PALM HARBOR — In 2007, residents of the Cloverplace Condos began to notice unmistakable signs of sinkhole activity.
Walls were cracking, stucco was peeling off, doors no longer closed as they should. Depressions formed alongside units. Yet even as claims were filed on more than 100 units and property values plunged, the community's insurer, Citizens Property Insurance, never paid a cent.
Citizen's conduct shows "monumental bad faith and (is) a textbook example of how not to deal with a insured customer," complained homeowner Dennis McKenna.
Last week, a Pinellas County jury agreed, announcing one of the largest verdicts ever against state-run Citizens — $12.7 million. That's the estimated amount it would take to stabilize 83 of the homes.
But the story doesn't end there. Citizens, which covers Floridians who cannot find property insurance in the open market, plans to appeal.
"Simply making a cash payment that does not require repairs to be made is not in the best interest of Citizens or the community," the company said in a statement.
Citizens' decision to appeal comes even though it has acknowledged damage and evidence of sinkhole activity at Cloverplace. Even though it denied claims based on a law passed after Cloverdale's insurance policy took effect. And even though a judge said Citizens "judge- shopped" in an attempt to find one that would rule in its favor.
"I'm disappointed that once again Citizens fights and fights homeowners to where a jury finally has to say, 'You're wrong and the homeowner is right,'" said Pasco County Property Appraiser Mike Fasano, who as a state senator tried to help the Cloverplace owners. "I guess the big question is how much does it cost Citizens and its premium payers for these attorneys that keep losing?"
Citizens said it has spent $186,731 in its six-plus years fighting Cloverplace but Ted Corless, attorney for the condo association, thinks the ultimate figure could be in the millions. Last year, Citizens' cost of battling policyholders on all types of claims — not just sinkhole suits — was $72.8 million. Legal fees are a major reason for rate increases.
Built in the 1980s, Cloverplace is a duplex community just off U.S. 19 in mid-Pinellas. The 120 buildings (240 units) are home to about 500 people, many of them retirees and young families.
Even if owners wanted to sell and move, they would have a hard time. They would have to find cash buyers because banks won't write mortgages on properties in sinkhole litigation.
The dispute with Citizens has killed (property values), absolutely killed them," said Charles Kunath, an owner who is also Cloverplace's property manager. "These were selling for $170,000 at one time. Now they sell between $80,000 and $120,000."
To add insult to injury, Kunath adds, the condo association is still paying Citizens around $150,000 a year in premiums because it can't switch insurers until the lawsuits are settled.
Kunath's home was among 26 where signs of sinkhole activity first appeared. Also in that group were two units owned by McKenna, who in 2010 noted depressions getting larger and closer to his properties. After engineers hired by the condo association found suspected sinkhole activity, Citizens decided to do test drilling near one of his units.
McKenna, a retired engineer, stepped outside one morning to find an enormous hole.
"The workman doing the drilling said it was the largest collapse he'd ever experienced in conjunction with drilling and he'd nearly been crushed by the drilling equipment falling on top of him," McKenna wrote last year to then state-Sen. Jack Latvala.
Citizens had the hole filled with sand, then denied the claims on all 26 homes. The condo association sued; that lawsuit, which was not affected by the $12.7 million verdict, is pending.
By 2011, Citizens was paying out so much on sinkhole claims statewide that the Florida Legislature tightened the law. The new law said coverage would kick in only if the damage was "structural," as determined by at least one of five technical factors. The law also allowed an insurer to deny coverage without conducting a sinkhole investigation, as previously required.
After an additional 83 Cloverplace homes showed signs of sinkhole activity, Citizens acknowledged damage but denied those claims in 2013 based on the new law. The condo association filed a second lawsuit, arguing Citizens was wrong to apply the law because it was not in effect at the time Cloverplace took out its insurance policy.
During its lengthy legal battle with Cloverplace, Citizens has been on the losing end of several motions.
In 2014, it filed a countersuit against Cloverplace in the St. Petersburg courthouse, then dismissed the case and refiled it in Clearwater. Pinellas Circuit Judge Douglas Baird sent the case back to St. Petersburg.
Citizens' attempt to move the case "constitutes either deliberate or inadvertent — I don't know what to call it — judge-shopping," Baird said in 2016.
Last August, Judge Pamela Campbell agreed with Cloverplace that its Citizens policy did not require proof that sinkhole activity impaired the "structural integrity" of a building — as Citizens claimed — but that such activity "merely" caused damage to the building.
And in January, Campbell ruled that Citizens had violated Florida law, breached its policy with Cloverplace and failed to notify the condo association of its rights to sinkhole testing. That paved the way for the $12.7 million verdict.
The judge "found that Citizens' conduct had made it impossible for (Cloverplace) to connect any damage to a potential sinkhole loss," said Corless, the attorney.
Citizens said it would repair "confirmed" sinkholes, but Corless said the condo board rejected that offer for the following reason: "If we can't trust Citizens to honor the terms of the policy, why would we trust Citizens to enter into some new agreement on how to adjust the losses?"
With no soil stabilization or end in sight to the lawsuits, these are anxious times for Cloverplace residents.
"Everyone in here wakes up and thanks God the house didn't fall during the night, that their kids are not dead because of Citizens not taking care of what they should take care of," says Kunath, the property manager. "That's the real story — the heartache and the depression."
Contact Susan Taylor Martin at firstname.lastname@example.org or (727) 893-8642. Follow @susanskate