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AMERICAN FIRE & CASUALTY INSURANCE COMPANY et al v. ACE AMERICAN INSURANCE COMPANY et al (June 11)

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Case Number: 
2:14-cv-03422 Search Pacer
ACE Group party(s): 
Opposing Party: 
AMERICAN FIRE & CASUALTY INSURANCE COMPANY
Court Type: 
Federal
Date Filed: 
Jun 11 2014

COMPLAINT
American Fire and Casualty Company (hereinafter "American Fire") and Ohio
Casualty Insurance Company (hereinafter "Ohio Casualty"), Plaintiffs, in the above-captioned
lawsuit, by and through its counsel, Weber Gallagher Simpson Stapleton Fires & Newby, LLP,
allege the following:
1. This is an action for breach of contract and declaratory judgment pursuant to 28
U.S.C.A. § 2201 for; 1) damages resulting from ACE American Insurance Company's
(hereinafter "ACE American") breach of a settlement agreement reached between Plaintiffs and
ACE American pursuant to which ACE American agreed to defend and indemnify Plaintiffs'
insured, Keystone Asset Management, Inc. (hereinafter "Keystone") under a commercial general
liability policy issued by ACE American to Federal National Mortgage Association a/k/a Fannie
Mae (hereinafter "Fannie Mae") with respect to the claims described below against Keystone; or
2) in the alternative, for declaratory judgment and other relief for the purpose of determining a
question in actual controversy between the parties as to the parties respective obligation to
defend and indemnify Keystone.

PARTIES AND JURISDICTION
2. Plaintiff, American Fire, is a New Hampshire corporation and maintains its
principal place of business at 175 Berkeley Street, Boston, Massachusetts.
3. Plaintiff, Ohio Casualty, is a New Hampshire corporation and maintains its
principal place of business at 175 Berkeley Street, Boston, Massachusetts.
4. Defendant, ACE American, is a Pennsylvania corporation which maintains its
principal place of business at 436 Walnut Street, Philadelphia, Pennsylvania.
5. Fannie Mae is a Congressionally chartered corporation and its principal place of
business is located at 14221 Dallas Parkway, Suite 1000, Dallas, Texas 75254.
6. Keystone is a corporation organized under the law of the Commonwealth of
Pennsylvania and its principal place of business is located at 100 West Main Street, Lansdale,
Pennsylvania.
7. Fannie Mae is named as an interested party pursuant to F.R.C.P. 19(a).
8. Jurisdiction is based on diversity pursuant to 28 U.S.C. § 1332(a)(1),
as the plaintiffs and defendants are citizens of different states and the amount in controversy
exceeds the sum or value of $75,000, exclusive of interest.
9. Venue is proper in this Court pursuant to 28 U.S.C. § 1391(a)(1).

