District Court of Appeal of Florida, Third District.

Opinion filed February 6, 2013.

Mager Lawyers and Scott A. Mager and Gerard A. Marino (Fort Lauderdale), for appellant.

Hinshaw & Culbertson and James H. Wyman (Fort Lauderdale) and Maureen G. Pearcy, for appellee.

Before WELLS, C.J., and SUAREZ and FERNANDEZ, JJ.

SUAREZ, J.

1500 Coral Towers Condominium ("Coral Towers") appeals a final summary judgment in favor of Citizens Property Insurance Corporation ("Citizens") in a breach of contract action. We affirm in part as the trial court correctly held that Coral Towers failed to give timely notice of the loss, but reverse in part for factual determination of the question of whether Citizens was prejudiced by the late notice.

At the time of Hurricane Wilma, in October 2005, Coral Towers was insured under a commercial-residential property insurance policy with Citizens. Approximately five years after Hurricane Wilma, on June 29, 2010, Coral Towers notified Citizens for the first time that the property had sustained damages as a result of Hurricane Wilma. Pursuant to the terms of the insurance policy, Citizens requested Coral Towers to submit a sworn proof of loss within sixty days. Coral Towers did not submit the proof of loss within sixty days. In October 2010, Coral Towers brought suit for breach of contract alleging that it had properly and timely notified Citizens of the damages it had sustained to the condominium properties as a result of Hurricane Wilma. It also alleged that Citizens had denied its claim. Citizens filed an answer and asserted affirmative defenses alleging that Coral Towers had failed to give prompt notice of the alleged loss and had breached the following policy provisions:

4. You[r] Duties After Loss. In case of a loss to covered property, you must: a. Give prompt notice to us, or your producer, who is to give immediate notice to us. . . . d. Send to us, within sixty (60) days after our request, your signed, sworn proof of loss which sets forth, to the best of your knowledge and belief; (1) The time and cause of loss; (2) Your interest and that of all others in the Covered Property involved, and all liens on the covered property; (3) Other insurance which may cover the loss; (4) Changes in titles or occupancy of the Covered Property during the term of the Policy; (5) Specifications of damaged buildings and detailed repair estimates; (6) The inventory of damaged and undamaged personal property described in Condition number 4.b., Your Duties After Loss.

Citizens also asserted as an affirmative defense that Coral Towers was barred from recovery because it had failed to comply with conditions precedent to filing the lawsuit under the following policy provision:

15. Suits Against Us. No action can be brought unless the policy provisions have been complied with and the action is started within five (5) years from the date the loss occurs.

Three months after filing suit, Coral Towers provided the sworn proof of loss. The first opportunity Citizens had to inspect the property was in early August of 2010.

In discovery, Coral Towers admitted knowledge of the loss in November 2005, and that a roofer had repaired the elevator, roof, and surrounding walls in December 2005. The roof continued to leak and Coral Towers obtained estimates to replace the roof. The latter of the estimates was for $259,269.20. The reason Coral Towers alleged it did not notify Citizens immediately after Hurricane Wilma was because initially there was a question of whether the damages would exceed the policy deductible.

In September 2011, Citizens moved for summary judgment on grounds that Coral Towers was barred from recovery as a result of the failure to give prompt notice and failure to provide a sworn proof of loss within sixty days. Citizens alleged that it was prejudiced by the inability to investigate and evaluate the claim under the policy. Coral Towers maintained that the type of damages it had sustained appeared over time and would not have necessarily evidenced themselves within the first two years after the Hurricane. The two issues addressed by the trial court and presented on appeal are whether Coral Towers' notice of loss was timely and, if not, whether Citizens was prejudiced by the late notice.

