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

Owners of Hurricane Battered Apartments Sue Westchester Surplus

July 6, 2011 - The operators of an Alabama apartment complex have sued Westchester Surplus Lines Insurance Co. and two other insurers for their alleged failure to pay for damages caused to their property in 2004 by Hurricane Ivan.

Delaney Development Inc. and Delaney’s Inc. claimed breach of contract and breach of duty of good faith and dealing in their lawsuit against Westchester, Essex Insurance Co. and Landmark American Insurance Co. They asked for unspecified damages in a complaint that was filed in U.S. District Court for the Southern District of Alabama.

According to the complaint, the Delaney companies own and operate the Cabana apartments, of Mobile, Ala.  On Sept. 16, 2004, that property was damaged when Category 3-strength Ivan made landfall and raked the area. With damages estimated at more than $10 billion, Ivan is believed to be one of the ten most costly hurricanes to strike the United States.

The plaintiffs noted that prior to the hurricane, the government had ordered a voluntary evacuation of the greater Mobile area. The plaintiffs allege this forced everyone away from the area, but they said they mitigated damages by performing necessary repairs in an attempt to swiftly reopen.

The complaint states that all three insurers were notified of the Cabana damages, and all reportedly sent adjustors to inspect the property. Plaintiff’s say that as late as May 27, 2005, Essex contacted them about documenting their claims regarding the loss of rents.

Plaintiffs contend in the suit that they have provided satisfactory proof of loss, yet the insurers have not yet adequately paid them. Plaintiffs claim as a result, they have sustained a loss of use of the insured property, loss of business income and diminution in value.

Though the lawsuit comes more than six years after the loss occurred, the plaintiffs contend in their complaint that the statute of limitations was ”interrupted” by correspondence with the defendants.

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