BACKROUND
10. This controversy arises out of a personal injury lawsuit filed against Fannie Mae
and others in Maria Clara Rodriguez v. County of Westchester, et al, venued in the Supreme
Court of New York, County of Westchester, Index No. 26027/10; Third Party Index No.
26027/107 (hereinafter "underlying lawsuit" or "underlying complaint"). A true and correct copy
of the underlying complaint is attached as Exhibit "A".
A. The Underlying Lawsuit
11. The underlying lawsuit alleges that on February 28, 2010, Maria Rodriguez
slipped and fell on ice and snow on a public sidewalk located at 106 Maple Street, Yonkers, New
York. (para. 22 of the underlying complaint).
12. As a result of the accident Ms. Rodigruez,, a 55 year old woman, allegedly
suffered fractures of multiple thoracic vertebrae requiring spinal fusion surgery. Ms. Rodriguez,
who was employed as a clerk and house cleaner prior to the accident, alleges that she is totally
and permanently disabled as the result of her alleged injuries.
13. The underlying lawsuit alleges that at the time of the accident, the sidewalk was a
public sidewalk owned by the City of Yonkers and that Fannie Mae owned the property located
at 106 Maple Street, Yonkers, New York, which Fannie Mae obtained through foreclosure, (para.
5 and 13 of the underlying complaint).
14. On or about August 2, 2011, Fannie Mae filed a Notice of Impleader /
Third Party Complaint against Keystone in the underlying lawsuit (the "Third Party
Complaint"). A true and correct copy of the Third Party Complaint attached as
Exhibit "B".
15. In the Third Party Complaint, Fannie Mae asserts that Keystone is Fannie
Mae's exclusive agent for the management and sale of the property pursuant to an Asset
Management Agreement between Fannie Mae and Keystone and that Keystone was
required to maintain and manage the subject property at 106 Maple Street, Yonkers, New
York." (Third Party Complaint, para. 8 & 10).
B. The Insurance Coverages
16. American Fire insured Keystone at the time of the accident under a commercial
general liability insurance policy, policy number BZA (10) 53 09 27 (the "American Fire
policy"). A true and correct copy of the American Fire policy is attached as Exhibit "C".
17. Ohio Casualty insured Keystone at the time of the accident under an umbrella
insurance policy, policy number UBO (10) 53 40 86. (the "Ohio Casualty umbrella policy"). A
true and correct copy of the Ohio Casualty policy is attached as Exhibit "D".
18. The American Fire policy does not cover claims for bodily injury arising out of
properties managed by Keystone Management.
19. Ohio Casualty has been providing a defense to Keystone in the underlying
lawsuit.
20. ACE insured Fannie Mae at the time of the accident under a commercial general
liability insurance policy, policy number HDOG2493536A (the "ACE American policy"). A
true and correct copy of the ACE American policy is attached as Exhibit "E".
21. The ACE American policy provides coverage to any person or organization that
acts as real estate manager for Fannie Mae.
22. Fannie Mae admits that Keystone was Fannie Mae's real estate manager by
pleading in the Third Party Complaint that "Keystone was required to maintain and manage the
subject property at 106 Maple Street, Yonkers, New York." (Third Party Complaint, para 11).
23. Plaintiffs tendered defense and indemnification of Keystone to ACE American on
or about August 1, 2012.
24. ACE American failed to respond to Plaintiffs' tender on behalf of Keystone.

COUNT I-BREACH OF SETTLEMENT AGREEMENT
25. Plaintiffs incorporate the preceding paragraphs of this complaint as if set forth at
length herein.
26. On December 20, 2012 Plaintiffs filed an action for declaratory judgment in this
Court against, inter alia, ACE American, seeking a declaration that ACE American had a duty to
defend and indemnify Keystone against the claims asserted against Keystone in the underlying
case and that ACE American was obligated to reimburse Ohio Casualty for attorneys' fees and
costs incurred in defending Keystone. That action was captioned American Fire & Casualty
Insurance Company, et. al. v. ACE American Insurance Company, et. al, Civil Action No.: 12-
7126 (the "Prior lawsuit"). A true and correct copy of the complaint in the Prior lawsuit is
attached as Exhibit "F" .
27. On or about July 22, 2013 ACE American agreed to assume Keystone's defense
and indemnity in the underlying lawsuit and to reimburse Ohio Casualty for reasonable defense
fees and expenses incurred in defending Keystone between August 1, 2012 (the date of tender)
and ACE American's assumption of the defense. In consideration of ACE American's
undertaking, Plaintiffs agreed to waive their claim for fees and costs incurred in pursuing the
Prior lawsuit, waive any claim for attorneys' fees and costs incurred prior to August 1, 2012,
and to dismiss the Prior Lawsuit without prejudice. Plaintiffs and ACE American memorialized
this agreement in a document dated July 22, 2013 (the "Settlement Agreement"). A true and
correct copy of the Settlement Agreement is attached as Exhibit "G".
28. Plaintiffs dismissed the Prior Lawsuit by filing a stipulation of dismissal with the
Court on July 26, 2013. A true and correct copy of the Stipulation of Dismissal without
Prejudice is attached as Exhibit "H".
29. Despite demand, without any explanation, and without any justification, ACE
American has disregarded the Settlement Agreement and has failed and refused to assume
Keystone's defense and indemnity in the underlying lawsuit and has failed to reimburse
Plaintiffs for reasonable defense fees and costs incurred by Plaintiffs in defending Keystone in
the underlying lawsuit between August 1, 2012 and the present.
30. Plaintiffs have fulfilled all of their obligations under the Settlement Agreement.
31. ACE American has breached the terms of the Settlement Agreement by failing
and refusing to assume Keystone's defense and indemnity in the underlying lawsuit on and after
July 22, 2013 and by failing to reimburse Plaintiffs for reasonable defense fees and costs
incurred by Plaintiffs in defending Keystone in the underlying lawsuit on and after August 1,
2012.
32. Plaintiffs have sustained damages as the result of ACE American's breach of the
Settlement Agreement including, without limitation, the reasonable defense fees and costs
incurred by Plaintiffs in defending Keystone on and after in the underlying lawsuit on and after
August 1, 2012 in an amount in excess of $55,000.
WHEREFORE, Plaintiffs demand judgment in their favor and against ACE American,
together with costs, interest, and such other relief as the Court deems appropriate.
COUNT II-DECLARATORY JUDGMENT
33. Plaintiffs incorporate the preceding paragraphs of this complaint as if set forth at
length herein.
34. The ACE American Policy contains the following pertinent language:

