Contract analysis

I. INTRODUCTION Plaintiff Verimark Hospitality Group Inc. ("VHG") respectfully moves this Court, pursuant to Florida Rule of Civil Procedure 1.510, for partial summary judgment on a discrete but pivotal issue in this multi-defendant insurance coverage dispute: whether the $15,000,000 named-windstorm sub-limit that appeared in the prior-year policy was deleted from the Ironclad Indemnity Corporation ("Ironclad") prima

II. STATEMENT OF UNDISPUTED MATERIAL FACTS Contemporaneously with this Motion, VHG has filed a separate Statement of Undisputed Material Facts with full record citations, as required by this Court's Uniform Administrative Order and in conformity with Florida Rule of Civil Procedure 1.510(c). The material facts are summarized below for the Court's convenience. All citations herein are to the record evidence supporting

1. VHG is a Delaware corporation, publicly traded on the Nasdaq Stock Exchange under the ticker symbol "VMRK," and is headquartered at 1900 Brickell Avenue, Suite 3200, Miami, Florida 33129. VHG owns and operates luxury resort hotels and conference centers throughout the State of Florida. For fiscal year 2021, VHG reported revenue of approximately $412,000,000 and earnings before interest, taxes, depreciation, and am

2. VHG's three insured properties at issue in this litigation are: (a) Verimark Grand Key Resort, located at Mile Marker 48, Marathon, Monroe County, Florida 33050, consisting of 312 guest rooms, restaurants, spa and pool facilities, and marina; (b) Verimark Harborview Hotel & Conference Center, located at 1400 Estero Boulevard, Fort Myers Beach, Lee County, Florida 33931, consisting of 224 guest rooms and a 40,000-s

3. Defendant Ironclad Indemnity Corporation is a Connecticut-domiciled stock insurance company with its principal office at 55 Constitution Boulevard, Hartford, Connecticut 06103, NAIC Company Code No. 20537. Ironclad is the lead carrier on VHG's primary all-risks property and business-interruption insurance policy, Policy No. IIC-PRP-2022-07541, with a per-occurrence limit of $25,000,000 for business interruption an

4. Defendant Pinnacle Surplus Lines Inc. is a Texas-domiciled surplus-lines insurer with its principal office in Austin, Texas. Pinnacle provides the first excess layer of VHG's property and business-interruption insurance program under Policy No. PSL-XS1-2022-3390, affording $15,000,000 in excess of the underlying $25,000,000 Ironclad primary limit, on a follow-form basis with the Ironclad primary policy. (Policy No

5. Defendant Montclair Assurance Company is a New York-domiciled admitted carrier. Montclair provides the second excess layer under Policy No. MAC-XS2-2022-09817, affording $10,000,000 in excess of $40,000,000 (i.e., excess of the combined Ironclad primary and Pinnacle first excess limits). (Policy No. MAC-XS2-2022-09817, Declarations Page, at VHG-00487–VHG-00489; Orde Declaration, ¶ 4.)

6. Defendant Sovereign Re Ltd. is a Bermuda-domiciled excess carrier. Sovereign Re provides the third and final excess layer under Policy No. SRL-XS3-2022-5102, affording $10,000,000 in excess of $50,000,000 (i.e., excess of the combined limits of all underlying layers). (Policy No. SRL-XS3-2022-5102, Declarations Page, at VHG-00623–VHG-00625; Orde Declaration, ¶ 4.)

7. The total insurance tower for VHG's property and business-interruption program is $60,000,000 above the $500,000 deductible. The annual premium for the full tower for the 2022–2023 policy year was $1,840,000, allocated as follows: Ironclad primary, $980,000; Pinnacle first excess, $410,000; Montclair second excess, $265,000; Sovereign Re third excess, $185,000. (Pellegrini Declaration, ¶ 12, Ex. C (premium invoice

8. The 2021–2022 Ironclad primary policy (the "predecessor policy"), Policy No. IIC-PRP-2021-06328, contained a Named Windstorm Endorsement (Endorsement No. 14 to the predecessor policy) that imposed a sub-limit of $15,000,000 for business-interruption losses arising from named windstorms as designated by the National Hurricane Center, the Central Pacific Hurricane Center, or any successor agency. The sub-limit opera

9. In March 2022, as VHG began preparations for the July 2022 renewal of its property and business-interruption insurance program, VHG's Vice President of Risk Management, Sandra Pellegrini, directed VHG's broker of record, Tidewater Risk Advisors LLC ("Tidewater"), through its account executive Franklin Orde (whose office is located at 2600 South Bayshore Drive, Suite 800, Miami, Florida 33133), to negotiate the rem

