IN THE CIRCUIT COURT OF THE ELEVENTH JUDICIAL CIRCUIT IN AND FOR MIAMI-DADE COUNTY, FLORIDA
CIVIL DIVISION
Case No.: 2022-CA-031547
VERIMARK HOSPITALITY GROUP INC., a Delaware corporation,
Plaintiff,
v.
IRONCLAD INDEMNITY CORPORATION, a Connecticut corporation;
PINNACLE SURPLUS LINES INC., a Texas corporation;
MONTCLAIR ASSURANCE COMPANY, a New York corporation; and
SOVEREIGN RE LTD., a Bermuda corporation,
Defendants.
PLAINTIFF VERIMARK HOSPITALITY GROUP INC.'S RESPONSES AND OBJECTIONS TO DEFENDANT IRONCLAD INDEMNITY CORPORATION'S FIRST REQUEST FOR PRODUCTION OF DOCUMENTS
Plaintiff Verimark Hospitality Group Inc. ("VHG" or "Plaintiff"), by and through its undersigned counsel, Calderwood & Harkness LLP, hereby responds and objects to Defendant Ironclad Indemnity Corporation's ("Ironclad") First Request for Production of Documents (the "Requests"), served on or about June 5, 2023, pursuant to Florida Rule of Civil Procedure 1.350. These responses are served on July 5, 2023, within the thirty (30) day response period prescribed by the Florida Rules of Civil Procedure.
VHG's responses are based upon information reasonably available to VHG as of the date hereof. Discovery and investigation in this matter are ongoing, and VHG expressly reserves the right to supplement, amend, or correct these responses as additional documents and information are identified in the course of continuing discovery, investigation, and litigation preparation. No response or objection herein shall be construed as a representation that VHG has completed its search for and review of all potentially responsive documents.
GENERAL OBJECTIONS
VHG asserts the following General Objections, which are incorporated by reference into each specific response below as though fully set forth therein. The assertion of a General Objection with respect to any particular Request does not indicate that the General Objection is necessarily applicable to that Request, but rather preserves VHG's right to rely upon such objection to the extent applicable.
General Objection No. 1 — Scope and Proportionality
VHG objects to any Request that is overly broad, unduly burdensome, or disproportionate to the needs of the case within the meaning of Florida Rule of Civil Procedure 1.280(b)(1). In assessing proportionality, VHG has considered the importance of the issues at stake in this litigation, the amount in controversy (VHG's business-interruption claim totals approximately $60 million in losses sustained across three resort properties as a result of Hurricane Callista), the parties' relative access to relevant information, the parties' respective resources, the importance of the discovery sought in resolving the disputed issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. VHG will make reasonable, good-faith efforts to identify and produce responsive, non-privileged documents, but objects to any Request to the extent it imposes obligations that exceed the bounds of proportionality.
General Objection No. 2 — Attorney-Client Privilege and Work-Product Doctrine
VHG objects to any Request that seeks, or that may be construed to seek, documents or communications protected by the attorney-client privilege, the work-product doctrine (including both opinion and fact work product), or any other applicable privilege or immunity from discovery recognized under Florida law or federal common law. Without limitation, VHG will not produce privileged communications between VHG and its current litigation counsel, Calderwood & Harkness LLP, or any prior counsel, including but not limited to in-house counsel, coverage counsel, or regulatory counsel. VHG will also not produce attorney work product prepared in anticipation of this litigation or the underlying coverage dispute between VHG and Ironclad, including materials prepared by, at the direction of, or for the use of counsel. A privilege log identifying all documents withheld on the basis of privilege will be provided in accordance with Florida Rule of Civil Procedure 1.280(b)(6). VHG notes that its privilege log is being served separately on or before August 1, 2023.
General Objection No. 3 — "All Documents" and "Each and Every"
VHG objects to any Request that uses the phrases "all documents," "each and every," "any and all," or similarly expansive language to the extent such phrases purport to impose an obligation to conduct an exhaustive search of every possible repository, custodian, storage medium, or location where potentially responsive documents might conceivably reside. VHG interprets such requests reasonably and will conduct a diligent, good-faith search of relevant custodians, file repositories, and electronic data sources reasonably likely to contain responsive documents, but VHG does not undertake to search every conceivable source of information within its organization.
General Objection No. 4 — Temporal Scope
VHG objects to any Request that is not limited to a reasonable time period relevant to the claims and defenses in this action. Unless otherwise stated in a specific response, VHG will produce responsive, non-privileged documents from the period of January 1, 2020 through the present date. This temporal scope captures the relevant policy periods, renewal negotiations for the insurance programs at issue, the Hurricane Callista event (September 18, 2022), the subsequent claims process, and litigation activity to date. VHG objects to any request seeking documents from periods outside this range as temporally overbroad and not proportional to the needs of the case.