SECTION I-COVERAGES
COVERAGE A BODILY INJURY AND PROPERTY DAMAGE
LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to
pay as damages because of "bodily injury" or "property damage" to which
this insurance applies.
* * *

SECTION II-WHO IS AN INSURED
* * *
2. Each of the following is also an insured:
b. Any person (other than your "employee" or "volunteer
worker"), or any organization while acting as your real estate
manager.
See Exhibit "E".
35. The Third Party Complaint filed by Fannie Mae against Keystone includes
admissions by Fannie Mae that Keystone was its "real estate manager":
8. Prior to the subject accident, FANNIE MAE retained Third Party
Defendant Keystone to be the exclusive agent for the management and
sale of the property pursuant to the subject contract.
10. That prior to subject accident on February 28, 2010,
Defendant/Third Party Plaintiff entered into a written agreement with
KEYSTONE as the exclusive agent to manage and sell the subject
property known as 106 Maple Street, Yonkers, NY.
11. That pursuant to that agreement, KEYSTONE was required to
maintain and manage the subject property at 106 Maple Street, Yonkers,
NY. See also Paragraphs 16, 17, 22, 23, 28, 29
See Exhibit "B".
36. Keystone was Fannie Mae's "real estate manager" within the meaning of the ACE
American policy and the claims asserted against Keystone in the underlying lawsuit arise out of
Keystone's status as Fannie Mae's "real estate manager."
37. The ACE American policy further provides that the coverage provided is primary
except when certain circumstances not presented by this case are present.
38. ACE American has a duty to defend and indemnify Keystone against the claims
asserted in the underlying lawsuit.
39. ACE American's failure to accept the tender and its refusal to defend and
indemnify Keystone is without basis, unreasonable, unjustified, and entitles Plaintiffs to recover
attorneys' fees and costs incurred in bringing this action.
WHEREFORE, Plaintiffs respectfully requests relief in the form of an Order:
a. Declaring that Keystone Asset Management, Inc. is an insured under
ACE American Insurance Company Policy HDOG2493536A and ACE
American Insurance Company must defend Keystone Asset Management, Inc.
against the claims asserted in the underlying lawsuit captioned Maria Clara
Rodriguez v. County of Westchester, et al, Supreme Court of New York, County
of Westchester, Index No. 26027110; Third Party Index No. 260271107, arising
from the accident that occurred on February 28, 2010;
b. Declaring that Keystone Asset Management, Inc is an insured under
ACE American Insurance Company Policy HDOG2493536A and that ACE
American Insurance Company must indemnify Keystone Asset Management, Inc.
for any judgments, verdicts, settlements, fees, costs, damages or other sums in
connection with any claims asserted in the underlying lawsuit captioned Maria
Clara Rodriguez v. County of Westchester, et al, Supreme Court of New York,
County of Westchester, Index No. 26027/10; Third Party Index No 26027/107,
arising from the accident that occurred on February 28, 2010; and
c. Granting such other relief as this Honorable Court deems just and
reasonable.

