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

Power Company Sues ACE Over California Wildfire Damages

September 3rd, 2014 - Legal fallout from one of the worst series of wildfires to ever strike California has continued for ACE American Insurance Co. with a lawsuit being filed against it by a leading state utility.

Southern California Edison Co. contends in a federal suit filed in U.S. District Court in Los Angeles that the ACE unit has repeatedly ignored its request to defend or indemnify the utility. Also named in the suit were ESIS Inc., another ACE unit that handles claims for it, and Time Warner Cable Enterprises LLC.

Groundwork for the lawsuit began in 2001, when Edison entered an agreement with Adelphia Cable Communications that allowed the latter firm to string its fiber optic cable on certain power poles owned by the utility. Adelphia and the company that later acquired it, Time Warner, agreed to carry comprehensive liability insurance and to also defend the utility should it be sued and the insurer balked at coverage.

On October 21st, 2007, a fire broke out in the vicinity of power poles in Santa Rosa, California, covered by the pact. Known as the Nightsky Fire, said Edison, it came during a month of fires that lit up California and destroyed 1,500 homes (mostly in the San Diego area, well south of Santa Rosa). The Nightsky Fire spawned two lawsuits against Edison, including one from the California Department of Forestry and Fire Protection.

Edison said one of the lawsuits expressly sought damages for alleged acts and omissions of Time Warner. As the suits were combined in a state court action, Edison asked that Time Warner and its insurer, ACE American, defend and indemnify it.

Edison said that its attorneys called, wrote and emailed ACE about the claims, all to no avail. This despite the fact that, to its belief, ACE is defending Time Warner.

Edison has accused all three defendants with breach of contract and breach of implied covenant of good faith and fair dealing. It asked the court to declare that ACE has a duty to defend and indemnify it, and to award it any actual and consequential damages.

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