General Objection No. 5 — Confidentiality
VHG objects to the production of competitively sensitive, proprietary, or confidential business information absent entry of an appropriate protective order governing the use, disclosure, and handling of such materials. VHG notes that the parties have agreed to negotiate a stipulated protective order and are in the process of finalizing its terms. VHG will produce documents containing confidential business information, including but not limited to property-level financial data, revenue figures, pricing information, occupancy data, and forward-looking projections, subject to the protections afforded by such order once entered by the Court. To the extent any confidential documents are produced prior to entry of the protective order, such production shall be deemed made subject to the terms of the protective order nunc pro tunc.
General Objection No. 6 — Documents Equally Available
VHG objects to any Request that seeks documents that are already in Ironclad's possession, custody, or control, or that are equally available to Ironclad through its own files and records. This objection applies, without limitation, to Ironclad's own claim file, underwriting file, policy issuance records, internal memoranda, correspondence with VHG or VHG's insurance broker Tidewater Risk Advisors LLC, and documents produced to or generated by Ironclad's independent adjusting firm, Arbor Claims Services LLC. Ironclad should not impose upon VHG the burden of producing copies of documents that Ironclad itself maintains.
General Objection No. 7 — Third-Party Documents
VHG objects to any Request that seeks or purports to require VHG to produce documents that are solely in the possession, custody, or control of third parties, including but not limited to Tidewater Risk Advisors LLC, Arbor Claims Services LLC, general contractors, subcontractors, vendors, governmental agencies, or other entities over which VHG does not exercise legal custody or control. VHG will produce responsive documents in its own possession, custody, or control, including copies of third-party documents that VHG received and retained in the ordinary course of business. Documents solely in the possession of third parties should be sought through appropriate discovery mechanisms directed to those third parties.
SPECIFIC RESPONSES AND OBJECTIONS
Request for Production No. 1
REQUEST: All documents relating to the property damage sustained by Verimark Grand Key Resort, Verimark Harborview Hotel & Conference Center, and Verimark Sunset Shores as a result of Hurricane Callista, including but not limited to photographs, videos, damage assessments, inspection reports, and engineering reports.
RESPONSE: VHG objects to this Request as overly broad to the extent it seeks "all documents" relating to property damage without limitation as to type, source, or time period. VHG further objects to this Request to the extent it seeks documents protected by the attorney-client privilege or work-product doctrine, including reports and communications prepared at the direction of counsel in anticipation of litigation or in connection with the coverage dispute with Ironclad. VHG incorporates its General Objections Nos. 1, 2, 3, and 7 as though fully set forth herein.
Subject to and without waiving the foregoing specific objections and General Objections, VHG will produce non-privileged documents in its possession, custody, or control relating to property damage at its three resort properties resulting from Hurricane Callista (which made landfall in the Florida Keys and Southwest Florida coast on September 18, 2022, as a Category 4 hurricane), including:
(a) Photographs and video documentation of storm damage at Verimark Grand Key Resort, located at Mile Marker 48, Marathon, Florida 33050, including pre-storm condition photographs where available, post-storm damage documentation, and photographs taken during the restoration process;
(b) Photographs and video documentation of storm damage at Verimark Harborview Hotel & Conference Center, located at 1400 Estero Boulevard, Fort Myers Beach, Florida 33931, including pre-storm condition photographs where available, post-storm damage documentation, and photographs taken during the restoration process;
(c) Photographs and video documentation of storm damage at Verimark Sunset Shores, located at 7200 Gulf Boulevard, St. Pete Beach, Florida 33706, including pre-storm condition photographs where available, post-storm damage documentation, and photographs taken during the restoration process;
(d) Internal damage assessment reports prepared by VHG's facilities management department and in-house engineering staff following initial post-storm property inspections;
(e) Third-party inspection reports in VHG's possession, custody, or control, including reports prepared by contractors, remediation firms, and building consultants retained by VHG in the ordinary course (as distinguished from experts retained at the direction of counsel for litigation purposes); and
(f) Correspondence with Ironclad and Arbor Claims Services LLC transmitting or discussing damage assessment information, to the extent not privileged.
VHG will not produce any reports, analyses, memoranda, or communications prepared by or at the direction of counsel in anticipation of litigation, including without limitation materials prepared by or at the direction of Jeffrey Caldwell, P.E., of Caldwell Engineering Associates Inc. (7900 NW 25th Street, Suite 210, Doral, Florida 33122), who was retained through Calderwood & Harkness LLP for purposes of forensic engineering analysis and cause-of-loss assessment. Such materials constitute attorney work product and are protected from disclosure. Documents withheld on this basis will be identified on VHG's privilege log to be served on or before August 1, 2023.
Request for Production No. 2
REQUEST: All documents relating to the closure and reopening of Verimark Grand Key Resort, Verimark Harborview Hotel & Conference Center, and Verimark Sunset Shores, including internal memoranda, board presentations, management reports, and communications regarding the decision to close and the timeline for reopening.
