Marking further action in a case that has established a significant legal precedent, the Federal District Court in Miami ruled that the Monticello Insurance Company is liable for the $5.75 million settlement in the 1997 drownings of Zachary Breaux and Eugenie Poleyeff.

According to the lawsuit, both individuals were vacationing with family (separately) in Miami Beach in February 1997 and on February 20 they both went to the beachfront located at 29th Street in Miami Beach. Although there were concessions and other amenities located at that area of the beach, there were no lifeguards or signage warning of the strong rip tides that day.

“People thought the concessionaires were lifeguards, but there were no warning signs that the beach was unguarded,” said Howard Pomerantz, an attorney for the Breaux family

Poleyeff, 66 went into the water and began struggling after being caught in a rip tide. Breaux, 36, an up-and-coming jazz guitarist, went in to try and rescue her and got in trouble himself. Lifeguards were summoned from several blocks away, but did not arrive in time to save the victims.

Then the question became, who was responsible? The concessionaire on that stretch of beach had an insurance policy through the Monticello Insurance Company of Delaware naming the city of Miami Beach as an additional insured. Additionally, in 2005 the Florida Supreme Court ruled that cities have a responsibility to warn beach goers of known dangers, just like private landowners.

“Had they merely put up warning sings saying this is an unguarded beach, they would have been OK. We probably never would have brought the case,” said Pomerantz. “Not only had they not warned of rip currents that day, but people thought it was a guarded beach.”

Following the incident, a lifeguard stand was erected at 29th street and the city went forward negotiating a settlement with the families of the victims. However, according to case information, Monticello Insurance Company has refused to pay the settlements on the grounds that the language in the policy did not cover the city.

The recent judgment against Monticello means the company will now have to pay the full settlement even though the policy only covered up to $1 million. As of press time, Pomerantz expected that Monticello would appeal the decision. If that happens, the case would move to the 11th Circuit Court of Appeals.

Kevin Trapani, president and CEO of The Redwoods Group, has been following the case. His Morrisville, N.C., risk management firm insures aquatics operators including the YMCA. And Trapani said the case just illustrates how important it is to get the language in an insurance policy right, particularly when it comes to additional insured parties.

“This is just a classic case of an unintended exposure,” said Trapani. “That can happen when you’re not clear about the additional insured [in your policy]. We want to talk about victims in distress but at the end of the day we have to be careful about how we buy our insurance products.”