Brown & Brown Won’t Get Change of Venue in Coverage Gap Lawsuit by Property Firm

Daytona Beach-based Brown & Brown Insurance, often called one of the largest and fastest-growing insurance brokerages in the United States, has lost a round in its legal battle with one of its largest clients, a Florida property management firm.

The ruling by Florida’s 3^rd District Court of Appeals last week denied a change of venue in the case from Miami to Jacksonville, giving guidance on where insurance disputes should be filed. The underlying litigation also provides a glimpse into what may have gone wrong in securing coverage for a notoriously high-crime apartment complex, and on how careful brokers, agents and insureds need to be in reading policies and exclusions.

The case has taken on new importance after a rise in huge premises-liability verdicts around the South and as large corporations and hedge funds have expanded their ownership of rental property in the country.

The Brown & Brown dispute stems from a 2016 fatal shooting at Kings Trail Apartments in Jacksonville, Florida. The complex was owned by Tzadik Acquisitions LLC, based in Miami. The property management firm, which said it owns some 19,000 units and property in 20 states, had worked with Brown & Brown’s Ian Shinnick, a senior vice president, to secure coverage for its properties.

But after the shooting at Kings Trail, which killed Alfred Lance, Tzadik was sued by the victim’s estate. It was only then that the property company discovered that it had a $750,000 gap in its coverage, according to the 2022 lawsuit filed against Brown & Brown.

Tzadik charges that Shinnick and Brown & Brown had promised in 2015 to be more than mere “order takers” on insurance needs, and would serve as risk experts and insurance advisors. “And that makes all the difference,” Brown & Brown reportedly said.

Instead, Tzadik said the brokerage failed to obtain the needed coverage.

“Instead of going to market to obtain quotes and find the best coverages/policies for the Tzadik Enterprise that would also comply with lender requirements, Shinnick sought and obtained policies for the Tzadik Enterprise that maximized his commission and/or generated business for insurance carriers affiliated with Brown & Brown,” the complaint alleges.

Brown & Brown secured a James River Insurance policy with an assault-and-battery sublimit of $250,000, along with an excess commercial policy that did not kick in until after the underlying policies’ limits were exhausted. That should have been at $1 million, Tzadik said.

But the insurance broker did not know or did not explain that a United Specialty Insurance Co. policy for the middle layer of coverage had somehow omitted the Kings Trail property. That jeopardized Tzadik’s loan with JP Morgan Chase Bank and forced the company to pay for most of the settlement in the negligence lawsuit after the shooting.

The omission may have come about after Tzadik representatives told Shinnick that it had found better offers from other brokers. Shinnick said he would match the offers. But Tzadik charges in the complaint that the broker did not actually find better-priced coverage.

“Upon information and belief, Shinnick simply reduced the amount of coverage afforded to the Tzadik Enterprise’s policies in order to reduce the premiums paid by the Tzadik Enterprise, without advising it of the same,” the lawsuit reads.

Tzadik noted that it had obtained correspondence from a Brown & Brown subsidiary, Peachtree Specialty Risk Brokers, to Shinnick, noting that Ara Dresner was the broker’s representative with Tzadik and that she was responsible for checking the endorsement for accuracy. Dresner is named in the Tzadik lawsuit.

Brown & Brown officials and attorneys could not be reached for comment. In its answer to the complaint, the company has denied all allegations.

“Plaintiffs’ claims are barred, in whole or in part, because any injuries and damages allegedly sustained by Plaintiffs were the result of Plaintiffs’ own negligence in failing to employ adequate security or other protection at Plaintiffs’ apartment complex where and when the alleged wrongful death occurred,” reads the Brown & Brown answer, written by lawyers with the Freeborn & Peters law firm in Tampa.

The lawsuit will now proceed in Miami-Dade County Circuit Court.

In refusing the change of venue motion by Brown & Brown, the appeals court upheld the trial judge. The court found that Florida law requires legal actions to be brought in the county where the defendant resides, where the cause of action accrued, or where the property is situated. It’s the plaintiff’s prerogative to choose the venue based on those criteria.

Brown & Brown argued that Duval County was the proper site for the case, since the property is in Jacksonville. But the courts pointed out that Tzadik is based in Miami, and that’s where a B&B representative met with company officials to seal the insurance coverage.

The lawsuit did not explain if Brown & Brown carries outside errors and omissions coverage, or if it is self-insured. The 80-year-old brokerage firm may have little trouble paying damages if it settles or does not prevail in the litigation: The publicly traded company reported a net income of $145 million for the fourth quarter of 2022 – a 48% increase over the fourth quarter in 2021.

Brown & Brown said it has some 14,500 associates in 450 offices worldwide.

Topics Lawsuits Property