RESPONSE: VHG objects to this Request to the extent it seeks documents protected by the attorney-client privilege or the work-product doctrine, including without limitation communications between VHG's management and board of directors and Calderwood & Harkness LLP, or any other counsel, regarding the legal and strategic implications of closure and reopening decisions, insurance coverage considerations, mitigation obligations, and litigation strategy. VHG incorporates its General Objections Nos. 2, 3, and 5 as though fully set forth herein.
Subject to and without waiving the foregoing specific objections and General Objections, VHG will produce non-privileged documents relating to the closure and reopening of the three subject properties, including:
(a) Documents reflecting the closure of all three properties beginning September 18, 2022, in advance of and following Hurricane Callista's landfall;
(b) Mandatory evacuation orders issued by Monroe County (issued September 16, 2022) and Lee County (issued September 17, 2022), and any corresponding evacuation directives or communications relating to Pinellas County applicable to the Sunset Shores property;
(c) Documents relating to the partial reopening of Verimark Sunset Shores on November 30, 2022, and its return to full operational capacity on February 28, 2023;
(d) Documents relating to the reopening of Verimark Harborview Hotel & Conference Center on January 31, 2023;
(e) Documents relating to the reopening of Verimark Grand Key Resort on March 15, 2023, following approximately 178 days of total closure;
(f) Internal management memoranda and status reports circulated among VHG's executive team regarding restoration timelines, construction progress, and projected reopening dates;
(g) Board of directors and executive committee presentations, reports, and materials addressing property status, restoration progress, and reopening schedules, to the extent such documents do not contain or reflect legal advice from counsel; and
(h) Communications among VHG operations, facilities, and management personnel regarding the operational status of each property during the closure and restoration periods.
Documents reflecting communications with counsel, or containing or reflecting legal advice regarding closure and reopening decisions, will be withheld as privileged and identified on VHG's privilege log.
Request for Production No. 3
REQUEST: All financial records, including but not limited to profit and loss statements, revenue reports, occupancy reports, average daily rate reports, and EBITDA calculations for each of the three subject properties for fiscal years 2019, 2020, 2021, and 2022, and year-to-date 2023.
RESPONSE: VHG objects to this Request to the extent it seeks financial information for periods unrelated to the business-interruption claim at issue in this litigation. Specifically, VHG objects to the inclusion of fiscal year 2019 financial data, as VHG's business-interruption claim is predicated upon the insurance policy periods and financial performance relevant to the period commencing January 1, 2020, and VHG contends that the fiscal year 2019 data is not necessary to evaluate the claim or the defenses raised in this action. VHG further objects to this Request to the extent it seeks enterprise-wide or consolidated financial information beyond the three subject properties, as such information is neither relevant nor proportional to the needs of the case. VHG incorporates its General Objections Nos. 1, 4, and 5 as though fully set forth herein.
Subject to and without waiving the foregoing specific objections and General Objections, VHG will produce property-level financial records for fiscal years 2020, 2021, 2022, and year-to-date 2023, including:
(a) Revenue reports for each property, broken down by revenue stream (room revenue, food and beverage, conference and events, marina operations, spa, and ancillary revenues);
(b) Occupancy reports and average daily rate ("ADR") data for each property, including historical monthly and quarterly data. For reference, VHG's pre-loss financial metrics for the three subject properties were as follows:
• Verimark Grand Key Resort: pre-loss ADR of $389 per night; average occupancy rate of 82%;
• Verimark Harborview Hotel & Conference Center: pre-loss ADR of $295 per night; average occupancy rate of 74%;
• Verimark Sunset Shores: pre-loss ADR of $342 per night; average occupancy rate of 79%;
(c) Profit and loss statements at the property level for each of the three subject properties;
(d) EBITDA calculations at the property level for each of the three subject properties; and
(e) Such additional property-level financial data as is maintained in the ordinary course and is responsive to this Request.
VHG notes, for context, that VHG's consolidated fiscal year 2021 revenue was approximately $412 million, with consolidated EBITDA of approximately $78 million across VHG's entire portfolio of hospitality properties. Property-level breakdowns for the three subject properties will be produced as specified above. VHG is a publicly traded company (Nasdaq: VMRK), and certain aggregate and consolidated financial data is publicly available through VHG's filings with the U.S. Securities and Exchange Commission; however, property-level financial detail of the type sought by this Request is not publicly disclosed and constitutes confidential, competitively sensitive business information. Accordingly, production of property-level financial data will be made subject to the stipulated protective order currently being negotiated by the parties, and all such documents shall be designated as "Confidential" thereunder.
Request for Production No. 4
REQUEST: All documents relating to VHG's calculation of its claimed business-interruption losses in the amount of $60,000,000, including supporting schedules, workpapers, spreadsheets, and assumptions.
RESPONSE: VHG objects to this Request to the extent it seeks documents protected by the attorney-client privilege or the work-product doctrine, including without limitation communications between VHG and counsel regarding the development, evaluation, and presentation of VHG's business-interruption loss claim, as well as draft analyses, memoranda, and communications with expert consultants retained in connection with this litigation and the underlying coverage dispute. VHG incorporates its General Objections Nos. 2 and 5 as though fully set forth herein.