We agree with the trial court that there is no factual dispute that Coral Towers failed to give timely notice of the loss. When an insurance contract contains a provision which applies to submitting a proof of loss and notice of the damage claim, an insured must give notice of the loss that implicates a potential claim without waiting for the full extent of the damages to become apparent. Kendall Lakes Towers Condo. Ass'n v. Pacific Ins. Co., No. 10-24310-CIV, 2012 WL 266438 (S.D. Fla. Jan. 30, 2012); see Clena Invs., Inc. v. XL Specialty Ins. Co., No. 10-cv-62028, 2012 WL 1004851 (S.D. Fla. Mar. 26, 2012); Kroener v. Fla. Ins. Guar. Ass'n, (Fla. 4th DCA 2011) (holding that as a matter of law, notice to insurer of a claim of loss more than two years and two months after the loss occurred was not prompt notice and untimely reporting of the loss violated insurance policy sufficient to bar the claim); Ideal Mut. Ins. Co. v. Waldrep, (Fla. 3d DCA 1981). On facts similar to those before us, the Southern District of Florida has held that a condominium association is not entitled to wait until determining on its own that the damages in question exceed the deductible under its insurance policy or until it has ascertained the precise cause of the damage before giving notice of the loss or damage under the terms of the insurance contract. Kendall Lakes, 2012 WL 266438. In Kendall Lakes, the insured waited approximately four years to notify the insurance company of its claim caused by Hurricane Wilma because it believed that the damage caused by the Hurricane did not meet the policy deductible. After Hurricane Wilma, the Kendall Lakes Condominium Association had the roof repaired on its own, but the premises continued leaking and required periodic repairs. It was not until 2009, approximately four years after the damage occurred, that the association determined the problems were structural in nature, were, in fact, attributable to Hurricane Wilma and submitted a claim. The Southern District held that:

As a result, Pacific was entitled to prompt notice of the loss following Hurricane Wilma, not, as occurred here, to notice more than four years later. There is no genuine factual dispute that Kendall Lakes did not provide timely notice and Pacific is entitled to judgment as a matter of law on this issue.

Kendall Lakes, 2012 WL 266438, at *4. Here, as in Kendall Lakes, there is no genuine factual dispute that Coral Towers failed to give timely notice as required by the Citizens' policy in question. Therefore, the next question is whether Citizens was prejudiced by the late notice.

An insurer is prejudiced by untimely notice when the underlying purpose of the notice requirement is frustrated by late notice. 13 Couch on Insurance § 192:28 (Thompson West 3d ed. 2005). As in Kendall Lakes, Citizens alleges that the extended passage of time creates a very strong inference that Citizens' investigation and defenses have been diminished as a result of the late notice. Also, it alleges that the repairs that were made without first notifying Citizens hampered the monitoring of, and efforts to coordinate, the mitigation of damages.

Whether or not the delay in investigating the damages was prejudicial to the insurance company is a question of fact for the jury.

Whether the prompt investigation would have enabled Citizens to determine the cause of the damage with greater certainty, to take steps to mitigate the damage, or whether it was placed in a substantial disadvantage to be prejudiced by the delay, present genuine questions of material fact that cannot be resolved on motion for summary judgment.

Kendall Lakes, 2012 WL 266438, at *7.

Therefore, we reverse the trial court's grant of summary judgment on the issue of whether Citizens was prejudiced by the untimely notice. The issue of prejudice is factual and is not one to be determined on summary judgment.

We affirm the final summary judgment in favor of Citizens on the issue of the failure of the insured to give prompt notice, and we reverse for factual determination the issue of whether or not Citizens was prejudiced by the delay in Coral Towers' late notice.

Reversed and remanded.

WELLS, C.J., (concurs).

I concur in the conclusion that on the instant facts, as a matter of law, Coral Towers failed to give timely notice of the loss at issue. See Edwards v. State Farm Florida Ins. Co., 732 (Fla. 3d DCA 2011) ("Summary judgment is correctly granted when the record evidence shows there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law.").

As to the question of the prejudice resulting from that untimely notice, I write solely to stress that on remand, Bankers Insurance Co. v. Macias, (Fla. 1985), will control. As most recently explained in Kings Bay Condominium Association, Inc. v. Citizens Property Insurance Corp., 102 So.3d 732, 733 (Fla. 4th DCA 2012), quoting Kramer v. State Farm Florida Insurance Co., 306 (Fla. 4th DCA 2012), and Soronson v. State Farm Florida Insurance Co., 953 n.1 (Fla. 4th DCA 2012):

Despite the fact that a notice of loss and a sworn proof of loss are conditions precedent to suit . . . our supreme court long has held that "[s]uch a condition can be avoided by a party alleging and showing that the insurance carrier was not prejudiced by noncompliance with the condition." [Bankers Ins. Co. v. Macias, 1218 (Fla. 1985)]. In other words, "[i]f the insured breaches the notice provision, prejudice to the insurer will be presumed, but may be rebutted by a showing that the insurer has not been prejudiced by the lack of notice." Id. (citations omitted).

(Emphasis added). Thus, on remand, the burden is on Coral Towers to show that Citizens was not prejudiced by the lack of timely notice.

Not final until disposition of timely filed motion for rehearing.