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The legal aftermath of Hurricane Charley is likely to consist mostly of litigation over construction practices and insurance claims, according to attorneys who were involved in litigation after Hurricane Andrew in 1992. Wrongful death and other personal injury lawsuits are less probable and, barring freakish circumstances, would be more difficult for plaintiffs to win, they say. Charley swept across Florida from Punta Gorda to Daytona Beach Aug. 13 and 14, leaving property damage that analysts say could exceed $20 billion. Much of the damage was caused by flooding from storm surges off the Gulf of Mexico. Twenty-three have been reported killed, and thousands of homes were destroyed or severely damaged. Many of the residences affected were mobile homes. Changes in insurance company practices and stiffer building codes established in the wake of Andrew may reduce the number of lawsuits, according to legal experts. On the other hand, they say, property insurers are likely to aggressively pursue subrogation claims seeking to force builders to contribute to claims payouts made to policyholders. Post-Charley, insurers will be “fair with customers and tough on builders,” predicts Adam Leichtling, managing partner of Larson King in Miami. “They’ll do everything they can to collect damages from builders who have shoddy practices.” But Leichtling says the success of such claims would vary with the facts of the cases, and that plaintiffs are more likely to prevail where the storm was weakest. “Along the Gulf you had 145 mph winds,” he says. “That makes it easier for home-builders to defend, to argue that their work was up to code, but was overwhelmed anyway.” But the storm’s diminished severity as it slashed across the state could cut the other way, too, says Steve Reininger, a partner at Miami’s Rasco Reininger & Perez. “If you suffer damages with lesser winds,” he says, “you’ve got a stronger case that the construction was defective.” Insurers paid an estimated $15.5 billion to policyholders after Andrew. A number of attorneys said the immense damage left by Charley — which could total nearly as much in dollars as the damages caused by Andrew — poses a threat to the financial viability of smaller insurers. That increases the pressure on carriers to pursue subrogation claims. The claims stemming from Charley already are arriving in torrents. Bloomington, Ill.-based State Farm Insurance reported that as of the afternoon of Aug. 15 almost 20,000 homeowners and more than 1,500 auto owners had filed claims for hurricane damage. Lawsuits will have to wait at least until courthouses reopen. The Office of State Courts Administration reported Aug. 16 that courts were still closed in Orange, Osceola, Seminole, Lee, and Charlotte counties. “The carriers have gotten very good about settling first-party claims,” says Thomas Burke, a partner in the tort defense practice of the Orlando office of Holland & Knight. “They’ve learned their lessons from the regulators and from adverse jury verdicts. But there will always be disagreements over claims estimates.” Burke says that the carriers have less exposure to claims because many Florida policies were rewritten after Andrew. The changes boosted deductibles from a standard $500 per incident into the range of 2 percent to 5 percent of total wind damage to houses valued at more than $100,000. Burke says that disputes with policyholders are likely to turn on coverage issues rather than claims estimates. In those cases, he says, the key question will be causation — whether the damage resulted from wind or flooding. Sometimes the answer to that question is not at all clear and has to be litigated. Steven Brodie, an insurance defense attorney at Carlton Fields in Miami, says a typical causation dispute arose in a hurricane-related case he defended several years ago in the Florida Keys. The case turned on whether water damage to a residence occurred because the house’s windows were blown off or because of ground-level flooding. Cases like that can become “extremely complex and very difficult to try,” he says. Part of the problem is that many homeowners purchase wind insurance from one carrier and flood insurance from another. Typically, homeowners policies do not include flood damage coverage, which is most often purchased through federal government programs. Leichtling says he experienced a Hurricane Andrew-related lawsuit that was complex for other reasons. He represented Cincinnati-based Federated Department Stores in litigation that took seven years to resolve. His client first sued a contractor for alleged construction defects, then sued the insurer over coverage. THE BIG LOSERS Reininger says mobile home manufacturers may be the big losers from Hurricane Charley. “The trailer parks are where many of the deaths were reported,” he says. “Plaintiff lawyers and state regulators are going to take a good hard look at the practices of the trailer builders. Product liability claims against the manufacturers are another possibility.” The legal exposure of those companies to wrongful death and personal injury claims will be mitigated by the fact that authorities issued evacuation orders in the worst-damaged areas, Reininger says, so people who didn’t follow those orders may bear at least some liability. “But that will only introduce issues of comparative negligence,” he says. “That won’t keep anybody out of the courtroom.” Holland & Knight’s Burke says, however, that home-builders and construction contractors of all types need to brace for lawsuits. “I’ll be surprised if this passes without class action lawsuits resulting,” he says. Several lawyers noted that the number of homeowners’ lawsuits alleging construction defects will not be clear for some time, because state law prohibits the filing of lawsuits until builders have had 25 days to inspect the alleged defects and cure them. As a result, the lawyers expect a booming business for experts in construction forensics. Many of the expected lawsuits may be handled on a pro bono basis. The Academy of Florida Trial Lawyers already has a hotline — (866) 550-2929 — for storm victims seeking legal assistance through a Florida Bar pro bono program. Other legal disputes are likely to arise over who has the right to collect the insurance payout for a damaged property and whether post-hurricane repairs were done properly, says Brodie, whose résumé includes a stint as outside counsel to state insurance regulators. He says that because so many Florida properties at any given time are in the process of a sale, lawsuits will arise over who has the final say on the extent and quality of repairs. “The owners will file the claims and get the money,” Brodie says, “but what will be the quality of the replacement work? Who will decide how the insurance proceeds are utilized?” Brodie recalled his experience at his former law firm in Kendall, Fla., which was located in Andrew’s path and suffered extensive damage to its offices. His main advice to policyholders is to file claims in a timely manner, and get a camera and document the damage. Steve Ellman is a staff writer for the Miami Daily Business Review , where this article first appeared.

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