Subject to and without waiving the foregoing specific objections and General Objections, VHG will produce non-privileged documents underlying its business-interruption loss calculation, including:
(a) The Sworn Statement in Proof of Loss submitted by VHG to Ironclad on November 15, 2022, asserting total business-interruption losses of $60,000,000;
(b) Supporting schedules and workpapers prepared by VHG's internal finance team under the direction of Diane Calder, Chief Financial Officer, including revenue loss calculations, incremental expense analyses, and period-of-restoration computations;
(c) Loss calculations broken down by property, reflecting the following allocation of the total claimed loss:
• Verimark Grand Key Resort: $31,400,000;
• Verimark Harborview Hotel & Conference Center: $18,700,000;
• Verimark Sunset Shores: $9,900,000; and
(d) Underlying data, spreadsheets, and financial source documents utilized in the preparation of the Proof of Loss and supporting schedules, to the extent such documents are non-privileged and were not prepared at the direction of counsel for litigation purposes.
VHG will not produce, at this time, documents prepared by or at the direction of VHG's retained testifying expert, Dr. Helen Vasquez, CPA, CFF, of Meridian Forensic Economics LLC (1201 Peachtree Street NE, Suite 1000, Atlanta, Georgia 30361). Dr. Vasquez was retained through Calderwood & Harkness LLP for purposes of forensic economic analysis and damages quantification, and documents prepared by or at her direction constitute attorney work product. Dr. Vasquez's expert report, which will set forth her opinions, methodology, and the data and other information considered in forming those opinions, is to be served pursuant to the Court's Scheduling Order on or before September 15, 2023. VHG will produce, in connection with its expert disclosures, all non-privileged materials considered by Dr. Vasquez in forming her opinions, as required by the applicable rules.
Request for Production No. 5
REQUEST: All documents relating to repair, restoration, remediation, and reconstruction work performed at each of the three subject properties following Hurricane Callista, including contracts, invoices, payment records, change orders, and correspondence with contractors and vendors.
RESPONSE: VHG incorporates its General Objections as though fully set forth herein. Subject to and without waiving the General Objections, VHG will produce non-privileged documents in its possession, custody, or control relating to repair, restoration, remediation, and reconstruction work at all three subject properties following Hurricane Callista, including:
(a) Construction and remediation contracts between VHG and general contractors and subcontractors performing repair and restoration work at each property;
(b) Invoices and payment records reflecting amounts paid or payable to contractors, subcontractors, and vendors for repair and restoration work;
(c) Change orders modifying the scope, cost, or timeline of repair and restoration contracts;
(d) Correspondence between VHG and contractors, subcontractors, and vendors regarding the scope of work, project timelines, material procurement, and construction progress; and
(e) Internal project management documents, including construction schedules, progress reports, and punch lists.
VHG notes that this production is relevant both to VHG's claim for the period of restoration during which business-interruption losses were sustained and to Ironclad's affirmative defense alleging that VHG failed to mitigate its losses by not completing restoration work with reasonable dispatch. VHG's position is that all restoration and repair work was completed with reasonable speed and diligence given the magnitude of the damage sustained at each property and the significant market constraints on contractor availability, labor supply, and building materials that prevailed throughout South Florida and the Florida Keys in the months following Hurricane Callista. VHG reserves all rights to contest the factual and legal bases for Ironclad's failure-to-mitigate defense.
Documents reflecting communications with counsel regarding restoration strategy, contractor selection, and mitigation obligations will be withheld as privileged and identified on VHG's privilege log.
Request for Production No. 6
REQUEST: All documents relating to extra expenses incurred by VHG as a result of Hurricane Callista, including temporary facility costs, employee relocation expenses, and expedited repair costs.
RESPONSE: VHG incorporates its General Objections as though fully set forth herein. Subject to and without waiving the General Objections, VHG will produce non-privileged documents in its possession, custody, or control relating to extra expenses incurred as a result of Hurricane Callista, including:
(a) Invoices and payment records for temporary facilities and alternative accommodations arranged for displaced guests, including costs associated with booking guests at non-affected VHG properties and third-party hotels;
(b) Employee-related expenses, including temporary relocation costs for staff displaced from the three subject properties, employee retention bonuses paid to preserve key operational staff during the closure period, and overtime compensation for employees involved in restoration and emergency response efforts;
(c) Expedited shipping and procurement costs for building materials, furnishings, fixtures, and equipment required for the repair and restoration of the subject properties;
(d) Emergency response and debris removal costs incurred in the immediate aftermath of Hurricane Callista, including costs for boarding, tarping, water extraction, mold remediation, and hazardous material abatement;
(e) Costs for temporary power, security services, and property protection during the closure and restoration periods; and
(f) Documentation of saved expenses and reduced operating costs during the periods of closure at each property, including reductions in payroll, utilities, food and beverage procurement, supplies, and other variable operating expenses, to the extent such documentation is maintained in the ordinary course of VHG's business.
