Contract analysis

I. IDENTITY AND BACKGROUND OF DECLARANT

1. My full name is Franklin Orde. My business address is 2600 S. Bayshore Drive, Suite 800, Miami, Florida 33133.

2. I am employed as an Account Executive at Tidewater Risk Advisors LLC ("Tidewater"), a licensed insurance brokerage firm headquartered in Miami, Florida. Tidewater is licensed as a general lines insurance agency in the State of Florida and maintains surplus lines licenses in multiple jurisdictions across the United States. I have been continuously employed by Tidewater since 2014.

3. I am a licensed insurance broker in the State of Florida, holding Florida Department of Financial Services License No. E124783. I have maintained an active license in the State of Florida without lapse, suspension, or disciplinary action at all times relevant to this proceeding.

4. I have worked in the commercial insurance brokerage industry for approximately eighteen years. Prior to joining Tidewater, I held positions at two nationally recognized brokerage firms, where I gained extensive experience in the placement, negotiation, and servicing of large commercial property and casualty insurance programs. Throughout my career, I have specialized in large commercial property and hospitality ac

5. In my capacity as a commercial insurance broker, I have been directly responsible for negotiating policy terms, conditions, endorsements, sub-limits, deductibles, and premium structures with underwriters at numerous domestic and international insurance carriers. I am thoroughly familiar with industry customs and practices relating to the placement and renewal of layered commercial property insurance programs, incl

6. Since approximately 2018, I have served as the designated Account Executive and broker of record for Verimark Hospitality Group Inc.'s commercial property and business-interruption insurance program (the "VHG Program"). In this capacity, I have been the primary point of contact between VHG and the insurance carriers participating in VHG's layered property program, and I have been directly responsible for all aspec

7. All statements made in this Declaration are based upon my personal knowledge, derived from my direct participation in the placement, negotiation, and renewal of the VHG Program, my contemporaneous review of correspondence and communications exchanged during the relevant periods, and my familiarity with the customary practices of the commercial insurance industry. Where I reference specific documents, I have review

II. OVERVIEW OF VHG'S PROPERTY INSURANCE PROGRAM

8. Tidewater Risk Advisors LLC served as the broker of record responsible for placing and managing VHG's all-risk property and business-interruption insurance program during the policy period at issue in this litigation: July 1, 2022 through July 1, 2023 (the "2022–2023 Policy Period"). Tidewater also served in this capacity during prior policy periods, including the immediately preceding policy period of July 1, 202

9. The VHG Program consisted of a layered insurance tower designed to provide comprehensive coverage for VHG's portfolio of resort and hospitality properties located in the State of Florida. The program provided aggregate limits of Sixty Million Dollars ($60,000,000) in total coverage, above a Five Hundred Thousand Dollar ($500,000) per-occurrence deductible applicable at the primary layer.

10. For the 2022–2023 Policy Period, the structure of the VHG Program was as follows: (a) Primary Layer — Ironclad Indemnity Corporation: Ironclad Indemnity Corporation ("Ironclad"), a Connecticut corporation, provided the primary layer of coverage with a policy limit of Twenty-Five Million Dollars ($25,000,000), subject to a per-occurrence deductible of Five Hundred Thousand Dollars ($500,000). The primary policy wa

11. All layers of the VHG Program provided coverage on an "all risks" basis for physical loss or damage to covered property, including coverage for business interruption and extra expense. The excess layers followed form to the terms, conditions, and endorsements of the Ironclad primary policy, except where specifically modified by the terms of the applicable excess policy.

12. The total annual premium for the VHG Program for the 2022–2023 Policy Period was One Million Eight Hundred Forty Thousand Dollars ($1,840,000), allocated among the participating carriers as follows:

13. VHG paid all premiums due under the VHG Program for the 2022–2023 Policy Period in full and on a timely basis. No carrier in the program has asserted that any premium was unpaid or that the program was not in force at the time of the Hurricane Callista loss.