COUNT III-DECLARATORY JUDGMENT
40. Plaintiffs incorporate the preceding paragraphs of this complaint as if set forth at
length herein.
41. The American Fire Policy contains a "Real Estate Operations- Limitation
of Coverage Endorsement" which provides:
With respect to real estate operations, this insurance applies only to
"bodily injury", "property damage" or "personal and advertising injury"
arising out of the ownership, operation, maintenance or use of:
1. Such part of any premises you use for general real estate office
purposes; and
2. Premises listed with you for sale or rental, if:
a. You do not own, operate, manage or rent the premises;
b. They are not in your care, custody or control; or
c. You do not act as agent for the collection of rents or in any
supervisory capacity.
A true and correct copy of the "Real Estate Operations- Limitation of Coverage Endorsement" is
attached as Exhibit "I".
42. The claims asserted against Keystone in the underlying lawsuit do not arise out of
premises Keystone uses as a general real estate office or premises listed with Keystone for sale
or rental which Keystone does not operate, manage or rent and which are not in in Keystone's
care, custody or control.
43. Accordingly, the American Fire policy does not provide coverage for the claims
asserted against Keystone in the underlying lawsuit.
WHEREFORE, Plaintiffs respectfully requests relief in the form of an Order:
a. Declaring that American Fire & Casualty Insurance Company has no
duty under insurance policy number BZA (10) 53 09 27 to defend Keystone Asset
Management, Inc. against the claims asserted in the underlying lawsuit captioned
Maria Clara Rodriguez v..County of Westchester, et al, Supreme Court of New
York, County of Westchester, Index No. 26027110; Third Party Index No.
260271107, arising from the accident that occurred on February 28, 2010;
b. Declaring that American Fire & Casualty Insurance Company has no
duty under insurance policy number BZA (10) 53 09 27 to indemnify Keystone
Asset Management, Inc. against the claims asserted in the underlying lawsuit
captioned Maria Clara Rodriguez v. County of Westchester, et al, Supreme Court
of New York, County of Westchester, Index No. 26027110; Third Party Index
No.260271107, arising from the accident that occurred on February 28, 2010; and
c. Such other relief as this Honorable Court deems just and reasonable.

COUNT IV-DECLARATORY JUDGMENT
44. Plaintiffs incorporate the preceding paragraphs of this complaint as if set forth at
length herein.
45. Ohio Casualty issued the Ohio Casualty Umbrella Policy, which
provides limits in the amount of $5 million per occurrence in excess of underlying
insurance.
46. The Ohio Casualty Umbrella Policy includes the following pertinent provisions:

I. COVERAGE
We will pay on behalf of the "Insured" those sums in excess of the
"Retained Limit" that the "Insured" becomes legally obligated to pay by
reason of liability imposed by law or assumed by the "Insured" under an
"insured contract" because of bodily injury ... that takes place during the
Policy Period and is caused by an "occurrence" happening anywhere. The
amount we will pay for damages is limited as described below in the
Insuring Agreement Section II. LIMITS OF INSURANCE.
G. Retained Limit
We will be liable only for that portion of damages, subject to the Each
Occurrence Limit stated in the Declarations, in excess of the "retained
limit," which is the greater of:
2. the total amounts stated as the applicable limits of the underlying
policies listed in the Schedule of Underlying Insurance and the
applicable limits of any other insurance providing coverage to the
"Insured" during the Policy Period;

