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ADRE COUNTRY SQUARE, LLC v. WESTCHESTER SURPLUS LINES INSURANCE COMPANY

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Case Number: 
1:14-cv-02991 Search Pacer
ACE Group party(s): 
Opposing Party: 
ADRE Country Square, LLC
Court Type: 
Federal
US District Court: 
District of Colorado
Date Filed: 
Nov 4 2014

the District Court in and for the
County of Arapahoe.
FIRST CLAIM FOR RELIEF: (Breach of Contract)
4. ADRE Country Square incorporates its allegations set forth in Paragraphs
1 through 3 of this Complaint as if fully restated here.
5. Westchester issued an insurance policy that provided commercial property
coverage to ADRE Country Square, Policy Number D37405450001 (“the Policy”). A
copy of the Policy is attached as Exhibit 1.
6. The Policy was in effect from March 19, 2013 through March 19, 2014.
7. Under the Policy, Westchester agreed to pay for direct physical loss or
damage to the Property caused by risks of direct physical loss or damage unless
otherwise limited or excluded and to pay all amounts owed for such losses.
8. ADRE Country Square paid the premiums due on the Policy in a timely
manner.
9. ADRE Country Square performed all duties and responsibilities required of
it under the Policy, or alternatively, has been excused from performance by
Westchester’s acts, representations, and/or conduct.
10. On or around September 14, 2013, the Property sustained direct physical
loss and/or damage due to a covered event; namely, a wind and/or hail storm (hereafter
"the Loss”).
11. The Policy was in full force and effect at the time of the Loss.
12. ADRE Country Square properly submitted a claim, Claim Number
JY13J0586289, to Westchester for insurance benefits due under the Policy for the Loss
and fulfilled all other duties required of it under the Policy.
13. On November 14, 2013, ADRE Country Square hired Derek O’Driscoll, a
public adjuster of Impact Claim Services, LLC, to help it adjust its insurance claim.
14. On November 18, 2013 O’Driscoll sent a letter to Ron Jernigan, a senior
claims specialist at Westchester requesting that Westchester provide a coverage
decision and an explanation of that decision as soon as possible.
15. On December 19, 2013, Westchester sent its adjuster, Robert Howell, and
an engineer, Matthew Sitzmann of Haag Engineering, Co. to inspect the property.
16. Sitzmann issued a report on January 16, 2014 with his findings from his
inspection of the Property.
17. Sitzmann found hail damage to the Property.
18. In a letter dated January 31, 2014, Westchester stated that it was denying
coverage for ADRE-Country Square’s claim based-in part on^Sitzmann’s findings-ifrat-------------------
the damage at the Property was “likely caused” by a “storm on or before June 7, 2009.”
19. On March 17, 2014, O’Driscoll sent a letter to Jernigan at Westchester
asking Westchester to reconsider its denial because there were a number of material
errors and unsupported speculations in Sitzmann’s report.
20. Westchester then hired Russell Clark, of Engle Martin & Associates, Inc.,
to adjust the claim.
21. On April 23, 2014, Clark wrote to O’Driscoll and stated that "[wjhile we
agree that hail hit the insured risk on September 14, 2013, we disagree that this storm
caused much in the way of damage.”
22. O’Driscoll again wrote to Clark to address a number of deficiencies and
inconsistencies in Westchester’s investigation and coverage determinations.
23. On July 14, 2014, Clark replied to O’Driscoll and stated that “we don’t
believe this hail storm has produced any direct physical damage.”
24. On July 16, 2014, O’Driscoll estimated the full replacement cost value of
the claim to be $338,954.47 and the net claim amount after depreciation to be
$313,954.47, which Westchester refused to pay.
25. Westchester’s denial of benefits constituted a wrongful failure to pay its
insured for the covered loss and amounted to a breach of the Policy.
26. This breach of the insurance contract was and is the direct cause of
damage to ADRE Country Square, including, without limitation:
a. loss of Policy benefits owed to indemnify it for the entire loss;
b. costs to repair, restore and/or replace Westchester the significant
property damage, and future costs to remediate such damage;
c. incidental and consequential damages, within the contemplation of
the parties in the event of breach; and/or;
d. other expenses incurred as a result of Westchester's breach of its
contractual obligations, including costs and fees.
27. Plaintiff, ADRE Country Square, LLC, is entitled to judgment in its favor
and against Defendant, Westchester Surplus Lines Insurance Company, on its First
Claim for Relief for compensatory damages for its losses, including prejudgment
interest; costs and reasonable attorneys’ fees in accordance with applicable law.