III. THE PRIOR POLICY YEAR AND THE NAMED-WINDSTORM SUB-LIMIT

14. In the policy year preceding the July 2022 renewal—that is, the 2021–2022 Policy Period (July 1, 2021 through July 1, 2022)—the Ironclad primary policy contained a named-windstorm sub-limit of Fifteen Million Dollars ($15,000,000) that applied specifically to business-interruption losses arising from named windstorm events. This sub-limit operated to cap the amount of business-interruption coverage available unde

15. The named-windstorm sub-limit had been a feature of the Ironclad primary policy for multiple prior renewal cycles. To the best of my recollection, the sub-limit was present in the Ironclad primary policy during the 2019–2020, 2020–2021, and 2021–2022 policy periods. During those years, the sub-limit was a standard condition imposed by Ironclad's underwriting department in light of the wind exposure associated wit

16. VHG's portfolio of insured properties under the VHG Program consisted of three resort properties, all located in hurricane-prone coastal areas of Florida: (a) Verimark Grand Key Resort, located in Marathon, Florida (Monroe County, Florida Keys); (b) Verimark Harborview Hotel & Conference Center, located in Fort Myers Beach, Florida (Lee County, Southwest Florida coast); and (c) Verimark Sunset Shores, located in

17. In or about early 2022, Sandra Pellegrini, Vice President of Risk Management for VHG, communicated to me that VHG wanted the $15,000,000 named-windstorm sub-limit removed from the Ironclad primary policy at the upcoming July 2022 renewal. Ms. Pellegrini explained that VHG's management had grown increasingly concerned about the concentration of its property portfolio in hurricane-prone coastal Florida locations an

18. Based on these communications, VHG expressly instructed Tidewater to negotiate the deletion of the $15,000,000 named-windstorm sub-limit as a priority for the July 2022 renewal of the Ironclad primary policy. This instruction was clear and unambiguous: VHG wanted the sub-limit removed so that the full $25,000,000 primary layer limit would be available for business-interruption losses arising from named windstorm

IV. THE JULY 2022 RENEWAL NEGOTIATIONS

19. Beginning in approximately April 2022, consistent with the customary renewal timeline for a commercial property program of this size and complexity, I initiated renewal discussions with Ironclad Indemnity Corporation's underwriting department for the July 1, 2022 renewal of the primary policy. The Ironclad underwriting team was led by Jason Whitfield, a Senior Underwriter in Ironclad's Commercial Property Divisio

20. During the early stages of the renewal discussions, I specifically raised VHG's request that the $15,000,000 named-windstorm sub-limit be deleted from the renewed primary policy for the 2022–2023 Policy Period. I communicated this request both in writing and verbally over the course of the renewal negotiation period, which extended from approximately April 2022 through late June 2022.

21. I communicated VHG's request in writing via email to Mr. Whitfield and to other members of Ironclad's underwriting team. In my initial renewal submission, which was sent to Ironclad on or about April 18, 2022, I included a summary of VHG's renewal objectives, prominently listing the deletion of the named-windstorm sub-limit as a primary renewal objective. I followed up on this request in subsequent emails and tel

22. Ironclad's underwriting department initially indicated that deletion of the $15,000,000 named-windstorm sub-limit would require an additional premium above the expiring premium for the primary layer. Mr. Whitfield explained in a telephone conversation in approximately mid-May 2022 that Ironclad's underwriting guidelines required additional premium to compensate for the increased exposure that would result from re

23. I promptly conveyed Ironclad's position to VHG. Specifically, I communicated with Sandra Pellegrini at VHG regarding the additional premium that Ironclad was requesting in exchange for the deletion of the named-windstorm sub-limit. After internal discussion within VHG's management team, Ms. Pellegrini authorized Tidewater, on behalf of VHG, to negotiate and accept a reasonable premium increase in exchange for the

24. After further negotiations between myself and Mr. Whitfield during late May and June 2022, Ironclad's underwriting department agreed to delete the $15,000,000 named-windstorm sub-limit for the 2022–2023 Policy Period in exchange for an increased premium on the primary layer. The specific terms of the agreement were as follows: Ironclad would issue the renewed primary policy for the July 1, 2022 through July 1, 20

25. The increased premium for the Ironclad primary layer was reflected in the final agreed-upon premium of $980,000 for the 2022–2023 Policy Period. This figure represented a meaningful increase over the prior year's primary layer premium for the 2021–2022 Policy Period. While multiple factors contributed to the overall premium increase at renewal—including general market hardening, updated catastrophe modeling, and

26. I received confirmation from Ironclad's underwriting department that the named-windstorm sub-limit would be removed from the primary policy for the 2022–2023 Policy Period. This confirmation was communicated during the renewal negotiations and was reflected in the terms of the quotation and the renewal binder.

