PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT This memorandum is prepared by counsel in anticipation of litigation and for the purpose of providing legal advice. It is protected by the attorney-client privilege and the work-product doctrine. This document should not be disclosed to, or discussed with, any person other than the addressee and members of the legal team without the express prior authorization of Calderwood & Harkness LLP.
MEMORANDUM
TO: Sandra Pellegrini, Vice President of Risk Management, Verimark Hospitality Group Inc.
FROM: Tiffany Rosenthal, Calderwood & Harkness LLP Andrew Fitzpatrick, Calderwood & Harkness LLP
REVIEWED BY: Elaine Forsythe, Calderwood & Harkness LLP (Responsible Partner)
DATE: August 10, 2023
RE: Deposition Preparation — Verimark Hospitality Group Inc. v. Ironclad Indemnity Corp. et al., Case No. 2022-CA-031547, Eleventh Judicial Circuit of Florida, Miami-Dade County
ENGAGEMENT NO.: 1021-00003
DEPOSITION DATE: August 14, 2023
DEPOSITION LOCATION: Calderwood & Harkness LLP, 333 SE 2nd Avenue, Suite 4400, Miami, FL 33131 (or as noticed)
EXAMINING COUNSEL:
Gregory Stanton and/or Meredith Liang (Fendowell Rourke & Stanton LLP, representing Ironclad Indemnity Corporation and Pinnacle Surplus Lines Inc.)
Patricia Kraus and/or Raymond Cho (Delvecchio & Kraus LLP, representing Montclair Assurance Company and Sovereign Re Ltd.)
DEFENDING COUNSEL: Tiffany Rosenthal, Calderwood & Harkness LLP
I. Purpose of This Memorandum
This memorandum has been prepared to assist you in preparing for your deposition, which has been noticed by the defendants in the above-captioned insurance coverage action. The deposition was noticed by Fendowell Rourke & Stanton LLP on behalf of Ironclad Indemnity Corporation ("Ironclad") and Pinnacle Surplus Lines Inc. ("Pinnacle"). Counsel for the remaining defendants — Delvecchio & Kraus LLP, representing Montclair Assurance Company ("Montclair") and Sovereign Re Ltd. ("Sovereign Re") — may also examine you during the same session.
The purpose of this memorandum is to provide you with an overview of general deposition guidelines, to identify the topic areas on which opposing counsel is likely to question you, to flag key issues where your testimony will be particularly significant, and to offer guidance on how to address anticipated lines of questioning. This document is intended to serve as a reference in advance of and in connection with our in-person preparation sessions, which are scheduled for August 12–13, 2023 at our Miami office.
This memorandum is protected by the attorney-client privilege and the work-product doctrine. It reflects the mental impressions, conclusions, opinions, and legal theories of counsel. It should not be shared with anyone outside the legal team — including but not limited to colleagues at Verimark Hospitality Group Inc. ("VHG") who are not part of the litigation team, employees of Tidewater Risk Advisors LLC, representatives of the defendant insurers, or any other third party. If you are asked during the deposition whether you reviewed any documents or memoranda prepared by your attorneys, you may acknowledge that you prepared for the deposition with the assistance of counsel, but you should not disclose the contents of this memorandum or the substance of your discussions with us.
II. General Deposition Guidelines
The following guidelines apply to all depositions and are designed to help you present accurate, truthful, and effective testimony. We will review each of these principles in detail during our preparation sessions on August 12–13, but it is important that you familiarize yourself with them in advance.
A. Fundamental Rules of Testimony
1. Listen to the full question before answering. Wait until the examining attorney has finished speaking before you begin your response. This gives you time to absorb the question and gives defending counsel an opportunity to interpose an objection if necessary.
2. Answer only the question asked — do not volunteer information. Your obligation is to provide truthful, responsive answers, not to educate opposing counsel. If a question calls for a "yes" or "no," give that answer. If additional explanation is necessary and appropriate, counsel will provide an opportunity for you to clarify during redirect or at a break. Resist the temptation to fill silences or to offer context that has not been requested.
3. If you do not understand a question, ask for clarification. There is no obligation to answer a question you do not understand. You may say, "I'm not sure I understand the question — could you rephrase it?" or "Could you clarify what you mean by [term]?" This is entirely appropriate and should not cause you any concern.
4. If you do not know or do not remember, say so — do not guess. You are under oath, and guessing creates the risk of inaccurate testimony. "I don't recall" and "I don't know" are perfectly acceptable answers if they are truthful. Do not allow opposing counsel to pressure you into speculating or reconstructing events from incomplete memory.
5. Take your time. There is no rush. You may pause to think before answering. A thoughtful pause does not look bad on the record — in fact, it reflects care and diligence. Take a breath between the question and your answer.
6. Beware of compound questions. If an attorney asks a question that contains multiple parts or embeds multiple assumptions, you have every right to ask that the question be broken into its component parts. For example: "Isn't it true that you received the policy in August and reviewed it that same week?" contains two separate factual predicates. You may say, "I'd like to answer those one at a time."
