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

Company Alleges ACE Units “Unreasonable and Unlawful” in Denying Injury Claim

April 10th, 2013 - A New York corporation has sued ACE American Insurance Co. and ACE Property and Casualty Insurance Co. contending that they improperly denied coverage on a claim asserted against the plaintiff.

ITT Corp. said the ACE Group units refused to abide be terms of two insurance policies, one covering general liability and the other an umbrella, for a one-year period starting Jan. 1, 2009.

ITT was sued in Missouri state court in 2011 by the widow and surviving son of Thomas Mulnix. He died in a Columbia, Missouri hospital 39 days after being injured in an explosion. Plaintiffs asserted claims against ITT and co-defendant MFA Oil Co. in excess of $15 million.

Though ITT said it had defenses available, it also said that its attorneys believed the plaintiffs would be able to support a substantial damages figure in a trial.

ITT said claims asserted by the survivors “fell squarely within the coverage of the ACE policies.”  They also said they fully apprised ACE of the suit as it progressed, including a March 7 mediation among the litigants during which the jointly appointed mediator proposed a settlement between ITT and the plaintiffs.

Under the deal ITT would have retained the first $1 million of damages, but it said that ACE “categorically refused” to accept the proposal.

ITT entered into settlement negotiations with the Mulnixes, and eventually made a demand on the ACE companies for payment. They refused, however, saying the amount that ITT settled for is unreasonable.

ITT has now sued, charging its insurers in U.S. District Court in Philadelphia with breach of contract for unreasonably refusing to consent to the settlement. ITT asked for damages and punitive damages under Pennsylvania law. (The ACE companies are based in Philadelphia.)

Ironically, both ACE companies had also insured MFA Oil, which is not party to this suit.

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