Request for Production No. 7
REQUEST: All documents constituting or relating to communications between VHG and Tidewater Risk Advisors LLC regarding VHG's property and business-interruption insurance program, including but not limited to the placement, renewal, and terms of the policies at issue, for the period January 1, 2021 to the present.
RESPONSE: VHG objects to this Request to the extent it seeks documents protected by the attorney-client privilege or the work-product doctrine, including communications involving counsel regarding the legal implications of policy terms, coverage positions, and claim strategy. VHG further objects to the extent this Request is overly broad in seeking "all" communications with VHG's insurance broker, Tidewater Risk Advisors LLC, over a period of more than two and a half years, without limitation as to subject matter. Many communications between VHG and Tidewater may relate to insurance programs, policies, or lines of coverage other than the property and business-interruption program at issue in this litigation and are not relevant to the matters in dispute. VHG incorporates its General Objections Nos. 1, 2, 3, 6, and 7 as though fully set forth herein.
Subject to and without waiving the foregoing specific objections and General Objections, VHG will produce non-privileged communications between VHG (primarily Sandra Pellegrini, Vice President of Risk Management) and Tidewater Risk Advisors LLC (primarily Franklin Orde, Account Executive) relating to:
(a) The placement and renewal of VHG's property and business-interruption insurance program for the July 1, 2022 – July 1, 2023 policy period, which is the primary policy period at issue in this litigation;
(b) Prior policy period (July 1, 2021 – July 1, 2022) renewal and placement materials, for comparison purposes and to establish the context of the coverage terms carried forward or modified at the 2022 renewal;
(c) Discussions, correspondence, and negotiations regarding the named-windstorm sub-limit and VHG's request for its deletion at the July 2022 renewal, which is a central coverage issue in this litigation;
(d) Marketing submissions, coverage specifications, and requests for quotation circulated to the insurance market through Tidewater;
(e) Binder and policy delivery correspondence, including confirmation of bound terms and conditions; and
(f) Post-binding correspondence regarding endorsements, policy amendments, or corrections to the policies at issue.
VHG notes that communications between VHG, Tidewater, and counsel made after Calderwood & Harkness LLP's engagement in connection with the coverage dispute (on or about August 30, 2022) that reflect, contain, or were made for the purpose of obtaining or providing legal advice will be withheld as privileged and identified on VHG's privilege log.
Request for Production No. 8
REQUEST: All insurance policies, binders, endorsements, declarations pages, and certificates of insurance for VHG's property and business-interruption insurance program for the policy periods July 1, 2021 – July 1, 2022 and July 1, 2022 – July 1, 2023.
RESPONSE: No objection. VHG will produce complete copies of the following policies and related documents in its possession, custody, or control:
(a) Ironclad Indemnity Corporation primary property and business-interruption policy, Policy No. IIC-PRP-2022-07541, effective July 1, 2022 through July 1, 2023, including all endorsements, declarations pages, schedules of covered locations, and any amendments or modifications thereto;
(b) Pinnacle Surplus Lines Inc. first excess property and business-interruption policy, Policy No. PSL-XS1-2022-3390, effective July 1, 2022 through July 1, 2023, including all endorsements, declarations pages, and schedules;
(c) Montclair Assurance Company second excess property and business-interruption policy, Policy No. MAC-XS2-2022-09817, effective July 1, 2022 through July 1, 2023, including all endorsements, declarations pages, and schedules;
(d) Sovereign Re Ltd. third excess property and business-interruption policy, Policy No. SRL-XS3-2022-5102, effective July 1, 2022 through July 1, 2023, including all endorsements, declarations pages, and schedules;
(e) Prior-year policy documents for the July 1, 2021 – July 1, 2022 policy period for each of the above carriers, including all endorsements, declarations pages, and schedules, for comparison purposes and to establish the coverage history relevant to the renewal negotiations at issue; and
(f) Binders, certificates of insurance, and any endorsements or amendments modifying or supplementing the foregoing policies.
Request for Production No. 9
REQUEST: All documents relating to VHG's submission of the notice of loss, proof of loss, and any other claims-related submissions to Ironclad or any other insurer arising from Hurricane Callista.
RESPONSE: No objection. VHG will produce the following documents relating to VHG's claim submissions:
(a) The initial notice of loss submitted by VHG to Ironclad on September 22, 2022, four days after Hurricane Callista's landfall;
(b) The Sworn Statement in Proof of Loss submitted by VHG to Ironclad on November 15, 2022, asserting total business-interruption losses of $60,000,000;
(c) All supplemental claims submissions, supporting documentation, and correspondence transmitted by VHG to Ironclad's claims department (Victor Haddon, Senior Vice President, Claims) in connection with the Hurricane Callista claim;
(d) All correspondence and communications between VHG and Arbor Claims Services LLC (Denise Whitford, Lead Adjuster), the independent adjusting firm retained by Ironclad to investigate and adjust the claim, relating to VHG's claim submissions and supporting documentation;
(e) Notices of loss and claim submissions made by VHG to the excess carriers in the program — Pinnacle Surplus Lines Inc., Montclair Assurance Company, and Sovereign Re Ltd. — and any responsive correspondence from those carriers; and
(f) Any additional claims-related submissions, supplemental proofs, or supporting documentation provided by VHG to any insurer in connection with the Hurricane Callista claim.