10. Ms. Pellegrini testified at her deposition that VHG's management, including General Counsel Nathaniel Driscoll and Chief Financial Officer Diane Calder, had determined that the $15,000,000 sub-limit presented an unacceptable gap in VHG's insurance program given the company's concentration of assets in Florida's coastal hurricane zone, and that VHG was willing to pay additional premium to secure the deletion of th

11. Franklin Orde testified at his deposition that, in accordance with VHG's instructions, he communicated VHG's request to delete the $15,000,000 named-windstorm sub-limit to Ironclad's underwriting department during May and June 2022. Orde's communications were directed to Ironclad's lead underwriter for the VHG account, whose identity and role are confirmed in the underwriting correspondence produced by Ironclad i

12. On or about June 15, 2022, Orde received written confirmation from Ironclad's lead underwriter, transmitted via email, agreeing to delete the $15,000,000 named-windstorm sub-limit from the renewal policy in exchange for an increased premium on the primary layer. The email stated, in pertinent part, that Ironclad was "agreeable to the removal of the Named Windstorm Sub-Limit of $15M for Business Interruption, subj

13. The increased premium for the 2022–2023 primary layer was $980,000, up from $840,000 in the prior policy year — an increase of $140,000, representing approximately a 16.7% increase over the prior-year premium. This premium increase was specifically negotiated as the consideration for the deletion of the named-windstorm sub-limit. (Orde Depo., at 31:1–32:8; Pellegrini Declaration, ¶ 12, Ex. C.)

14. Following receipt of Ironclad's agreement, Orde conveyed the underwriter's agreement to Sandra Pellegrini, who in turn relayed the information to VHG's General Counsel, Nathaniel Driscoll, and CFO, Diane Calder. VHG's management authorized the increased premium and directed Tidewater to bind coverage effective July 1, 2022, with the understanding that the named-windstorm sub-limit had been deleted. (Pellegrini De

15. When Ironclad issued Policy No. IIC-PRP-2022-07541, the policy form included a "Named Windstorm Endorsement" (Endorsement No. 14) that contained boilerplate language referencing a sub-limit applicable to business-interruption losses arising from named windstorms. However, critically, the endorsement's schedule of sub-limits contained a blank entry in the "Business Interruption Sub-Limit" field — no dollar figure

16. Ironclad did not issue a separate endorsement expressly captioned "Deletion of Named-Windstorm Sub-Limit," nor did it issue any policy-change confirmation, policy-change request acknowledgment, or endorsement amendment reflecting the agreed-upon deletion of the sub-limit. (Orde Declaration, ¶ 9; Pellegrini Declaration, ¶ 11.)

17. The coverage binder issued by Tidewater on June 28, 2022, which was provided to VHG and a copy of which was transmitted to Ironclad's underwriting department, stated: "Named Windstorm Sub-Limit: Deleted per agreement" under the summary of coverage changes from the prior year. This language appeared in the section of the binder titled "Summary of Material Changes from Prior Policy Year." (Orde Declaration, ¶ 7, Ex

18. VHG's premium invoice for the 2022–2023 policy period, issued by Ironclad and reflecting the higher $980,000 primary-layer premium, was paid in full by VHG on or about July 8, 2022. Ironclad accepted and retained the full $980,000 premium without objection, protest, or any communication suggesting that the sub-limit had not been deleted or that the premium increase was attributable to any coverage change other th

19. Hurricane Callista was designated as a named tropical storm by the National Hurricane Center on September 12, 2022, and was subsequently upgraded to hurricane status. Hurricane Callista made landfall as a Category 4 hurricane on the Saffir-Veltason Hurricane Wind Scale (sustained winds of approximately 145 miles per hour) on September 18, 2022, at approximately 1:30 PM Eastern Daylight Time, near Big Pine Key in

20. Hurricane Callista produced storm surge of 8 to 14 feet above normal tide levels in Monroe County and 6 to 10 feet above normal tide levels in Lee County. Catastrophic wind damage, flooding, and debris impacts were reported throughout the affected areas. Monroe County issued a mandatory evacuation order on September 16, 2022. Lee County issued a mandatory evacuation order on September 17, 2022. (National Weather

21. All three VHG properties sustained catastrophic damage as a result of Hurricane Callista and were forced to close: (a) Grand Key Resort (Marathon, Monroe County): Closed for a total of 178 days, from September 18, 2022 through March 15, 2023. The property sustained severe structural damage to guest-room buildings, complete destruction of the marina, flooding of ground-floor common areas, and loss of electrical, p