7. Do not speculate about documents you have not seen or conversations you were not part of. If you are asked about the contents of a document you have not reviewed, say so. If you are asked about what another person said, thought, or intended, and you do not have personal knowledge, state that you do not know. Your testimony should be limited to facts within your personal knowledge.
8. Be careful with absolutes. Words like "never," "always," "every time," and "without exception" can be used against you if any contrary evidence exists. Use qualifiers when appropriate: "To the best of my recollection," "Generally," "In the usual course."
9. Do not argue with examining counsel. Even if you believe a question is unfair, misleading, or based on a false premise, remain calm and professional. If a question is improper, defending counsel will object. Your role is to be a truthful witness, not an advocate.
10. Do not joke, use sarcasm, or make off-the-record comments. Everything you say while the court reporter is present is on the record, including comments made during pauses, transitions, and even some sidebar remarks. Treat every moment as if it will be read by a judge or jury.
B. Objections and Privilege
Defending counsel — Tiffany Rosenthal — will be present throughout the deposition and will assert objections as necessary to preserve VHG's rights. The following principles govern objections and privilege issues:
• If an objection is made, pause and wait for instruction before answering. In most cases, an objection will be stated for the record (e.g., "Objection — form" or "Objection — assumes facts not in evidence"), and you will then be instructed to answer. In some cases, however, counsel may instruct you not to answer, typically because the question invades the attorney-client privilege. If you are instructed not to answer, do not answer.
• Do not disclose communications with Calderwood & Harkness attorneys. Any communications you have had with Tiffany Rosenthal, Andrew Fitzpatrick, Elaine Forsythe, or any other attorney or staff member at Calderwood & Harkness LLP regarding this litigation are protected by the attorney-client privilege. Do not describe the substance of those communications, the advice you received, or the topics discussed. If asked, you may state: "I discussed that matter with my attorneys, and those communications are privileged."
• Do not discuss the substance of any conversation with Nathaniel Driscoll (VHG General Counsel) regarding legal strategy or this litigation. Communications with in-house counsel made for the purpose of obtaining or providing legal advice are also privileged. If a question touches on conversations with Mr. Driscoll that relate to legal strategy, litigation preparation, or legal analysis of coverage issues, pause and allow defending counsel to assess whether a privilege applies. Note, however, that not all communications with Mr. Driscoll are necessarily privileged — communications that are purely operational or business-related may not be protected. We will discuss this distinction in detail during the preparation sessions.
• If a question touches on privileged communications, pause and let counsel intervene. You do not need to identify the privilege yourself. Simply pausing when a question feels as though it is asking about advice from lawyers will give counsel the opportunity to object and provide instruction.
C. Document Review Protocol
Opposing counsel will likely present numerous documents during the deposition, including policy forms, correspondence, emails, reports, and internal memoranda. The following guidelines will help you handle document-related questions effectively:
• Take time to review each document fully before answering questions about it. Do not allow examining counsel to rush you. Read the entire document — or at least the relevant portions — before answering any question about its contents. This is your right, and it prevents errors caused by incomplete review.
• Do not assume any document is complete. Confirm page counts and exhibit labels. If a document appears to be missing pages, is an excerpt, or lacks context, say so. Ask whether the exhibit includes the full document.
• If you are shown a document you have not previously seen, say so. There is no obligation to be familiar with every document produced in this case. If a document is unfamiliar to you, state that clearly before answering substantive questions about it.
• You may request to see the entire document if only a portion is presented. If opposing counsel asks you about a particular paragraph or page, you may request the opportunity to review the full document for context before answering.
• Do not authenticate documents unless you have personal knowledge of their creation or receipt. If you are asked whether a document is a "true and accurate copy," confirm only if you have a basis for doing so. If you are not sure, say so.
D. Corrections and Clarifications
• You will have the opportunity to review and sign the deposition transcript after it is prepared, unless that right is waived. During your review, you may make corrections to the transcript if you believe any of your answers were inaccurately transcribed or if you wish to clarify a response. Substantive changes, however, can be highlighted by opposing counsel and may be the subject of further inquiry.
• If you realize during the deposition that an earlier answer was incorrect or incomplete, please let counsel know at the next available break. We can then address the issue, either by bringing it up on the record or by noting it for potential correction during transcript review.
III. Background on Sandra Pellegrini's Role and Anticipated Scope of Examination
A. Ms. Pellegrini's Position and Responsibilities
Sandra Pellegrini currently serves as Vice President of Risk Management at Verimark Hospitality Group Inc. In this role, Ms. Pellegrini reports dually to Diane Calder, VHG's Chief Financial Officer, and Nathaniel Driscoll, VHG's General Counsel. Ms. Pellegrini's tenure at VHG should be confirmed during the preparation session, including the date she assumed the VP of Risk Management role and any prior positions held within the company.