III. DEFENSE
A. We will have the right and duty to investigate any "claim" and
defend any "suit" seeking damages covered by the terms and conditions of
this policy when:
1. the applicable Limits of Insurance of the underlying policies listed
in the Schedule of Underlying Insurance and the Limits of Insurance of
any other insurance providing coverage to the "Insured" have been
exhausted by actual payment of "claims" for any "occurrence" to which
this policy applies;
VI. Conditions
J. Other Insurance
If other insurance applies to a loss that is also covered by this policy, this
policy will apply excess of the other insurance. Nothing herein will be
construed to make this policy subject to the terms, conditions and
limitations of such other insurance. However, this provision will not
apply if the other insurance is specifically written to be excess of this
policy.
[emphasis added]
See Exhibit "D".
47. Pursuant to Article VI(J) of the Ohio Casualty Umbrella Policy, the Ohio
Casualty Umbrella Policy is "excess of the other insurance.... " Accordingly, the ACE
American Policy is primary since the Ohio Casualty Umbrella Policy is excess of the
applicable limits of the underlying policies and is excess to any other insurance providing
coverage to the Insured during the policy period. See Exhibit "D".
48. Further, pursuant to the provisions of Article III of the Ohio Casualty Umbrella
Policy, Ohio Casualty does not owe a defense in the underlying lawsuit until "the applicable
Limits of Insurance of the underlying policies listed in the Schedule of Underlying Insurance and
the Limits of Insurance of any other insurance providing coverage to the "Insured" have been
exhausted .... " See Exhibit "D".
49. Accordingly, ACE American Insurance Company Policy HDOG2493536A
provides primary coverage to Keystone Asset Management, Inc. and Ohio Casualty Insurance
Company Commercial Umbrella Policy UBO (10) 53 40 86 14 provides excess insurance
coverage, once all applicable other insurance coverage has been exhausted.
50. Ohio Casualty has incurred and will continued to incur damages based on ACE
American Insurance Company's wrongful refusal to defend and indemnify under the ACE
American Insurance Policy issued to Fannie Mae, under which Keystone is an insured and
entitled to coverage.

WHEREFORE, Plaintiffs respectfully request relief in the form of an Order:
a. Declaring that ACE American Insurance Company Policy HDOG2493536A
provides primary coverage to Keystone Asset Management, Inc. and that Ohio Casualty
Insurance Company Commercial Umbrella Policy UBO (10) 53 40 86 14 is excess of the
applicable limits of the underlying policies and is excess to any other insurance
providing coverage to the Insured during the policy period.
b. Declaring that Ohio Casualty Insurance Company Commercial Umbrella Policy
UBO (10) 53 40 86 14 has no duty to defend or indemnify or provide coverage for any
judgments, verdicts, settlements, fees, costs, damages or other sums in connection with
any claims asserted in the underlying lawsuit captioned Maria Clara Rodriguez v.
County of Westchester, et al, Supreme Court of New York, County of Westchester,
Index No. 26027/10; Third Party Index No. 26027/107, arising from the accident that
occurred on February 28, 2010 until such coverage is triggered by exhaustion of all
underlying insurance policies providing coverage to the Insured during the policy period.
c. Declaring that ACE American Insurance Company owes Ohio Casualty Insurance
Company its attorney fees and costs incurred in defending Keystone; and
d. Such other relief as this Honorable Court deems just and reasonable.

COUNT V-REIMBURSEMENT OF DEFENSE COSTS
51. Plaintiffs incorporate the preceding paragraphs of this complaint as if set forth at
length herein.
52. ACE American has a duty to defend Keystone against the claims asserted in the
underlying lawsuit.
53. ACE has refused and failed to defend Keystone against the claims asserted in the
underlying lawsuit without justification or legal basis.
54. Ohio Casualty, which has no duty to defend unless/until such time as ACE
American's limit of liability is exhausted through payment of judgments or settlements, has
fulfilled ACE American's obligation under the ACE American policy to defend Keystone and
has incurred attorneys' fees and costs in providing a defense to Keystone in the underlying
lawsuit.
55. Ohio Casualty, as a secondary insurer, has the right to recover from ACE
American, the primary insurer, the costs of defending Keystone against the claims asserted in the
underlying lawsuit.
WHEREFORE, Plaintiffs respectfully request that the Court enter an order against ACE
American Insurance Company awarding Ohio Casualty Insurance Company:
a. reimbursement of reasonable fees and costs incurred by Ohio Casualty
Insurance Company in defending Keystone Asset Management, Inc. in the
underlying lawsuit captioned Maria Clara Rodriguez v. County of Westchester,
l et al, Supreme Court of New York, County of Westchester, Index No. 26027/10;
Third Party Index No. 26027/107; and
b. reasonable attorneys' fees and costs incurred in prosecuting this action.

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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