VHG objects, however, to the extent this Request seeks communications between VHG and its counsel regarding the preparation, review, or strategy related to claim submissions. Such communications are protected by the attorney-client privilege and will be identified on VHG's privilege log.
Request for Production No. 10
REQUEST: All documents relating to any mitigation measures taken or considered by VHG to reduce business-interruption losses or expedite the restoration of the subject properties following Hurricane Callista.
RESPONSE: VHG objects to this Request to the extent it seeks documents protected by the attorney-client privilege or the work-product doctrine, including without limitation advice from counsel regarding VHG's contractual and legal obligations to mitigate losses under the terms of the Ironclad primary policy and applicable Florida law. VHG further objects to the breadth of the phrase "taken or considered," to the extent it purports to require disclosure of internal deliberative communications reflecting options that were evaluated but not pursued, which may implicate privilege or work-product protections. VHG incorporates its General Objections Nos. 2 and 3 as though fully set forth herein.
Subject to and without waiving the foregoing specific objections and General Objections, VHG will produce non-privileged documents relating to mitigation measures, including:
(a) Emergency response and property-protection measures undertaken before and immediately after Hurricane Callista's landfall on September 18, 2022, including storm preparation protocols, property shutdowns, and guest and employee evacuations;
(b) Post-storm emergency measures including boarding and tarping of damaged structures, water extraction, dehumidification, mold remediation, and hazardous material abatement;
(c) Documents relating to expedited contractor procurement efforts, including solicitations, bid processes, and engagement of contractors on an accelerated basis given post-storm demand for construction services in the region;
(d) Documents relating to temporary operational measures implemented to resume limited operations at the subject properties, including the partial reopening of Verimark Sunset Shores on November 30, 2022, with limited room inventory available pending completion of restoration of the remaining guest rooms and common areas;
(e) Internal communications among VHG's executive management team — including Marcus Ellsworth, Chief Executive Officer; Diane Calder, Chief Financial Officer; and Sandra Pellegrini, Vice President of Risk Management — regarding mitigation steps taken or under consideration, to the extent such communications do not contain or reflect legal advice; and
(f) Reports and memoranda documenting the status of mitigation and restoration efforts prepared by VHG's facilities and operations teams.
VHG notes, and states affirmatively, that it took all reasonable steps to mitigate its business-interruption losses following Hurricane Callista, including commencing emergency response and restoration activities within hours of the storm's passage and engaging contractors and remediation firms on an expedited basis despite severe post-storm market constraints. VHG's position is that Ironclad's affirmative defense alleging failure to mitigate is factually and legally without merit.
Request for Production No. 11
REQUEST: All documents relating to VHG's revenue forecasts, budgets, and projections for fiscal years 2022 and 2023 for each of the three subject properties, including any revisions made after Hurricane Callista.
RESPONSE: VHG objects to this Request to the extent it seeks competitively sensitive, forward-looking business information and proprietary financial projections beyond what is reasonably necessary to evaluate VHG's business-interruption claim or Ironclad's defenses. VHG is a publicly traded company, and disclosure of detailed, property-level revenue projections to competitors or the market could cause competitive harm. VHG incorporates its General Objections Nos. 1 and 5 as though fully set forth herein.
Subject to and without waiving the foregoing specific objections and General Objections, VHG will produce:
(a) Pre-hurricane revenue budgets and forecasts for fiscal year 2022 and fiscal year 2023 for each of the three subject properties, as approved by VHG management prior to Hurricane Callista;
(b) Post-hurricane revised forecasts for fiscal years 2022 and 2023, reflecting the impact of property closures and restoration timelines on projected revenues;
(c) Seasonal booking data and reservation reports demonstrating anticipated occupancy levels, booking pace, and revenue during the periods of closure at each property, to the extent such data was maintained in VHG's reservation and property management systems; and
(d) Budget-to-actual variance reports for the periods at issue, to the extent maintained in the ordinary course.
Production of documents responsive to this Request will be made subject to the stipulated protective order currently being negotiated by the parties, and all such documents shall be designated as "Confidential" thereunder.
Request for Production No. 12
REQUEST: All documents relating to any prior insurance claims submitted by VHG for property damage or business interruption at any of the three subject properties within the past ten years.
RESPONSE: VHG objects to this Request as overly broad and not proportional to the needs of this case. The Request seeks information about prior, unrelated insurance claims spanning a ten-year period, the vast majority of which have no relevance to the coverage issues in dispute in this litigation, which center on the interpretation of specific policy terms in the July 1, 2022 – July 1, 2023 insurance program, the existence or absence of a named-windstorm sub-limit, and the quantification of VHG's business-interruption losses from Hurricane Callista. VHG further objects to the ten-year temporal scope of this Request as unreasonable, unduly burdensome, and disproportionate, as it would require a search for claim files and related documents potentially predating VHG's current document retention systems and custodians. VHG incorporates its General Objections Nos. 1 and 4 as though fully set forth herein.