Ms. Pellegrini's core responsibilities include the following:
• Enterprise Risk Management Program: Overseeing the design, implementation, and ongoing management of VHG's enterprise risk management framework, encompassing all categories of insurable and non-insurable risk across VHG's portfolio of hospitality properties.
• Insurance Program Design and Procurement: Designing and procuring VHG's comprehensive insurance program, including property, casualty, general and professional liability, workers' compensation, environmental, and specialty lines of coverage. Ms. Pellegrini is the principal VHG executive responsible for determining coverage requirements, setting coverage limits and deductible levels, and working with VHG's insurance broker to place coverage in the market.
• Broker Relationship Management: Managing VHG's relationship with Tidewater Risk Advisors LLC ("Tidewater"), VHG's broker of record for commercial property and casualty insurance. Ms. Pellegrini's primary point of contact at Tidewater is Franklin Orde, Account Executive, who handles the VHG property account.
• Loss Notification and Claims Administration: Managing the process of notifying VHG's insurers of losses, submitting proofs of loss, and coordinating VHG's claims administration efforts. Ms. Pellegrini serves as VHG's primary point of contact with insurance carriers, independent adjusters, and outside coverage counsel in connection with major claims.
• Coordination with Outside Adjusters and Counsel: For significant claims, Ms. Pellegrini coordinates with outside independent adjusters retained by insurers, forensic accountants, engineering consultants, and coverage counsel to manage the claims process and protect VHG's interests.
• Disaster Preparedness and Response Coordination: Overseeing VHG's disaster preparedness program, including hurricane preparedness protocols for VHG's Florida properties, evacuation planning, property protection measures, and business continuity planning.
Ms. Pellegrini's professional background in insurance and risk management — including any relevant certifications, prior employment, and educational credentials — should be confirmed during the preparation session so that she is prepared to address background questions at the opening of the deposition. Opposing counsel will almost certainly begin with questions about her qualifications, experience, and the scope of her responsibilities.
B. Why Defendants Want This Deposition
Ms. Pellegrini is the VHG executive most directly involved in the factual issues at the core of this coverage dispute. Defendants have noticed her deposition because she has personal knowledge of — and played a central decision-making role in — the following areas:
1. The design and renewal of VHG's property/business-interruption insurance program, including the critical July 2022 renewal of the Ironclad primary policy and the placement of the excess tower.
2. Communications with Tidewater Risk Advisors regarding the July 2022 renewal, including the negotiations concerning the windstorm sub-limit — the most heavily contested coverage issue in this case.
3. Notice of loss procedures following Hurricane Callista, including the timing and content of VHG's initial loss notification to Ironclad and the preparation and submission of the sworn statement in proof of loss.
4. Mitigation and restoration decision-making, including the scope and pace of VHG's efforts to repair its damaged properties and resume business operations after Hurricane Callista.
5. Communications with Ironclad, Arbor Claims Services LLC, and other insurers and their representatives during the claims process, including the receipt and response to reservation of rights letters and formal coverage denials.
Defendants' deposition of Ms. Pellegrini is designed to develop facts supporting their four principal coverage defenses:
(a) Windstorm Sub-Limit: Ironclad contends the primary policy contains a $15 million named-windstorm sub-limit on business-interruption coverage, which would cap BI recovery under the primary layer and reduce the amount available under the excess tower.
(b) Period of Restoration: Ironclad argues that VHG's claimed period of restoration for each property exceeds the period during which coverage applies, asserting that repairs could have been completed more quickly with the exercise of reasonable diligence.
(c) Concurrent Causation / Flood Exclusion: Ironclad contends that a portion of the damage at Grand Key Resort and Harborview Hotel was caused by flooding (storm surge), which it asserts is excluded from coverage under the policy's flood exclusion, and that the concurrent-causation provisions operate to preclude recovery for losses attributable in whole or in part to excluded perils.
(d) Failure to Mitigate: Ironclad alleges that VHG failed to take reasonable steps to reduce the duration and extent of business interruption, thereby inflating its claimed losses.
Ms. Pellegrini's testimony will be significant as to each of these defenses. Accordingly, careful preparation is essential.
IV. Anticipated Topic Areas and Preparation Notes
The following sections address the principal topic areas on which Ms. Pellegrini is likely to be examined. For each topic area, we have provided background facts, anticipated questions, and guidance on how to approach the examination. This guidance is not a script — Ms. Pellegrini must testify truthfully in her own words. Rather, it is intended to help her organize her recollections, understand the significance of various lines of questioning, and avoid common pitfalls.
Topic 1: VHG's Insurance Program Design and the July 2022 Renewal
A. Overview of the Insurance Tower
Ms. Pellegrini should be prepared to describe VHG's property and business-interruption insurance program as it was structured for the July 1, 2022 through July 1, 2023 policy year. The program consisted of a four-layer tower, structured as follows:
The total tower provided $60 million of coverage above a $500,000 per-occurrence deductible. Total annual premium for the tower was $1,840,000. The program was written on an all-risk basis, providing coverage for direct physical loss and damage from all causes of loss not specifically excluded, together with business-interruption coverage (loss of business income) and extra-expense coverage.
