GTT&C partner Dale L. Kingman and associate Matthew F. Pierce returned home from Florida in May 2009 following a contentious arbitration in which the panel awarded the firm’s client, The Sandpiper Condominium Association of Marco Island, Florida, nearly $7.2 million. The award represented the maximum amount available to the Condo Association under the Florida Insurance Guaranty Act.  The award culminated 12 months of litigation commenced after the Florida Insurance Guaranty Association (“FIGA”) refused to acknowledge the extent of the hurricane damage that the condominium had sustained.

In May 2008 GTT&C, on behalf of The Sandpiper, filed a complaint in Collier County, Florida, for declaratory relief and damages against FIGA, as successor-in-interest to Southern Family Insurance Company, an insolvent insurer.  In response to the complaint, FIGA moved to compel arbitration under the terms of the insurance policy.

The Sandpiper is an ocean-front condominium complex located on the West coast of Florida, in Marco Island, Collier County.  The litigation and arbitration stemmed from damage suffered by The Sandpiper as a result of Hurricane Wilma, which struck Collier County in October 2005 with sustained winds of 125 mph and gusts up to 135 mph.  As a result of Wilma, The Sandpiper suffered damage to, among other things, its exterior building envelope, interior, and roof. 

The Sandpiper submitted its claim for damages to Southern Family.  In 2006 and 2007, Southern Family, and after the insurer’s insolvency, FIGA, adjusted the loss and paid approximately $2.6 million.  FIGA denied coverage for The Sandpiper’s additional claims.  FIGA’s argument in support of its denial was two-fold:  (1) The Sandpiper had preexisting damage to its building envelope, which was excluded under the policy; and (2) The Sandpiper’s damage was not caused by Hurricane Wilma, an argument it supported by noting the extent of damage suffered by The Sandpiper far exceeded that suffered by other buildings on Marco Island. 

In response to FIGA’s first argument, GTT&C discovered The Sandpiper’s building envelope had been remediated in 2003-2004, just prior to the storm, and was in pristine condition when Hurricane Wilma made landfall.  In response to FIGA’s second argument, GTT&C, along with its expert, Andrew Taylor, PhD, of KPFF Consulting Engineers, noted that among all buildings on Marco Island, the Sandpiper is unique in its design.  It is constructed in an hourglass configuration, consisting of a narrow core flanked by two large wings, with the core providing the shear capacity for the building.   It is this peculiar feature that distinguishes it from every other high-rise building on Marco Island and which promoted the extent of damage not faced by more conventionally designed high-rise condominiums on the Island.  

Based on these observations, GTT&C and KPFF theorized The Sandpiper would react differently from other high-rise buildings on Marco Island, when subjected to high winds.  KPFF developed a computer model to test the theory.  The computer model indicated The Sandpiper is unusually flexible, with its dominant response to lateral wind pressure being a twisting or torsional movement.  This movement resulted in inter-story drift at the exterior columns and floor slabs, leading to increased damage to the inflexible building envelope – the stucco.  The level and location of stucco damage predicted in the computer modeling was confirmed by mapping of the building exterior as the stucco was removed.  The empirical results and observations of the stucco mapping perfectly aligned with KPFF’s computer modeling.

The arbitration was heard in May 2009 by a three-arbitrator panel.  Both sides presented evidence through live testimony and witness affidavits.  Following the hearing, the panel issued an award in favor of The Sandpiper in the amount of $7,193,349.   In June 2009 FIGA made payment to The Sandpiper.

Click here to see a photograph of The Sandpiper, courtesy of Microsoft Virtual Earth.