SECOND CLAIM FOR RELIEF:
------------------------------------------ (Common Law Bad Faith}-------------------------------------------
28. ADRE Country Square incorporates its allegations set forth in Paragraphs
1 to 27 of this Complaint as if fully restated here.
29. Under Colorado law, an insurer owes its insured the duty of good faith and
fair dealing.
30. An insurer breaches its duty of good faith and fair dealing when it engages
in any of the following conduct:
a. Misrepresenting pertinent facts or insurance policy provisions
relating to coverages at issue and the appraisal process;
b. Failing to adopt and implement reasonable standards for the fair
investigation of claims arising under insurance policies;
c. Refusing to pay the claim without first completing a reasonable and
fair investigation based upon all available information;
d. Not attempting in good faith to effectuate prompt, fair, and equitable
settlements of claims in which liability has become reasonably
clear; and
e. Compelling insureds to institute litigation to recover amounts due
under an insurance policy by offering substantially less than the
amounts ultimately recovered in actions brought by such insureds.
31. Westchester breached its duty of good faith and fair dealing by:
a. Refusing to timely and fully pay its insured for the full cost of
covered damage to the insured premises;
b. Misrepresenting pertinent facts and policy provisions related to
coverage at issue by adopting inconsistent and baseless coverage
positions;
c. Failing to conduct a fair, timely, and thorough investigation of ADRE
Country Square’s claim;
d. Conducting a biased and outcome-oriented claim investigation
through the use of third parties;
e. Delegating its duty to adjust the loss to an unqualified and/or biased
third party;
i
f. Denying coverage based on incorrect facts and unsubstantiated
---------------------------- speculation;------------------------------------------------------------------------------
g. Refusing to reconsider its coverage position, even when facts that
undermined the basis of its denial became evident;
h. Contradicting the findings of its own underwriting inspection by
stating that the claim was a result of pre-existing damage to the
Property; and
i. Paying less than the full amount owed in the claim thereby forcing
the insured to institute litigation, and incur the fees and costs
associated therewith, simply to recover what was properly owed.
32. As a direct and expected result of Defendant Westchester’s breach of its
duty of good faith and fair dealing, ADRE Country Square has:
a. not received all Policy benefits owed to indemnify it for the entire
loss;
b. incurred and will incur in the future costs to repair, restore and/or
Westchester the significant property damage;
c. suffered and will continue to suffer incidental and consequential
damages, within the contemplation of the parties in the event of
breach; and
d. suffered and will continue to suffer other expenses incurred as a
result of Westchester’s unfair methods of competition and unfair or
deceptive acts or practices in the business of insurance, including
the fees and costs necessary to litigate.
33. Plaintiff, ADRE Country Square, LLC, is entitled to judgment in its favor
and against Defendant, Westchester Surplus Lines Insurance Company, on its Second
Claim for Relief for compensatory damages for its losses, including prejudgment
interest; costs and reasonable attorneys’ fees in accordance with applicable law.
THIRD CLAIM FOR RELIEF:
(Bad Faith Breach of an Insurance Contract)
CRS S5 10-3-1115 and -1116
34. ADRE Country Square incorporates its allegations set forth in Paragraphs
1 to 33 of this Complaint as if fully restated here.
35. Under C.R.S. § 10-3-1115, an insurer who delays or denies payment to an
insured without a reasonable basis for its delay or denial is in breach of the duty of good
faith and fair dealing.
36. In breach of its duty to ADRE Country Square, Westchester, without a
engaging in the following conduct:
a. Refusing to timely and fully pay its insured for the full cost of covered
damage to the insured premises;
b. Misrepresenting pertinent facts and policy provisions related to coverage
at issue by adopting inconsistent and baseless coverage positions;
c. Failing to conduct a fair, timely, and thorough investigation of ADRE
Country Square’s claim;
d. Conducting a biased and outcome-oriented claim investigation through the
use of third parties;
e. Delegating its duty to adjust the loss to an unqualified and/or biased third
party;
f. Denying coverage based on incorrect facts and unsubstantiated
speculation;
g. Refusing to reconsider its coverage position, even when facts that
undermined the basis of its denial became evident;
h. Contradicting the findings of its own underwriting inspection by stating that
the claim was a result of pre-existing damage to the Property; and
i. Paying less than the full amount owed in the claim thereby forcing the
insured to institute litigation, and incur the fees and costs associated
therewith, simply to recover what was properly owed.
37. As a direct and proximate result of Defendant Westchester’s actions,
ADRE Country Square has:
a. not received all Policy benefits owed to indemnify it for the entire
loss;
b. incurred and will incur in the future costs to repair, restore and/or
Westchester the significant property damage;
c. suffered and will continue to suffer incidental and consequential
damages, within the contemplation of the parties in the event of
breach; and
d. suffered and will continue to suffer other expenses incurred as a
result of Westchester’s unfair methods of competition and unfair or
deceptive acts or practices in the business of insurance, including
the fees and costs necessary incurred for litigation;
______38. Colo. Rev. Stat. § 10-3-1116 authorizes a f irst-party claimant whose claim
for payment of benefits has been unreasonably delayed or denied may bring an action
in a district court to recover reasonable attorney fees and court costs and two times the
covered benefit.
39. Plaintiff, ADRE Country Square, LLC, is entitled to judgment in its favor
and against Defendant, Westchester Surplus Lines Insurance Company, on its Third
Claim for Relief as authorized by applicable statutes, including prejudgment interest;
reasonable attorneys’ fees and costs in accordance with applicable law; court costs;
and two times the covered benefit.
WHEREFORE, Plaintiff ADRE Country Square, LLC prays as follows:
A. On its First Claim for Relief, for judgment in its favor and against the Defendant,
Westchester Surplus Lines Insurance Company, for all unpaid covered benefits
owed under the Policy;
B. On its Second Claim for Relief, for judgment in its favor and against the
Defendant, Westchester Surplus Lines Insurance Company, for all unpaid
covered benefits owed under the Policy;
C. On its Third Claim for Relief, for judgment in its favor and against the Defendant,
Westchester Surplus Lines Insurance Company, for two times the amount of all
covered benefits owed under the Policy;
D. Costs, expert witness fees, and attorneys’ fees incurred in prosecuting the claims
against Westchester Surplus Lines Insurance Company;
E. Other damages resulting from Westchester Surplus Lines Insurance Company’s
bad faith, including out-of-pocket expenses, costs of ongoing damages, and
exemplary damages resulting from Westchester Surplus Lines Insurance
Company's bad faith refusal to pay for the full loss and damage to ADRE Country
Square’s property, both real and personal;
F. Pre- and post-judgment interest; and
G. For any further relief deemed appropriate by the Court.

The provided text is an excerpt from a document filed in this case. For a full understanding of the case, one should read the complete court file, including the response.

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