Duty to Warn and Fine Print

By Michael J. Gelfand, Esq. / Published May 2022

Association Pays Big Bucks in Bollard Battle: Heed The Call of Duty to Warn

     A $41 million verdict in a case against a Florida homeowners association rings the alert, not just because of the dollar amount. The facts as recited in J.L. Property Owners Association, Inc. v. Timothy F. Schnurr, 47 Fla. L. Weekly D187, (Fla. 4th DCA, January 5, 2022) appellate decision reflect that Mr. Schnurr collided with a bollard while riding his bicycle in a promenade area at the Jonathan’s Landing Community.

     What is a bollard? It is a short post used to create a protective or architectural perimeter. In South Florida they are the ubiquitous, wide concrete or metal posts painted yellow located in front of entrances, such as Publix or governmental buildings.

     Tragically, as a result of the collision, Mr. Schnurr was rendered a paraplegic and later succumbed to his injuries.

     What was alleged that the association did wrong to result in such a large verdict? The decision details that the bollards were painted “beige or tan” instead of a high-contrast color like yellow. There were no pavement markings or other warnings to alert a person traveling on the promenade that they were approaching the bollards. Further, the bollards were installed without a permit and were contrary to various building codes and construction guidelines.

     The association’s defenses included that that the developer designed and installed the bollards. Nevertheless, that defense was rejected because at the time of the collision the developer had not had control over the community for over two decades. Also, the court held that it was the association’s duty under its declaration of covenants to maintain the promenade and warn of dangerous conditions in that area.

     Although the court ultimately reduced the award amount to $14 million and a new trial was awarded on the issue of future medical expenses after Mr. Schnurr’s death, the association will still be paying out millions. Their attorneys’ fees are in addition to the award amount!

     How can associations take precautionary measures to help ensure that unfortunate incidents like these are avoided? First, associations should make certain that all improvements, whether installed by the developer or the association, comply with all relevant codes and construction standards. This would presumably be part of the turnover/transition physical inspection of the premises. In practice, the association will be acting as if the buck stops with them because in cases such as these, it does.

     Second, although the appearance of a community is frequently high on many associations’ list of priorities, aesthetics should never come before safety. If a duty to warn of dangerous conditions arises, then an association should diligently inspect their communities and appropriately repair and warn.

     In conclusion, this decision reminds boards of the need for Florida associations—condominium, cooperative, and homeowners—to review their maintenance and repair duties! Oh yes, do not forget the foundation of decision making: make certain that you have a complete set of “documents”!

Insurance Company Bares Its “Clause” In Scope of Loss Dispute

     Florida community associations should beware of the so-called fine print clauses in their property insurance policies. A relatively new phenomenon is highlighted by a wave of policy disputes hitting Florida’s appellate courts. The disputes, which also impact a number of individual prop-erty owners, not just associations, involve text in some polices that many policy holders are unaware of that allow the insurance company to determine who has control of casualty repair work. Why is this an issue? Because associations and property owners want to help ensure that repairs are undertaken timely and properly, and they are not confident that the insurers’ contractors will have the same concerns.

     In a recent appellate decision, People’s Trust Insurance Co. v. Chen, 47 Fla. L. Weekly D116 (Fla. 4th DCA, January 12, 2022), the court recounted that after the Chens suffered damage to their home due to a hurricane, they contacted their insurer, People’s Trust. Although the insurer determined that the losses were covered by their insurance policy, People’s Trust elected to perform only some of the necessary repairs and would not restore the Chens’ home to as good a condition as before the loss. Noteworthy exclusions included roof repair, screened enclosures, interior property damage, and a decision to replace the previous hardwood floor with laminate.

     When the Chens filed a breach of contract suit against People’s Trust seeking money damages to make the proper repairs themselves, the insurer requested that the court require an appraisal to determine the scope of loss on the Chens’ property since the parties could not agree. The appraisal determined that the hardwood floors should be replaced with hardwood and that the roof was covered under the policy, so the court ordered that the insurance company pay the Chens money to make appropriate repairs.

     Not so fast, said the appellate court! A clause in the Chens’ insurance policy stated that if a dispute exists as to the scope of repairs “… upon receipt of the appraisal panel’s award, we will continue forward with repairs based upon the scope outlined in the appraisal award.” Therefore, the court determined that People’s Trust did not breach the policy by proposing to undertake repairs that would not have restored the home to its pre-loss condition since the policy provided that an appraisal panel would determine the scope and the insurer would perform the repairs outlined in the appraisal award in case of a dispute.

     What is the takeaway? Associations and homeowners should review their current insurance policies carefully to determine whether there are any “gotchas” or unexpected requirements lurking in the fine print. While reviewing policies may seem to some as a waste of time, a review first certainly beats the time and expense of litigation later!

Michael J. Gelfand, Esq.

Senior Partner, Gelfand & Arpe, P.A.

     Michael J. Gelfand, Esq., the senior partner of Gelfand & Arpe, P.A., emphasizes a community association law practice, counseling associations and owners how to set legitimate goals and effectively achieve those goals. Gelfand is a dual Florida Bar board certified lawyer in condominium and planned development law and in real estate law, a certified circuit and county civil court mediator, homeowners association mediator, an arbitrator, and parliamentarian. He is a past chair of the Real Property Division of the Florida Bar’s Real Property, Probate & Trust Law Section, and a Fellow of the American College of Real Estate Lawyers. Contact him at ga@gelfandarpe.com or (561) 655-6224.