Ms. Pellegrini should be comfortable identifying each carrier, the layer structure, the policy numbers, and the general scope of coverage. She should also understand the follow-form structure of the excess layers — Pinnacle, Montclair, and Sovereign Re follow form to the Ironclad primary policy, subject to certain limited modifications in their respective certificates of insurance.
B. Role of Tidewater Risk Advisors
Tidewater Risk Advisors LLC is VHG's insurance broker of record for commercial property and casualty coverage. Tidewater's principal office is located at 2600 South Bayshore Drive, Suite 800, Miami, Florida 33133. Franklin Orde is the Account Executive at Tidewater who has primary responsibility for the VHG property program.
Ms. Pellegrini should be prepared to describe her working relationship with Orde: how frequently they communicated (whether by phone, email, or in-person meetings), the typical timeline and process for annual renewals, and the nature and scope of the instructions VHG provided to Tidewater regarding its coverage needs for the 2022–2023 policy year.
Ms. Pellegrini should also be prepared to describe Orde's role in the renewal process — specifically, that Orde was responsible for marketing VHG's program to carriers, negotiating terms, conditions, pricing, and sub-limits with Ironclad's underwriting team, and placing the excess layers. VHG relied on Tidewater's professional expertise in structuring the program and in communicating VHG's coverage requirements to the market.
Defendants will likely probe the nature and extent of VHG's reliance on Tidewater and, in particular, whether VHG independently verified that Tidewater had secured the coverage terms VHG had requested. The answers to these questions are directly relevant to the windstorm sub-limit issue, as discussed below.
C. The Windstorm Sub-Limit — Critical Issue
This is the single most important topic area for the deposition. Ms. Pellegrini should expect extensive, detailed, and aggressive questioning on this subject from both sets of examining counsel.
Background: Ironclad contends that the primary policy, as issued, contains a $15 million named-windstorm sub-limit applicable to business-interruption coverage. Specifically, Ironclad points to Endorsement No. 14 to the policy, which provides that "the Named Windstorm Sub-Limit applicable to Business Income and Extra Expense coverages shall be $15,000,000 per occurrence." If this sub-limit applies, it would substantially reduce VHG's recovery under the primary layer and correspondingly reduce the amounts available under the excess layers, which follow form to the primary.
VHG's position: The $15 million windstorm sub-limit was deleted at the July 2022 renewal pursuant to negotiations between Tidewater (acting on VHG's behalf through Franklin Orde) and Ironclad's underwriting team. VHG requested the deletion of the sub-limit as part of the 2022 renewal, and an increased premium was agreed upon in exchange. The failure to issue a formal endorsement reflecting the deletion was an error in the policy issuance process — it was not a reflection of the parties' agreement. VHG's coverage expectations, as communicated through and confirmed by its broker, were that the sub-limit had been removed and that BI coverage was subject to the full $25 million policy limit without a separate windstorm cap.
Key questions Ms. Pellegrini should expect:
• What were VHG's coverage objectives for the 2022 renewal? Why was the removal of the windstorm sub-limit a priority?
• Did VHG specifically instruct Tidewater (Franklin Orde) to seek removal of the windstorm sub-limit?
• When and how did those instructions occur — by email, phone call, in-person meeting?
• What did Franklin Orde communicate to Ms. Pellegrini about the status of the windstorm sub-limit during the renewal negotiations? When did those communications occur?
• Did Orde tell Ms. Pellegrini that the sub-limit had been deleted? If so, when, and in what form (oral, written, email)?
• Did Ms. Pellegrini receive written confirmation — such as a binder, a policy summary, a coverage checklist, or a formal endorsement — confirming that the windstorm sub-limit had been deleted?
• Did Ms. Pellegrini review the policy forms, endorsements, or the policy manuscript after issuance? If so, when and to what extent?
• What was Ms. Pellegrini's understanding of the BI coverage in place as of the policy inception date (July 1, 2022)? Was her understanding that the full $25 million BI limit applied without a windstorm sub-limit?
• Was there an identifiable increase in premium attributable to the deletion of the sub-limit? If so, how much?
• Did Ms. Pellegrini compare the 2022–2023 premium to the prior year's premium? Did she understand why the premium increased?
Key guidance:
Ms. Pellegrini should testify truthfully and consistently about her understanding that the windstorm sub-limit was removed at the 2022 renewal. She should reference her conversations with Franklin Orde and describe what Orde communicated to her about the status of the sub-limit negotiations. She should describe any written confirmations she received, whether from Orde or from Ironclad directly.
However, Ms. Pellegrini should not overstate what she personally reviewed in the policy forms if, in fact, she relied primarily on the broker's representations and policy summaries rather than reading the full policy manuscript and every endorsement. The distinction between what Orde told her and what she independently verified by reviewing the policy document itself is critical. If she did not read Endorsement No. 14, she should say so. If she relied on Tidewater's assurances that the sub-limit had been deleted, she should say so clearly. Her reliance on the broker is reasonable and actually supports VHG's position — it demonstrates that VHG was told the sub-limit was deleted and acted in reliance on that representation, including by paying an increased premium.
