. In 2004, a policy was purchased from Citizens Insurance Company that offered a coverage limit of $50 million.

In September 2004, the condo tower sustained substantial damage as a result of two hurricanes – Frances and Jeanne. The damage from both hurricanes exceeded the $50 million limits but the association claims it was verbally assured by Marsh that its insurance policy would cover $50 million for each hurricane disaster – a total of $100 million.

Tiara moved forward with repairs. It decided not to merely dry the tower out but eventually renovated the damaged areas. When done, the repair work exceeded $100 million.

Once the renovations were completed, Tiara sought reimbursement of $100 million from the insurance company – $50 million per hurricane occurrence – to cover the repairs. Citizens denied Tiara’s request stating that the policy purchased in 2004 provided a $50 million limit and nothing more.

Tiara filed a lawsuit against Citizens for its damages and eventually reached a settlement with the insurer of $89 million, a portion of the renovations costs.

The association, under the contention that Marsh’s negligence caused the insufficient recovery from Citizens, next filed a lawsuit against Marsh for:

• breach of contract;
• negligent misrepresentation;
• breach of the implied convenient of good faith and fair dealing;
• negligence; and
• breach of fiduciary duty

The condo association contends the insurance broker breached the contract with the association in two ways.

1. He failed to procure a policy with adequate insurance coverage; and
2. He breached an oral agreement to take responsibility for any damages incurred as a result of insufficient coverage

Upon review of the insurance policy (contract), the District Court found the language unclear as to “aggregate limits” versus per-occurrence limits. Thus, the terms of the contract was construed in favor of the insured (or broker) and against the insurer (Citizens) that prepared the contract. First Specialty Ins. Co. vs. Caliber One Indem. Co., 988 So. 2d. 708, 712 (Fla. Dist. Ct. App. 2008).

As for the second breach of contract claim, the court has previously established that a breach of oral contract arises when the parties mutually assented to a definite proposition and left no essential terms open. Rubenstein vs. Primedica Healthcare, Inc., 755 So. 2d. 746, 748 (Fla. Dist. Crt. App. 2000).

In this case, the court did not find any evidence that the oral agreement between the parties extended beyond the written policy agreement.

In fact, the parties could not agree on the nature of the oral agreement.

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