27. A binder was issued reflecting the agreed-upon terms for the 2022–2023 Policy Period. Based on my review of the binder and the renewal correspondence, I understood the binder to reflect the deletion of the named-windstorm sub-limit, consistent with the agreement reached between Tidewater, on behalf of VHG, and Ironclad's underwriting department. The binder was issued on or about June 28, 2022, prior to the July 1

28. Upon receipt of the binder and confirmation of the renewal terms, I communicated to VHG, and specifically to Sandra Pellegrini, that the $15,000,000 named-windstorm sub-limit had been successfully negotiated out of the Ironclad primary policy for the upcoming renewal period. Ms. Pellegrini acknowledged this communication and confirmed that VHG was satisfied with the renewal terms.

V. POLICY ISSUANCE AND THE ENDORSEMENT ISSUE

29. The formal policy documents for Policy No. IIC-PRP-2022-07541 were issued by Ironclad after the July 1, 2022 inception date. This is consistent with standard industry practice for large commercial property insurance programs, in which binding authority is typically exercised prior to inception and formal policy manuscripts and endorsement schedules are prepared and delivered thereafter, sometimes weeks or even mo

30. Upon my review of the issued policy documents, there was ambiguity in the endorsement schedule regarding whether the named-windstorm sub-limit had been formally deleted by endorsement. Specifically, the policy forms as issued did not contain a clean, express endorsement explicitly striking or deleting the $15,000,000 named-windstorm sub-limit language that had appeared in the prior year's policy. The endorsement

31. Notwithstanding this ambiguity in the issued policy forms, my understanding—based on the renewal negotiations, the quotation terms, the binder, and the confirmation received from Ironclad's underwriting department during the April through June 2022 negotiation period—was that the named-windstorm sub-limit had been agreed to be deleted and that the premium charged to VHG for the 2022–2023 Policy Period reflected t

32. It is not unusual in commercial property programs for policy forms to be issued with delays or administrative oversights in endorsement processing. In my eighteen years in the commercial insurance brokerage industry, I have encountered numerous situations in other accounts where agreed-upon changes to policy terms, conditions, sub-limits, or endorsements were not immediately or clearly reflected in the formal pol

33. Consistent with this practice, I followed up with Ironclad regarding any missing or unclear endorsements following my review of the issued policy documents. At no time prior to the Hurricane Callista loss on September 18, 2022, did Ironclad inform me or VHG that the $15,000,000 named-windstorm sub-limit had not been deleted from the primary policy. To the contrary, Ironclad raised no objection to the deletion of

VI. REPRESENTATIONS MADE TO VHG

34. Based on the renewal negotiations, the quotation, the binder, and the confirmations received from Ironclad's underwriting department, I represented to VHG that the $15,000,000 named-windstorm sub-limit had been deleted from the Ironclad primary policy for the 2022–2023 Policy Period. These representations were made in good faith and were based upon the actual agreement reached during the renewal negotiations with

35. Sandra Pellegrini, in her capacity as VP of Risk Management for VHG, and other VHG personnel with responsibility for risk management and insurance matters, relied on my representations and on Tidewater's confirmation that the named-windstorm sub-limit had been deleted in connection with VHG's risk management decisions for the 2022–2023 Policy Period. Specifically, VHG's management relied on the understanding that

36. VHG paid the increased premium of $980,000 for the Ironclad primary layer for the 2022–2023 Policy Period, which incorporated the premium adjustment attributable to the deletion of the named-windstorm sub-limit. VHG paid this premium in full and on time, without objection or reservation, and Ironclad accepted the premium without objection or reservation.