Note regarding sequencing of other depositions: Franklin Orde is scheduled to be deposed on August 28, 2023 — two weeks after Ms. Pellegrini's deposition. Accordingly, Orde's sworn testimony on the sub-limit issue will not be available at the time of Ms. Pellegrini's deposition. Ms. Pellegrini should testify about her own knowledge and communications with Orde without anticipating, characterizing, or speculating about what Orde will say in his own deposition. Similarly, Ms. Pellegrini's Declaration filed on November 1, 2023 in support of VHG's Motion for Partial Summary Judgment will attest to her understanding that the sub-limit was deleted based on Tidewater's representations and the premium negotiation; this Declaration post-dates the deposition and Ms. Pellegrini should simply testify truthfully at the deposition in a manner consistent with the facts as she understands them.
D. Prior Policy Years
Defendants are likely to ask about the windstorm sub-limit in prior policy years in order to establish a historical baseline and to argue that the sub-limit was a longstanding feature of VHG's coverage. Ms. Pellegrini should be prepared to describe the following:
• Whether the $15 million windstorm sub-limit was present in the 2020–2021 policy year and the 2021–2022 policy year.
• When VHG first sought removal of the sub-limit and why — specifically, the business rationale tied to VHG's expansion of its Florida Keys and Gulf Coast property portfolio, which increased VHG's named-windstorm exposure and made the $15 million cap inadequate relative to VHG's potential BI losses.
• What coverage enhancements, if any, VHG obtained at prior renewals and whether the sub-limit was discussed in those prior renewal cycles.
• Whether VHG experienced any prior hurricane-related claims that informed its decision to seek deletion of the sub-limit.
Ms. Pellegrini should describe the evolution of VHG's coverage requirements as the company expanded its presence in coastal Florida markets, emphasizing that the decision to seek removal of the windstorm sub-limit was a deliberate, risk-informed business judgment made in consultation with Tidewater.
Topic 2: Notice of Loss Procedures Following Hurricane Callista
A. Hurricane Callista Timeline
Ms. Pellegrini should be familiar with the following timeline of events relating to Hurricane Callista and VHG's affected properties:
September 12, 2022: Hurricane Callista named by the National Hurricane Center (NHC). The storm was a tropical depression in the western Caribbean on September 10, upgraded to a tropical storm on September 11, and designated a hurricane on September 12 as it tracked north-northwest through the Gulf of Mexico.
September 16, 2022: Monroe County issued a mandatory evacuation order covering coastal areas, including the area of the Grand Key Resort in Marathon, Florida. VHG initiated evacuation of guests and non-essential staff at Grand Key Resort in accordance with county orders and VHG's hurricane preparedness protocols.
September 17, 2022: Lee County issued a mandatory evacuation order covering coastal areas, including Fort Myers Beach, where VHG's Harborview Hotel & Conference Center is located. VHG initiated evacuation of Harborview guests and staff. Sunset Shores in St. Pete Beach was not subject to a mandatory evacuation order at that time but was voluntarily closed as a precautionary measure.
September 18, 2022, approximately 1:30 PM EDT: Hurricane Callista made landfall in the Lower Florida Keys (Big Pine Key area) as a Category 4 hurricane with maximum sustained winds of approximately 145 miles per hour. Storm surge of 8 to 14 feet was recorded in Monroe County, and storm surge of 6 to 10 feet was recorded in coastal Lee County. All three VHG properties sustained damage of varying severity.
Post-landfall period: Widespread power outages, road closures, debris fields, and restricted access to affected areas. Monroe County and Lee County remained under emergency declarations, and access to barrier islands and coastal areas was restricted by local authorities.
Ms. Pellegrini should be prepared to describe each of these events from her personal perspective — where she was during the storm, how she monitored the situation, what communications she had with property-level management, and how decisions regarding evacuation and property protection were made.
B. VHG's Loss Notification
VHG submitted its initial notice of loss to Ironclad Indemnity Corporation on September 22, 2022 — four calendar days after Hurricane Callista's landfall. Defendants may probe the timing of this notification and argue that it was not "prompt" as required under the terms of the policy.
Ms. Pellegrini should be prepared to explain the notification process in detail:
• Who authorized the notice: Ms. Pellegrini, in coordination with Nathaniel Driscoll (General Counsel) and Diane Calder (CFO), authorized the submission of the initial notice of loss.
• How it was transmitted: The notice was submitted in writing, via email and hard-copy letter, to Ironclad's claims department. Ms. Pellegrini should confirm the specific addressee and method of transmission.
• What information was provided: The initial notice identified the three affected properties, described the general nature of the damage (wind, storm surge, and water intrusion), stated that VHG's properties were closed and that business-interruption losses were being incurred, and reserved VHG's right to supplement the notice with additional information as it became available.