22. VHG submitted its notice of loss to Ironclad on September 22, 2022, within four days of the hurricane's landfall and well within the policy's notice requirements. VHG subsequently submitted a sworn statement in proof of loss on November 15, 2022, claiming total business-interruption losses of $60,000,000, broken down as follows: Grand Key Resort, $31,400,000; Harborview Hotel & Conference Center, $18,700,000; Sun

23. On October 12, 2022, Ironclad issued a reservation of rights letter addressed to VHG, citing as one of several grounds the purported existence of the $15,000,000 named-windstorm sub-limit under Endorsement No. 14 as a potential limitation on VHG's business-interruption recovery. The reservation of rights letter was signed by Victor Haddon, Ironclad's Senior Vice President of Claims. (IIC-CL-00023–IIC-CL-00029 (re

24. On October 25, 2022, VHG, through its coverage counsel, Calderwood & Harkness LLP (Elaine Forsythe, Esq.), responded to Ironclad's reservation of rights letter, specifically disputing the applicability of any named-windstorm sub-limit and referencing the deletion negotiated during the July 2022 renewal. VHG's letter enclosed a copy of the Tidewater binder reflecting the deletion and demanded that Ironclad withdra

25. On February 3, 2023, Ironclad issued a formal coverage denial letter, asserting four grounds for denial or limitation of VHG's business-interruption claim: (1) The $15,000,000 named-windstorm sub-limit caps VHG's business-interruption recovery for Hurricane Callista losses; (2) VHG's claimed period of restoration is unreasonably extended and includes losses not attributable to the covered peril; (3) A portion of

26. On February 10, 2023, Pinnacle Surplus Lines Inc. issued its own denial letter, expressly following Ironclad's denial and adopting Ironclad's stated grounds, including the assertion that the $15,000,000 named-windstorm sub-limit applied. Pinnacle's denial rested on the follow-form nature of its excess policy. (PSL-CL-00012–PSL-CL-00015 (Pinnacle denial letter).)

27. Montclair Assurance Company and Sovereign Re Ltd. did not issue formal coverage denials. Both carriers reserved their rights and took the position that their respective excess layers would not be reached if the $15,000,000 named-windstorm sub-limit applied to the underlying Ironclad primary policy, as VHG's capped recovery would fall well below their attachment points ($40,000,000 and $50,000,000, respectively).

28. At his deposition, Victor Haddon, Ironclad's Senior Vice President of Claims, acknowledged that he was not involved in the underwriting or renewal negotiations for VHG's 2022–2023 policy and that he relied on the policy form as issued — specifically, Endorsement No. 14 — in making the decision to assert the named-windstorm sub-limit as a basis for limiting VHG's claim. (Deposition of Victor Haddon (July 10, 2023)

29. Critically, Haddon further testified that he did not consult with Ironclad's underwriting department about the sub-limit deletion negotiations before issuing the February 3, 2023 denial. When asked whether he had reviewed any correspondence between Ironclad's underwriter and Tidewater Risk Advisors concerning the deletion of the sub-limit, Haddon answered: "I did not." When asked whether he had spoken with anyone

30. Denise Whitford, the lead adjuster from Arbor Claims Services LLC retained by Ironclad to adjust VHG's claim, testified at her deposition that her adjustment report did not independently analyze whether the named-windstorm sub-limit had been deleted during the July 2022 renewal negotiations. Ms. Whitford testified that she was not asked by Ironclad to investigate the issue and that she applied the sub-limit in he

III. LEGAL STANDARD Under Florida Rule of Civil Procedure 1.510, as amended effective May 1, 2021, summary judgment is appropriate when "there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fla. R. Civ. P. 1.510(a). The 2021 amendments to Rule 1.510 adopted the federal summary judgment standard articulated in Celotex Corp. v. Catrett, 477 U.S. 317 (1986

IV. ARGUMENT A. Under Florida Law, the Named-Windstorm Sub-Limit Was Deleted at the July 2022 Renewal The undisputed record evidence establishes, as a matter of law, that the $15,000,000 named-windstorm sub-limit was deleted from VHG's primary property and business-interruption policy during the July 2022 renewal negotiations. The deletion was agreed upon by Ironclad's underwriting department, memorialized in the cov

1. The Binder Controls Where the Policy Is Ambiguous. Under Florida law, a binder is a temporary contract of insurance that establishes the terms and conditions of coverage until the formal policy is issued. See Fla. Stat. § 627.420(1) ("A binder may be issued pending the issuance of a policy."); Essex Ins. Co. v. Zota, 466 So. 2d 1208, 1210 (Fla. 3d DCA 1985) (recognizing that a binder constitutes a valid, enforceab

