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

Spoiled Soil Churns Up Lawsuit Against ACE Unit

April 7th, 2015 - A California firm has sued Illinois Union Insurance Co. over the latter’s denial of coverage for a construction site cleanup in Miami.

Malcolm Drilling Co., in a lawsuit filed in U.S. District Court in San Francisco, said that the ACE unit has an obligation to provide legal defense expenses and other professional loss costs associated with a 2013 pollution claim. And it accused the insurer of engaging in fraudulent business practices and violating the California Business and Professional Code in its dealings with Malcolm.

In 2012, San Francisco-based Malcolm had been hired by Turner Construction Co. to handle foundation-related work at the $1 billion mixed use Brickell City Centre in downtown Miami. That included excavating the site and removing unneeded dirt.

Malcolm then sub-contracted with Central Florida Equipment Rental Inc. to conduct the excavation and off-loading. It arranged for the dirt to be used as fill for a runway expansion project at the Fort Lauderdale-Hollywood International Airport, and for lake fill at a future development site at Biscayne Landing in North Miami.

Authorities originally allowed the dirt to be used at Biscayne Landing, but withdrew that approval in June 2013 after determining that the material contained unacceptable levels of aluminum.

Both the City of North Miami and the contractor for the runway then asked that the contaminated soil be removed. But Central Florida Equipment balked at performing the task, saying it was precluded from doing so by language contained in its sub-contract with Malcolm. Turner then demanded that Malcolm remove the soil, and Central Florida Equipment commenced arbitration proceedings against Malcolm.

Malcolm was at the time covered by a pollution liability and errors and omissions policy issued by ACE. It filed a claim with the insurer, and on November 11th, 2013, ACE denied coverage and explained that it did not see it as a covered cost. However, Malcolm said that ACE conceded that there could be “some covered costs associated with this incident,” in particular a claim by Central Florida Equipment involving the runway project.

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