• Why four days elapsed before the notice was submitted: Ms. Pellegrini should be prepared to explain the reasons for the four-day interval between landfall (September 18) and the notice of loss (September 22):
(a) Physical access to the properties was impossible in the immediate aftermath of the hurricane due to road closures, debris, flooding, and restricted access imposed by emergency management authorities. Monroe County did not permit re-entry to Marathon until September 20, and Fort Myers Beach was similarly restricted.
(b) The immediate priority of VHG management in the post-landfall period was ensuring the safety and accounting for guests and employees who had evacuated, coordinating with emergency services, and providing humanitarian assistance where needed.
(c) VHG needed to perform at least a preliminary damage assessment before notifying the carrier, so that the notice would contain meaningful information about the scope and nature of the losses. Reporting to the insurer before any property inspection would have resulted in a notice lacking the minimum substantive content necessary to initiate the claims process.
Ms. Pellegrini should emphasize that VHG acted promptly under the circumstances — a Category 4 hurricane had devastated a wide swath of coastal Florida, infrastructure was severely impaired, and four days was an entirely reasonable period in which to gather sufficient information to submit a meaningful notice of loss. She should note that nothing in the policy requires notice within a specific number of hours or days; the standard is one of reasonableness.
Ironclad's Reservation of Rights: Ironclad issued a reservation of rights letter dated October 12, 2022, approximately three weeks after receipt of VHG's notice of loss. Ms. Pellegrini should be prepared to describe her reaction upon receiving the reservation of rights letter — specifically, what coverage defenses Ironclad identified, what actions she took in response, and how VHG managed the claims process going forward in light of the reservation. She should be careful not to disclose the substance of any communications with Calderwood & Harkness attorneys regarding the reservation of rights, as those communications are privileged.
C. Sworn Statement in Proof of Loss
VHG submitted its sworn statement in proof of loss to Ironclad on November 15, 2022, claiming $60 million in business-interruption losses across the three affected properties. The claimed losses were allocated as follows:
Ms. Pellegrini should be prepared to describe her role in assembling and submitting the sworn statement in proof of loss. She was the VHG executive responsible for coordinating the proof of loss submission, working in conjunction with Diane Calder (CFO) and VHG's finance and accounting personnel. She should be able to describe the data sources used to calculate the BI loss figures, including historical revenue data, occupancy rates, average daily rates, seasonal adjustment factors, and projected revenue for the disrupted period. She should also describe the process of coordination with VHG's actuarial and accounting teams and any outside consultants who assisted in the BI calculation.
Ms. Pellegrini should note that the $60 million total figure represents the aggregate BI loss across all three properties and that it exhausts the full tower of coverage. She should be prepared to explain why the losses were of such magnitude, given the scale of VHG's operations, the high-season timing of the hurricane (the September–March period includes the beginning of the peak winter tourist season in the Florida Keys and Gulf Coast), and the duration of property closures.
If defendants press for detailed financial methodology, Ms. Pellegrini should defer to Diane Calder (who was deposed on August 8, 2023 and is VHG's principal financial witness) or to Dr. Helen Vasquez of Meridian Forensic Economics LLC, who has been retained as VHG's expert on business-interruption loss quantification.
D. Interaction with Arbor Claims Services
Ironclad retained Arbor Claims Services LLC ("Arbor") as an independent adjuster to inspect and evaluate VHG's claimed losses. The lead adjuster from Arbor was Denise Whitford. Arbor conducted its initial inspection of VHG's properties on October 5, 2022, approximately two weeks after VHG submitted its notice of loss.
Ms. Pellegrini should be prepared to describe her interactions with Denise Whitford and the Arbor inspection team:
• What access was provided to Arbor at each of the three properties (full access to all areas, accompanied by VHG personnel).
• What documents, data, and records were shared with Arbor during and after the inspection.
• What Whitford communicated — orally or in writing — to Ms. Pellegrini regarding her preliminary findings, the scope of damage observed, or the anticipated timeline for completing the adjustment.
• Whether there were any follow-up inspections, requests for additional information, or disputes regarding access.
Important: Ms. Pellegrini should not characterize or speculate about Arbor's conclusions, opinions, or internal analyses unless she has direct, personal knowledge of specific statements made by Whitford or other Arbor personnel. Denise Whitford was deposed on July 24, 2023, and her testimony speaks for itself as to Arbor's findings and conclusions. Ms. Pellegrini should limit her testimony to what she personally observed, heard, or communicated in her interactions with Arbor.
Topic 3: VHG's Mitigation Efforts and Period of Restoration
A. Ironclad's Failure-to-Mitigate Defense
Ironclad has asserted as an affirmative defense that VHG failed to take reasonable steps to reduce the duration of business interruption at its three affected properties, thereby increasing its claimed BI losses. This is a significant defense, and defendants will probe aggressively into VHG's post-hurricane restoration activities, the decisions made by VHG management, and the timeline for returning each property to operational status.
Ms. Pellegrini should be prepared to describe, in detail and chronologically, every significant mitigation effort VHG undertook following Hurricane Callista:
• Emergency property assessments: VHG deployed assessment teams to each property as soon as physical access was restored (September 20–21 for Grand Key; September 20 for Harborview; September 19 for Sunset Shores). These teams conducted initial damage assessments to evaluate structural integrity, identify safety hazards, and prioritize restoration activities.
• Engagement of contractors and restoration companies: VHG engaged emergency restoration contractors — including water extraction, mold remediation, debris removal, and temporary structural stabilization — within days of gaining access to the properties. Ms. Pellegrini should be prepared to identify the principal contractors engaged and the dates of engagement.
• Temporary repairs and water extraction: Immediate steps were taken to arrest ongoing damage, including water extraction at all three properties, temporary roof tarping, boarding of broken windows and compromised exterior openings, and emergency stabilization of damaged structural elements.
• Coordination with local authorities: VHG worked closely with local building departments in Monroe County, Lee County, and Pinellas County to obtain the necessary permits for repair and reconstruction work. Ms. Pellegrini should be prepared to describe the permitting process and any delays encountered.
• Challenges in obtaining contractors and materials: Hurricane Callista caused widespread devastation across southwestern Florida and the Florida Keys, creating extraordinary demand for construction labor, equipment, and building materials. Ms. Pellegrini should describe the competitive environment for contractors, the difficulty of securing skilled tradespeople, and the delays in material delivery caused by supply-chain disruptions.
• Supply chain delays for specialized hospitality fixtures and equipment: As a luxury hospitality operator, VHG required specialized furnishings, fixtures, equipment, and finishes that were not available off-the-shelf. Lead times for custom FF&E items were extended by supply-chain constraints that pre-dated the hurricane and were exacerbated by the post-hurricane demand surge.
B. Period of Restoration for Each Property
The following is a summary of the closure and restoration timeline for each of VHG's three affected properties:
Grand Key Resort (Marathon, FL)
• Property type: 312-room luxury resort and marina
• Pre-loss operating metrics: Average Daily Rate (ADR) $389; occupancy rate 82%
• Closure period: September 18, 2022 through March 15, 2023 (178 days)
• Nature of damage: Grand Key sustained the most severe damage of the three properties, including both high-wind damage and storm-surge inundation. The storm surge (8–14 feet in Monroe County) caused extensive flooding of ground-floor guest rooms, lobby areas, restaurants, back-of-house facilities, and the marina. Wind damage included substantial roof damage, exterior envelope failures, and window breakage. The marina facilities, including docks, piers, and the harbormaster's office, required extensive reconstruction.
• Claimed BI loss: $31,400,000
Harborview Hotel & Conference Center (Fort Myers Beach, FL)
• Property type: 224-room hotel with 40,000 square-foot conference center
• Pre-loss operating metrics: ADR $295; occupancy rate 74%
• Closure period: September 18, 2022 through January 31, 2023 (135 days)
• Nature of damage: The conference center suffered significant roof damage and resulting interior water intrusion, destroying ceilings, walls, flooring, audio-visual equipment, and furnishings across approximately 25,000 square feet of the facility. Guest room wings sustained roof and exterior damage, and ground-floor areas experienced storm-surge flooding (6–10 feet in Lee County). Mechanical and electrical systems required substantial repair and replacement.
• Claimed BI loss: $18,700,000
Sunset Shores (St. Pete Beach, FL)
• Property type: 186-room boutique resort
• Pre-loss operating metrics: ADR $342; occupancy rate 79%
• Closure period: Full closure September 18, 2022 through November 30, 2022 (73 days); property operated at partial capacity from December 1, 2022 through February 27, 2023; full capacity restored on February 28, 2023
• Nature of damage: Sunset Shores was the least damaged of the three properties, as it was not directly in the hurricane's core path. Damage included partial roof failure, wind-driven rain intrusion, broken windows, and landscape destruction. Storm surge at St. Pete Beach was less severe than at the other two locations. The property was able to reopen on a phased basis, with certain wings and amenities becoming available before the full restoration was complete.
• Claimed BI loss: $9,900,000
C. Reasonableness of Restoration Timeline
Ironclad's position is that business-interruption coverage terminates when repairs "could have been completed with reasonable speed and similar quality" — and Ironclad asserts that VHG unreasonably delayed the restoration of each property, extending the period of interruption and inflating its BI claim. This is a factual issue on which the parties fundamentally disagree, and Ms. Pellegrini's testimony will be central.
Ms. Pellegrini should be prepared to explain the following factors that drove the restoration timeline:
• Contractor shortages: In the aftermath of Hurricane Callista, every licensed general contractor, electrician, plumber, roofer, and specialty tradesperson in southwestern Florida was in overwhelming demand. VHG competed with thousands of commercial and residential property owners for a finite pool of contractors. Despite VHG's efforts to engage contractors immediately, scheduling constraints were unavoidable.