Subject to and without waiving the foregoing specific objections, VHG will produce documents relating to prior insurance claims for hurricane or named-windstorm damage at the three subject properties within the five (5) years preceding the inception of the July 1, 2022 policy (i.e., from July 1, 2017 forward), to the extent such documents remain in VHG's possession, custody, or control. VHG notes that the relevance of prior claims to the issues in this litigation is limited, and VHG reserves the right to seek a protective order or other relief from the Court if information regarding prior claims is sought to be used for purposes unrelated to the claims and defenses in this action, or if such information is disseminated in a manner inconsistent with the protective order.
Request for Production No. 13
REQUEST: All documents relating to communications between VHG and any governmental agency, including FEMA, regarding Hurricane Callista damage at the subject properties.
RESPONSE: VHG incorporates its General Objections as though fully set forth herein. Subject to and without waiving the General Objections, VHG will produce non-privileged documents in its possession, custody, or control relating to communications with governmental agencies regarding Hurricane Callista damage at the three subject properties, including:
(a) Correspondence and filings with the Federal Emergency Management Agency ("FEMA"), including any applications for disaster assistance, damage assessments, and related documentation;
(b) Communications with Monroe County and Lee County emergency management offices regarding evacuation orders, re-entry authorization, and post-storm damage reporting;
(c) Building permit applications, inspection reports, and certificates of occupancy or completion issued by local building departments in connection with repair and restoration work at the subject properties;
(d) Correspondence with the U.S. Small Business Administration ("SBA") regarding disaster loan applications, if any; and
(e) Any other communications with federal, state, or local governmental agencies relating to Hurricane Callista damage at the subject properties that are in VHG's possession, custody, or control.
Request for Production No. 14
REQUEST: All documents relating to any expert, consultant, or forensic accountant retained by VHG or its counsel in connection with the Hurricane Callista insurance claim or this litigation.
RESPONSE: VHG objects to this Request to the extent it seeks documents protected by the work-product doctrine or the attorney-client privilege, including without limitation communications between counsel and testifying or consulting experts, draft expert reports, internal analyses and memoranda prepared by experts at the direction of counsel, and the mental impressions, conclusions, opinions, and legal theories of counsel reflected in or communicated through expert-related materials. VHG further objects to this Request to the extent it seeks the identities of and documents relating to consulting experts retained by VHG or its counsel in anticipation of litigation who are not expected to testify at trial. The identities, opinions, and work product of non-testifying consulting experts are protected from discovery under Florida law. VHG incorporates its General Objections No. 2 as though fully set forth herein.
VHG will disclose its testifying experts and produce expert reports, together with underlying data and non-privileged materials considered by those experts, in accordance with the Court's Scheduling Order, which requires service of expert reports on or before September 15, 2023. VHG will not produce documents relating to consulting experts retained in anticipation of litigation who are not expected to be called as witnesses at trial.
At this time, VHG identifies the following testifying experts retained through Calderwood & Harkness LLP:
(a) Dr. Helen Vasquez, CPA, CFF, of Meridian Forensic Economics LLC, 1201 Peachtree Street NE, Suite 1000, Atlanta, Georgia 30361 — retained to provide expert opinions regarding forensic economics and damages quantification, including the calculation and methodology underlying VHG's business-interruption loss claim; and
(b) Jeffrey Caldwell, P.E., of Caldwell Engineering Associates Inc., 7900 NW 25th Street, Suite 210, Doral, Florida 33122 — retained to provide expert opinions regarding forensic engineering, cause-of-loss analysis, and the nature, extent, and causation of physical damage sustained at the three subject properties as a result of Hurricane Callista.
Expert reports, together with underlying data and non-privileged materials considered by each testifying expert in forming his or her opinions, will be produced in connection with VHG's expert disclosures on or before the deadline established by the Court's Scheduling Order.
Request for Production No. 15
REQUEST: All documents relating to VHG's board of directors' or management's discussions and decisions regarding the Hurricane Callista insurance claim, including board minutes, presentations, and reports.
RESPONSE: VHG objects to this Request to the extent it seeks documents protected by the attorney-client privilege, including without limitation board-level and executive-level communications with in-house counsel (Nathaniel Driscoll, General Counsel) and outside counsel (Calderwood & Harkness LLP) regarding litigation strategy, coverage analysis, claim valuation, and settlement considerations. Board minutes, presentations, and reports that contain, reflect, summarize, or reference legal advice provided by counsel are privileged and will not be produced. VHG incorporates its General Objections Nos. 2 and 5 as though fully set forth herein.
