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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

ACE Insurers Sue Former Client, Seeking Bar on Duty to Defend.

July 23rd, 2013 - A soured industrial contract has pitted two ACE Group units against a former policyholder that wants them to defend it in an ongoing lawsuit.

ACE American Insurance Co. sold commercial general liability policies to Rayonier Performance Fibers LLC effective January 1st, 2006, through January 1st, 2011. Its sister company, ACE Property and Casualty Insurance Co., issued umbrella policies to the firm with effective dates January 1st, 2007 to December 31st, 2010.

In mid-2006, MeadWestvaco signed a 10-year contract to buy industrial by-products produced by Rayonier at its plant in Jessup, Georgia. That contract was cancelled on September 30th, 2010, after Rayonier was accused by MeadWestvaco of providing a defective product. At that time MeadWastvaco sued the ACE client in South Carolina state court.

Negligence, quantum meruit and breach of implied warranties causes of action were dismissed on March 20th, 2013, when the state court determined that Rayonier owed no duties to MeadWestvaco beyond their contract.

Rayonier notified ACE American on May 14th that it had satisfied its self-insured retention and demanded that the insurer assume its defense. ACE American and ACE Property then issued declinations under their respective policies.

ACE asserted that the damages sought by MeadWestvaco are expressly excluded under both the primary and umbrella policies. Nor has Rayonier exhausted its deductible, said ACE.

ACE asked the court to determine that the allegations contained in the state court suit do not give rise to “property damage” under its policies. ACE further asked that it be given a declaration that it is under no obligation to defend or indemnify Rayonier under either the primary or umbrella policies.
 

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