Morritts Tortuga waiting on insurance claim

David Morritt, Developer for
Morritts Tortuga Club and
Resort

Thursday,  February 23, 2006

With no insurance settlement in sight for the $20 million in damages from Hurricane Ivan, Morritts Tortuga Club and Resort has gone into arbitration with its insurance company, Lloyds of London. 

The developer of the resort, David Morritt, said the insurance company has been underestimating the figure and the resort is now negotiating for a figure it believes is more appropriate.

“We have had professional people advise us on the figure and it is too low,” said Mr Morritt. 

“Over the last 16 years, I have never missed an insurance payment and 16 months after the hurricane we still don’t have a settlement.”

In spite of the lack of insurance funds the resort has been rebuilding with a priority on its four ocean front buildings. One oceanfront building just needed renovations and is expected to be opened in April. 

The foundation for another building has started while the other two are expected to get started over the summer. These three buildings will have two additional floors to make up five floors. Construction has also started on the dock. 

Morritts Director of Operations, Rick Lohr, said the shopping centre is almost completed and is expected to open in late March or early April. Tenants will include Foster’s, Red Sail Sports, Ye Ole English Bakery. 

The shopping centre is a positive step and will make an economic impact on the North Side and East End districts, he said.

“We are doing this without a settlement of insurance,” said Mr Lohr.

“Nothing has stopped as far as the progress of rebuilding the resort. Our sales have been good and people are transitioning from the old buildings to the new type of buildings.” 

Nevertheless, the owners of the popular resort could still face going to court as numerous timeshare owners are disgruntled about how they say the Morritts Tortuga has been running its finances. 

A special assessment fee of US$5.74 million had been charged to timeshare owners to cover the 15 percent deductible on the $20 million claim to the insurance company. Although most of those fees have been paid, numerous owners are claiming that actually the fee is not their responsibility as part of their purchase agreement and should be paid by the developer. 

Furthermore, it was the developer’s responsibility to carry adequate insurance coverage. And since the industry standard throughout the Caribbean is 5 percent, this is a sign the property may be underinsured, which they say is a clear example of financial mismanagement.

An attorney with Appleby Spurling Hunter is trying to get the resort to hand over financial and insurance records as well as details of the building plans. 

Timeshare owner Frank Woodruff said that so far Morritts has not come up with any information. 

“Without an insurance settlement yet, our concern is what are they doing with the money that has been paid in maintenance and special assessment fees,” said Mr Woodruff. 

“And with US$20 million in damages what are they going to do if an insurance settlement goes through and there is not enough to finish rebuilding? If they are using the money from sales and transitions fees and the money has already been spent then we are going to have a shortfall.”

He said another major concern is that many timeshare owners have elected not to upgrade to the new oceanfront buildings and pay the transition fees. That leaves too many timeshare owners to use the remaining building that was renovated but not rebuilt. Consequently, they will not be able to use their timeshare in a timely fashion. 

Mr Woodruff said the situation is exasperated because the resort was closed for most of 2005 so many timeshare owners have banked their weeks to be used for another year, which will only increase the backlog. 
According to some timeshare owners, the attorneys for Morritts Tortuga have said any substantial legal fees that it accrues will be passed on to the timeshare owners in another special assessment fees. 

However, some of the disgruntled timeshare owners have said they are not going to back off. Some have sought advice from timeshare owners involved in the Indies Suites case. 

Mr Woodruff added that many have visited the resort in the last few months and had a great time.

“But after they have returned home, a few weeks later they realise they are going to be stuck with more special assessment fees. We need some answers and if we have to go to litigation then that is the way it has to go,” said Mr Woodruff. 

Mr Lohr said the issues with timeshare owners are being addressed through their attorneys. 

“There are always going to be people who have a negative attitude, but for the most part our owners are behind us. They have been supportive. The whole process is a good thing,” said Mr Lohr. 

shurna@caymannetnews.com

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