2. The Extrinsic Evidence Unanimously Confirms Deletion. Even if the Court were to look beyond the four corners of the binder and the policy to consider the full scope of extrinsic evidence bearing on the parties' intent — as Florida law permits where a policy is ambiguous, see Excelsior Ins. Co., 369 So. 2d at 942 — the result is no different. The extrinsic evidence is unanimous, unrebutted, and points inexorably to

3. The Premium Increase Constitutes Bargained-For Consideration for the Deletion. The undisputed evidence further establishes that VHG's payment of the increased premium constitutes bargained-for consideration for the deletion of the named-windstorm sub-limit. The primary-layer premium increased from $840,000 in the 2021–2022 policy year to $980,000 in the 2022–2023 policy year — an increase of $140,000, representing

V. CONCLUSION AND RELIEF REQUESTED For all of the foregoing reasons, Plaintiff Verimark Hospitality Group Inc. respectfully requests that this Court enter partial summary judgment in VHG's favor, declaring as follows:

1. The $15,000,000 named-windstorm sub-limit was deleted from Ironclad Indemnity Corporation's primary property and business-interruption policy, Policy No. IIC-PRP-2022-07541, effective July 1, 2022, by agreement of the parties during the July 2022 renewal negotiations, and the deletion is reflected in the coverage binder, the premium paid and accepted, and Ironclad's own underwriting records.

2. VHG's business-interruption claim arising from Hurricane Callista is subject to the full $25,000,000 per-occurrence limit under the Ironclad primary policy (less the $500,000 deductible) and is not limited by any named-windstorm sub-limit.

3. Pinnacle Surplus Lines Inc.'s follow-form excess policy, Policy No. PSL-XS1-2022-3390, is likewise not subject to any named-windstorm sub-limit, and Pinnacle's coverage denial on that ground is without basis.

4. The named-windstorm sub-limit does not bar VHG's claim from reaching the attachment points of the second excess layer (Montclair Assurance Company, $10,000,000 excess of $40,000,000, Policy No. MAC-XS2-2022-09817) or the third excess layer (Sovereign Re Ltd., $10,000,000 excess of $50,000,000, Policy No. SRL-XS3-2022-5102). VHG further respectfully requests such other and further relief as this Court deems just an

VI. SUPPORTING MATERIALS REFERENCED The following materials are filed concurrently with this Motion and are incorporated herein by reference:

1. Statement of Undisputed Material Facts in Support of Plaintiff's Motion for Partial Summary Judgment on the Named-Windstorm Sub-Limit Issue;

2. Memorandum of Law in Support of Plaintiff's Motion for Partial Summary Judgment on the Named-Windstorm Sub-Limit Issue;

3. Declaration of Sandra Pellegrini, with Exhibits A through E;

4. Declaration of Franklin Orde, with Exhibits A through D, including the June 28, 2022 Tidewater coverage binder (Exhibit B);

5. Declaration of Dr. Helen Vasquez, with Exhibits A through C;

6. Excerpts from the Deposition Transcript of Franklin Orde (taken August 28, 2023);

7. Excerpts from the Deposition Transcript of Sandra Pellegrini (taken August 14, 2023);

8. Excerpts from the Deposition Transcript of Victor Haddon (taken July 10, 2023);

9. Excerpts from the Deposition Transcript of Denise Whitford (taken July 24, 2023);

10. Certified copy of Policy No. IIC-PRP-2022-07541, including all endorsements (Endorsement No. 14 in particular);

11. Certified copy of Tidewater Risk Advisors coverage binder dated June 28, 2022; and

12. VHG premium invoice for the 2022–2023 policy period.

VII. CERTIFICATE OF SERVICE I HEREBY CERTIFY that on November 1, 2023, a true and correct copy of the foregoing Plaintiff's Motion for Partial Summary Judgment on the Named-Windstorm Sub-Limit Issue, together with all supporting materials referenced herein, was served via the Court's electronic filing system (E-Portal) and by electronic mail upon: Gregory Stanton, Esq. Meredith Liang, Esq. Colin Ashford, Esq. Fendowe

VIII. SIGNATURE BLOCK Respectfully submitted, CALDERWOOD & HARKNESS LLP 333 SE 2nd Avenue, Suite 4400 Miami, Florida 33131 Telephone: (305) 555-7200 Facsimile: (305) 555-7201 By: ________ Elaine Forsythe, Esq. Florida Bar No. 0847239 Email: eforsythe@calderwoodharkness.com Responsible Partner Tiffany Rosenthal, Esq. Florida Bar No. 1024516 Email: trosenthal@calderwoodharkness.com Lead Associate Andrew Fitzpatrick, Es