37. At no time during the 2022–2023 Policy Period prior to Hurricane Callista did any party—neither Ironclad, nor Tidewater, nor VHG—treat the primary policy as containing the $15,000,000 named-windstorm sub-limit. The sub-limit was not referenced in any communications, correspondence, or discussions between the parties during the period from July 1, 2022 through the date of the Hurricane Callista loss on September 1

VII. HURRICANE CALLISTA AND POST-LOSS EVENTS

38. Hurricane Callista made landfall on or about September 18, 2022, as a Category 4 hurricane on the Saffir-Veltason Hurricane Wind Scale, with maximum sustained winds of approximately 145 miles per hour. The storm made landfall in the Lower Florida Keys, near the Big Pine Key area of Monroe County, Florida. Hurricane Callista subsequently tracked northward through the Gulf of Mexico, causing devastating wind, storm

39. Hurricane Callista caused catastrophic damage to all three of VHG's resort properties insured under the VHG Program. The Verimark Grand Key Resort in Marathon, Florida, suffered severe structural damage from direct wind impact and storm surge. The Verimark Harborview Hotel & Conference Center in Fort Myers Beach, Florida, sustained extensive damage from storm surge, wind-driven rain, and debris impact. The Verima

40. VHG submitted an initial notice of loss to Ironclad Indemnity Corporation on September 22, 2022, within four days of Hurricane Callista's landfall. The notice of loss was transmitted in writing and identified the date and nature of the loss, the affected properties, and the applicable policy number for the Ironclad primary layer. Notices were also sent to the excess layer carriers in accordance with the notice pr

41. VHG retained independent loss adjustment and forensic accounting professionals to quantify the physical damage and business-interruption losses resulting from Hurricane Callista. VHG submitted a sworn statement in proof of loss to Ironclad on November 15, 2022, claiming approximately Sixty Million Dollars ($60,000,000) in combined property damage and business-interruption losses across its three resort properties

42. On October 12, 2022, approximately three weeks after VHG's initial notice of loss, Ironclad issued a reservation of rights letter to VHG. The reservation of rights letter identified several potential coverage defenses that Ironclad purported to reserve, including but not limited to issues relating to the named-windstorm sub-limit, the scope of business-interruption coverage, the period of restoration, and other m

43. On February 3, 2023, Ironclad issued a formal denial of coverage letter to VHG. In this letter, Ironclad asserted, among other grounds, that the $15,000,000 named-windstorm sub-limit remained in effect under Policy No. IIC-PRP-2022-07541 for the 2022–2023 Policy Period and that VHG's business-interruption recovery under the primary policy was capped at $15,000,000, rather than the full $25,000,000 per-occurrence

44. To my knowledge, the February 3, 2023 denial letter was the first time that Ironclad took the position that the $15,000,000 named-windstorm sub-limit had not been deleted at the July 2022 renewal. At no time during the renewal negotiations, the binding process, the issuance of the policy, or the period between inception and the Hurricane Callista loss did Ironclad communicate to me or to VHG that the sub-limit re

45. I was surprised by Ironclad's position as articulated in its February 3, 2023 denial letter, and I disagreed with that position. Ironclad's assertion that the sub-limit remained in effect was directly contrary to the agreement reached during the April through June 2022 renewal negotiations, as I have described above. The deletion of the sub-limit was the subject of extensive negotiation, was expressly agreed upon

46. I attest that I am prepared to produce, and have produced in discovery in this matter, relevant correspondence and communications with Ironclad's underwriting department from the April through July 2022 renewal negotiation period reflecting the agreement to delete the $15,000,000 named-windstorm sub-limit from the Ironclad primary policy. These documents include, without limitation, email correspondence between m

47. These documents have been produced in discovery in this action and are identified on VHG's privilege log to the extent any documents are withheld on grounds of attorney-client privilege or work-product protection. The documents produced are maintained by Tidewater in the ordinary course of its business as broker of record for the VHG Program.

48. I was deposed in this matter on August 28, 2023. During my deposition, I provided testimony that is consistent with the statements set forth in this Declaration regarding the renewal negotiations, the agreement to delete the named-windstorm sub-limit, my communications with Ironclad and VHG, and the circumstances surrounding the issuance of the policy documents for the 2022–2023 Policy Period.

49. Based on my personal knowledge, my direct participation in the July 2022 renewal negotiations for the VHG Program, my contemporaneous review of correspondence and communications exchanged during those negotiations, and my eighteen years of professional experience in the commercial insurance brokerage industry, I attest to the following: (a) Ironclad's underwriter, Jason Whitfield, agreed during the April through