• Permit delays: Local building departments in Monroe County, Lee County, and Pinellas County were overwhelmed with permit applications following the hurricane. Processing times that would normally be measured in days stretched to weeks. VHG could not legally commence certain categories of repair work without the necessary permits and inspections.
• Scope of damage: The damage at each property was extensive and complex, involving structural, mechanical, electrical, plumbing, fire-suppression, and finish work across multiple buildings and outdoor facilities. At Grand Key, the marina reconstruction alone was a multi-month project requiring specialized marine contractors.
• Restoration to pre-loss luxury standard: VHG made the business judgment to restore its properties to their pre-loss condition and quality — consistent with the luxury hospitality brand that VHG's guests expect. VHG did not accept temporary or substandard repairs that would have been inconsistent with the brand, would have generated guest complaints, and would have required subsequent remediation. This decision was both reasonable and consistent with the policy's requirement that coverage applies during the period necessary to restore the property with "reasonable speed and similar quality."
• Supply chain issues: Lead times for specialized hospitality materials — including custom furniture, high-end bathroom fixtures, commercial kitchen equipment, decorative finishes, and specialty lighting — were extended throughout 2022 and into 2023 due to ongoing global supply-chain disruptions. These delays were beyond VHG's control.
• Code-upgrade requirements: In certain instances, local building codes required that repairs incorporate current code standards (e.g., updated wind-resistance requirements, flood-zone construction standards), which added complexity and cost to the restoration process and extended timelines.
Ms. Pellegrini should be careful not to overstate her personal expertise in construction, engineering, or building-code matters. For technical opinions regarding the scope of structural damage, the engineering requirements for repair, and the reasonableness of the restoration timeline from an engineering perspective, VHG has retained Jeffrey Caldwell, P.E. of Caldwell Engineering Associates. Ms. Pellegrini should defer to Mr. Caldwell's expert opinions on those subjects and limit her testimony to what she personally observed, directed, and understood in her capacity as VP of Risk Management.
D. Extra Expense Measures
Ms. Pellegrini should describe the affirmative steps VHG took to accelerate the reopening of its properties, demonstrating that VHG acted diligently and incurred significant extra expenses to reduce the period of interruption:
• Authorization of overtime and premium pay for contractors: VHG authorized and paid premium rates for overtime work, weekend work, and holiday work to expedite restoration. These costs were substantial and are reflected in VHG's extra-expense claim.
• Sourcing of materials from out-of-state suppliers: When local suppliers could not meet demand or delivery timelines, VHG sourced materials — including roofing materials, mechanical equipment, and FF&E — from suppliers in Georgia, Alabama, Texas, and other states, paying expedited shipping charges.
• Use of temporary facilities where feasible: VHG explored the use of temporary structures and facilities (e.g., temporary conference facilities at Harborview) to partially resume operations before full restoration was complete.
• Relocation of displaced group bookings: Where possible, VHG worked with group-booking clients (corporate events, conventions, wedding blocks) to relocate their bookings to other VHG properties or to partner hotel properties, thereby mitigating the loss of group-booking revenue. Ms. Pellegrini should describe this effort and any challenges encountered.
These extra-expense measures demonstrate that VHG was proactive in its mitigation efforts and did not passively wait for restoration to occur. They directly rebut Ironclad's failure-to-mitigate defense.
Topic 4: Communications with Insurers During Claims Process
A. Communications with Ironclad
Ms. Pellegrini should be prepared to describe her communications — both direct and indirect — with representatives of Ironclad Indemnity Corporation during the claims process. The primary Ironclad claims representative was Victor Haddon, Senior Vice President of Claims.
Ms. Pellegrini should be prepared to testify about:
• The nature, frequency, and substance of her communications with Haddon or other Ironclad personnel. Were these communications by phone, email, letter, or in-person meetings? What information did VHG provide and what information did Ironclad provide?
• Any oral representations made by Haddon or other Ironclad representatives regarding coverage, the status of the claim, or Ironclad's position on the windstorm sub-limit or other coverage issues. If Haddon made any statements — express or implied — suggesting that coverage was available or that the claim would be paid, Ms. Pellegrini should describe those statements precisely.
• VHG's receipt of and response to Ironclad's reservation of rights letter, dated October 12, 2022. Ms. Pellegrini should describe her understanding of the reservation of rights, the defenses identified therein, and what actions VHG took in response. She should be careful not to disclose the substance of any legal advice received from Calderwood & Harkness attorneys regarding the reservation of rights.
• VHG's receipt of Ironclad's formal coverage denial, dated February 3, 2023. Ms. Pellegrini should describe the circumstances under which the denial was received, her reaction, and the steps taken by VHG in response. Again, communications with counsel regarding the denial are privileged.
Important: Ms. Pellegrini should not discuss any communications with Calderwood & Harkness attorneys regarding the reservation of rights letter, the formal denial, or the subsequent decision to initiate litigation. Those communications are protected by the attorney-client privilege and the work-product doctrine.
B. Communications with Excess Carriers