Subject to and without waiving the foregoing specific objections and General Objections, VHG will produce non-privileged board minutes, management reports, executive committee reports, and presentations addressing the Hurricane Callista losses and the insurance claim, to the extent such documents do not contain or reflect legal advice from counsel. Where a document contains both privileged and non-privileged content, VHG will produce redacted versions of such documents to the extent practicable, identifying the basis for each redaction on VHG's privilege log. All documents withheld in full on the basis of privilege will likewise be identified on VHG's privilege log.
Request for Production No. 16
REQUEST: All documents relating to the premium payments made by VHG for the property and business-interruption insurance policies at issue for the July 1, 2022 – July 1, 2023 policy period.
RESPONSE: No objection. VHG will produce documentation of premium payments for the July 1, 2022 – July 1, 2023 policy period, including invoices, payment records, wire transfer confirmations, and broker statements. The total annual premium for the property and business-interruption insurance program for the current policy period was $1,840,000, allocated among the program carriers as follows:
• Ironclad Indemnity Corporation (primary layer): $980,000
• Pinnacle Surplus Lines Inc. (first excess layer): $410,000
• Montclair Assurance Company (second excess layer): $265,000
• Sovereign Re Ltd. (third excess layer): $185,000
VHG will produce payment records, premium invoices, and broker account statements from Tidewater Risk Advisors LLC documenting the payment of these premiums.
Request for Production No. 17
REQUEST: All documents relating to the named-windstorm sub-limit endorsement, including any negotiations, correspondence, or communications regarding the inclusion, modification, or deletion of any named-windstorm sub-limit in the Ironclad primary policy for the July 1, 2022 – July 1, 2023 policy period.
RESPONSE: VHG objects to this Request to the extent it calls for the production of privileged communications with counsel regarding the legal significance, interpretation, and enforceability of the named-windstorm sub-limit, or the absence thereof, in the Ironclad primary policy. VHG incorporates its General Objections Nos. 2, 6, and 7 as though fully set forth herein.
Subject to and without waiving the foregoing specific objections and General Objections, VHG will produce non-privileged documents relating to the named-windstorm sub-limit, including:
(a) Renewal negotiation correspondence between VHG (Sandra Pellegrini, Vice President of Risk Management), Tidewater Risk Advisors LLC (Franklin Orde, Account Executive), and Ironclad's underwriting department regarding the existence, terms, and requested deletion of the $15,000,000 named-windstorm sub-limit that had been included in the prior policy period;
(b) Marketing submissions, coverage specifications, and requests for quotation circulated to the market through Tidewater that reflect VHG's request for deletion of the named-windstorm sub-limit at the July 2022 renewal;
(c) Binder documentation, policy forms, and endorsements relating to the terms of coverage as bound for the July 1, 2022 – July 1, 2023 policy period;
(d) Post-binding correspondence regarding endorsement schedules, policy issuance, and any corrections or amendments to the policy forms; and
(e) Any other non-privileged documents in VHG's possession, custody, or control reflecting the negotiations, agreements, and understandings regarding the named-windstorm sub-limit.
VHG's position in this litigation is that the $15,000,000 named-windstorm sub-limit that appeared in the prior policy year (July 1, 2021 – July 1, 2022) was deleted from the Ironclad primary policy at the July 2022 renewal, pursuant to negotiations conducted through Tidewater Risk Advisors LLC on VHG's behalf, and that the policy as bound and issued for the July 1, 2022 – July 1, 2023 period does not contain a named-windstorm sub-limit.
VHG further notes that additional documents relating to these negotiations are in the possession, custody, or control of Tidewater Risk Advisors LLC and Ironclad's own underwriting department, which documents are not within VHG's sole custody or control. VHG has issued a subpoena duces tecum to Tidewater Risk Advisors LLC (served June 20, 2023) seeking production of documents relating to these negotiations, among other topics.
Request for Production No. 18
REQUEST: All documents constituting or relating to VHG's communications with Arbor Claims Services LLC regarding the Hurricane Callista claim.
RESPONSE: VHG incorporates its General Objections as though fully set forth herein. Subject to and without waiving the General Objections, VHG will produce non-privileged communications between VHG and Arbor Claims Services LLC (Denise Whitford, Lead Adjuster) regarding the Hurricane Callista claim, including:
(a) Communications regarding the scheduling and conduct of Arbor Claims Services' property inspection on or about October 5, 2022, including coordination of access to each of the three subject properties;
(b) Information requests issued by Arbor Claims Services to VHG and VHG's responses thereto, including requests for financial data, operational information, damage documentation, and supporting materials;
(c) Correspondence regarding damage assessments, scope of loss, restoration timelines, and claim valuation; and
(d) Any other non-privileged correspondence, emails, and written communications between VHG personnel and Arbor Claims Services LLC relating to the Hurricane Callista claim.
VHG objects, however, to the extent this Request seeks communications between VHG and its counsel regarding Arbor Claims Services' inspection, adjustment activities, and findings. Such communications, including counsel's advice regarding VHG's rights and obligations in connection with the claims process, are protected by the attorney-client privilege and will be identified on VHG's privilege log.