Sun Communities sues insurer after child dies at campground

It’s been close to two years since Emma Davidson died.

e 3-year-old had been playing one early April evening in 2021 at a Cape May, N.J., RV campground when she stepped on an unsecured underground septic tank lid and dropped 10 feet or so into the sewage- lled pit, ultimately succumbing to her injuries after she was removed — perhaps as much as ve minutes after falling in, according to local reports from the time.

Now the property’s owner, Southeld-based Sun Communities Inc. (NYSE: SUI), the massive REIT run by Gary Shi man, is suing one of its insurers, Navigators Insurance Co., saying the Stamford, Conn.-based company failed to contribute to a mediated monetary settlement with the toddler’s family after they sued Sun.

e complaint against Navigators led in the U.S. District Court for the Eastern District of Michigan this month says Navigators “failed and refused to meaningfully participate in the (mediation) proceeding, failed and refused to give meaningful consideration to (Sun’s) settlement proposals, and ultimately refused to contribute any amount to the settlement reached at the mediation...”

It goes on to say that “ ... Sun faced exposure substantially in excess of the settlement amount if the matter went to trial, at which jurors would have been presented with, among other evidence, graphic photos and video evidence depicting the manner of (Davidson’s) death and the extreme mental anguish and su ering of the plainti s in the aftermath of the event, as well as evidence of (Davidson’s) conscious pain and su ering.”

Because Navigators didn’t monetarily contribute to the settlement, e total amount of the settlement with the Davidson family is not known.

Sun used its own money to pay what the insurer would not, according to the complaint. Sun says in its lawsuit that Navigators did not tell it that the claims were not covered or were subject to policy exclusion.

But Kenneth Neuman of Birmingham-based Altior Law, who reviewed a copy of the complaint, concluded the settlement was at least $11 million. at’s because in the lawsuit, Sun says it has at least three di erent layers of coverage: One for up to $1 mil- lion; another for $1,000,001 to $11 million; and the Navigators policy of up to $15 million, which would cover damages from $11,000,001 to $26 million.

Whether Sun has additional coverage beyond $26 million is not known.

Neuman — who has worked on insurance-related cases for policy holders as well as those with claims against insured parties like accounting and law rms — said Navigators will likely dispute in federal court that Sun’s exposure was “substantially in excess of the settlement amount” and likely wanted to take its chances with a jury trial.

“ ey are really good at collecting on premiums and really bad at paying out on claims. at’s their business model,” said Neuman, referring to insurance companies. “What I’m reading from this complaint is they (Sun) went into mediation and, given the facts of this loss, this 3-year-old child dying this horrible death, they gured their exposure was way above $11 million, and they wanted this third line of coverage (Navigators) to step in, and they wouldn’t. So it looks like Sun wrote the check for the delta.” e Davidson family sued Sun Communities and others in the summer 2021, New Jersey Advance Media reported at the time. e media group also reported sep- arately that at Sun’s Cape May campground, the New Jersey Department of Environmental Protection found “multiple violations, including ‘numerous’ unsecured lids that weren’t bolted or screwed down and others that were cracked, according to the DEP notice of violation.” It wasn’t just at Cape May where there were issues, according to local reports. A man suffered minor injuries when he fell into an underground septic system at another Sun-owned property in nearby Dennis Township.

Sun’s attorneys with the South eld o ce of Taft (formerly Ja e) declined comment. An email was also sent to Sun’s investor relations email account. Clunet Lewis, an independent director for the Sun Communities board, called Davidson’s death a horrible accident and a tragedy; and said he hadn’t heard about the lawsuit against Navigators and didn’t have any additional details, but would give my inquiry to the appropriate people at Sun. An email was sent to a spokesperson for Navigators, which is a division of e Hartford.

A representative from the Cape May County Prosecutor’s O ce on Tuesday said Davidson’s death was “strictly an accident” and there were no criminal charges led.

In a statement two years ago to NJ Advance Media, an unidenti ed outside public relations rm for Sun said:

“Because the safety of our guests is our highest priority, we have a longstanding and rigorous program of safety inspections and maintenance at all of our properties. As a result, serious accidents at any of our locations are extremely rare.” e statement continued: “Immediately after the tragic accident in Cape May, we re-inspected all septic tanks to ensure that covers are secured with screws or bolts, installed additional safety fencing and applied redundant inserts to further block access. We have also engaged an independent engineering rm to perform an additional assessment of our facilities in New Jersey, and a third party expert is conducting follow up inspections.”

Sun has a sprawling real estate portfolio that consists of everything from marinas to RV campgrounds and manufactured housing.

Its RV community portfolio consists of 182 properties with some 58,000 sites, with about 30,000 of them in North America, according to an investor presentation from earlier this month. In addition, it also has 298 manufactured housing communities with about 100,000 sites and 134 marinas with 48,000 wet slips and dry storage spaces.

Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB