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

CO-FREE, INC v. ILLINOIS UNION INSURANCE COMPANY

ATTENTION: It is possible that this information may no longer be current and therefore may be inaccurate. The index contains both open and closed cases and is not a complete list of cases in which an ACE Insurance Group company is involved. This information is provided to give interested persons an idea of the issues disputed in the indexed cases. For a full understanding of a case, one should read the rest of the court file, including the response. For the most up-to-date and complete information on a case, visit www.pacer.gov or contact the clerk of the relevant court.

Case Number: 
1:15-cv-01021 Search Pacer
ACE Group party(s): 
Opposing Party: 
Co-Free, Inc
Court Type: 
Federal
US District Court: 
Southern District of New York
Date Filed: 
Feb 13 2015

COMPLAINT FOR DECLARATORY AND AFFIRMATIVE RELIEF

Plaintiff, Co-Free. Inc. ("Co-Free"), by its attorneys Molod Spitz & DeSantis, P.C. sues
the Defendant, Illinois Union Insurance Company ("Illinois Union"), and states:
Jurisdiction and Venue
1. This is an action for declaratory relief pursuant to Section 3017 of the Civil
Practice Law and Rules, and for monetary damages within the jurisdiction of the Court.
2. At all times material to the Complaint, Co-Free was a Florida corporation that
owned and operated a retail convenience store with a petroleum dispensing and
underground storage tank facility known as Jiffy Food Store #305 located at 807 Irvin
Avenue Southwest, Live Oak, Florida ("the Facility").
3. At all times material to the Complaint, Illinois Union was authorized to do
business as a surplus lines carrier in the state of Florida under Section 626.918, Florida
Statutes.
4. Venue is proper because the Florida First District Court of Appeal reversed
the Circuit Court of the Third Judicial Circuit in and for Suwannee County, Florida and
upheld the foreign forum selection clause in the policy which states:
Moi.od Si’iT/. & DeSantis, P.C.

J. Jurisdiction and Venue
It is agreed that in the event of (he failure of the Insurer to pay any amount
claimed to be due hereunder, the Insurer and the “ Insured” will submit to
the Jurisdiction of the State of New York and will comply with all
requirements necessary to give such court Jurisdiction. Nothing in this
clause constitutes or should be understood to constitute- a waiver of the
Insurer’s right to remove an action to a United States District Court,
5. In addition to the insurance contract, Navigation Law Article 12, §181 provides
a basis of liability for the clean up of oil spills and is applicable to this case. It states:
Any person who has discharged petroleum shall be strictly liable, without
regard to fault, for all cleanup and removal costs and all direct and indirect
damages, no matter by whom sustained, as defined in this section.
§190 provides for claims against insurers and states:
Any claims for costs of cleanup and removal, civil penalties or damages by the
state and any claim for damages by any injured person, may be brought
directly against the bond, the insurer, or any other person providing evidence
of financial responsibility.
6. Florida State law and federal laws and regulations require that petroleum
storage tank owners and operators such as Co-Free demonstrate financial responsibility for
corrective action costs and third party claims resulting from discharges of pollutants. This
responsibility may be met by purchasing insurance coverage meeting federal and state
requirements and coverage limits.
7. Illinois Union offers a TANK SAFE-Storage Tank Liability Insurance Policy
as a means by which owners and operators of petroleum storage tanks in Florida can
demonstrate compliance with the aforementioned federal and state financial responsibility
requirements.
8. Illinois Union issued to Co-Free a Florida TANK-SAFE Storage Tank
Liability Insurance Policy No. UST G21977251, with effective dates May 9, 2005
through May 9, 2006 and a retroactive date of May 9, 2004 ("tire 2005 Policy"). A copy
Mot.oD Spit/. & DkSantis, P.C.
of the 2005 Policy is attached hereto as Exhibit A and is incorporated herein by reference.
9. On February 16, 2006, Illinois Union issued a Notice of Non-Renewal of
Insurance to Co-Free. (See Exhibit A, page 2005-2006 0066.) The effective date of the
nonrenewal of the 2005 Policy was May 9, 2006.
10. On May 9, 2006, Illinois Union issued to Co-Free a Florida TANK-SAFE
Storage Tank Liability Insurance Policy No. G21842345 with a Policy Period from May 9, 2006
to May 9, 2007 ("the 2006 Policy") and a Retroactive Date of May 9, 2006. A copy of the 2006
Policy is attached hereto as Exhibit B and is incorporated herein by reference.
11. Both the 2005 Policy and the 2006 Policy ("the Policies") contain the
following Jurisdiction and Venue provision:

VIII. CONDITIONS
J. Jurisdiction and Venue
It is agreed that in the event of the failure of the Insurer to pay any amount
claimed to be due hereunder, the Insurer and the "insured" will submit to the
jurisdiction of the State of New York and will comply with all
requirements necessary to give such court jurisdiction. Nothing in this
clause constitutes or should be understood to constitute a waiver of the
Insurer's right to remove an action to a United States District Court.
(See Exhibits A and B, page 9 of 9.)
12. The Policies also contain the following choice of law' provision:

VIII. CONDITIONS
K. Choice of Law
All matters arising hereunder including questions relating to the validity,
interpretation, performance, and enforcement of this Policy shall be
determined in accordance with tire law and practices of the State of New
York. (Id)

Relevant Policy Provisions
13. The Facility is a covered location under the Policies.
14. The Policies provide coverage for "Corrective action costs" in excess of the
Moi.od SJ’ITZ & DeSaviis, P.C.
Case l:15-cv-01021-PAE Document 1-1 Filed 02/13/15 Page 9 of 117
deductible resulting from "pollution incidents" arising from a "Storage tank incident," if
such "Storage tank incident" takes pLace after the Retroactive Date and before the end of
the "Policy Period," and the "Storage tank incident" is reported to the Insurer, in writing,
during the "Policy Period" or any applicable "extended reporting period." (See Section
1,B, of the Policies, page 1 of 9.)
15. Under the Policies, "Corrective action costs" means "expenses necessarily
incurred by the Insured to investigate, quantify, assess, monitor, abate, remove, dispose,
treat, neutralize or immobilize 'pollution conditions' to the extent required by 40 CFR
Sections 280.60-280.67 and 40 CFR 280.72 promulgated by the Federal Environmental
Protection Agency, or other 'environmental law1." (See Exhibits A and B, IV. C, page 2
of 9.)
16. "Pollution condition" under the Policies means "any spilling, leaking,
emitting, discharging, dispersing, seeping, escaping or releasing of the contents of any
'Covered Underground Storage Tank’ or 'Covered Aboveground Storage Tank’ into
surface soils, subsurface soils, surface water, or groundwater." (See Exhibits A and B,
Section IV. P, page 3 of 9.)
17. "Storage tank incident" as defined by the Policies means "a "pollution
condition" resulting from a "Covered Underground Storage Tank" or a "Covered
Aboveground Storage Tank." The entirety of continuous or repeated "pollution
conditions" resulting from the same "Covered Underground Storage Tank" or
"Covered Aboveground Tank" shall be deemed to be one "storage tank incident"."
(Emphasis supplied.) (See Exhibits A and B., IV. T, page 4 of 9.)
18. The underground storage tanks at Jiffy #305 are “Covered Underground
Storage Tanks" under the Policies. (See ExHibits A and B, UST Schedule, Pages 2005-
2006 0024 and 2006-2007 0040.)
Mourn SriTZ & DkSantis, P.C.
19. The Policies also each contain a State of Florida Storage Tank Certificate of
Insurance to Demonstrate Financial Responsibility which, as require by 40 CFR 280.97, states as
follows:
E. The insurance covers "claims" otherwise covered by the Policy that are
reported to the Insurer within six months of the effective date of cancellation
or non-renewal of the Policy except where the new or nonrenewed Policy
has the same Retroactive Date or a Retroactive Date earlier than that of the
prior policy, and which arise out of any covered occurrence that
commenced after the Policy Retroactive Date, if applicable, and prior to
such renewal or termination dale. "Claims" reported during such "extended
reporting period" are subject to the terms, conditions, limits, including
limits of liability, and exclusions of the Policy.
(See Exhibit A and B, Page 2005-2006 0035 and Page 2006-2007 0020.)
20. As set forth in paragraphs 8-10 above, the retroactive date of the 2005
Policy was May 9, 2004. Illinois Union non-renewed the 2005 Policy effective May 9. 2006.
The retroactive date for the 2006 Policy was May 9, 2006. Therefore, the Extended Reporting
Period coverage of the 2005 Policy applies to any claim reported to
the Insurer within six months of May 9, 2006, making the applicable retroactive date of the
subject claim May 9, 2004.

Co-Free's Claim Arising from a Storage Tank Incident
21. On June 8, 2006, soil samples taken from beneath the underground storage
tanks during tank removal activities revealed that a discharge had occurred at the Facility.
On June 13, 2006, a Discharge Report Form ("DRF") was executed by the compliance
director of AET, Co-Free's environmental consultant. The DRF states: "Soil seems
impacted to greater 20 [sic] feet and source removal cannot be completed." This and
subsequent assessment data indicate the presence of petroleum contamination at the
Facility resulting from "a pollution condition" arising from a "storage tank incident"
under the 2005 Policy.
Mot.oi) Scitz & Di-Santis, P.C.
22. The "storage tank incident" took place after the Retroactive Date and before
the end of the 2005 Policy's policy period, which includes the Extended Reporting Period.
23. The Policies require the insured to provide "immediate notice in the event
of a 'storage tank incident'. Such notice shall be provided as soon as reasonably
possible, but in any event, not less than seven (7) days after a ’responsible insured' first
became aware of, or should have become aware of a 'storage tank incident’." (See
Exhibits A and B, page 6 of 9.)'
24. On June 14, 2006 Co-Free timely reported the claim to Illinois Union.
Copies of the Claim Form. DRF, and the email transmission to Illinois Union are attached
hereto as Exhibit C.
25. On September 15, 2006, Ace Environmental Risk ("Ace") on behalf of
Illinois Union acknowledged receipt of the claim. On October 2, 2006, the Florida
Department of Environmental Protection ("DEP") demanded site assessment activities be instituted
at the Facility.
26. On May 8, 2007 Ace on behalf of Illinois Union sent Co-Free a claim
denial letter, a copy of which is attached hereto as Exhibit D. The letter references the
2006 Policy and states that the information provided to date "indicates that a storage tank
incident took place prior to the Retroactive Date of the Policy: May 9, 2006. As such,
the Insurer denies coverage for this claim based upon the Policy Retroactive Date."
1 Plaintiff realizes that this makes no sense and interprets "immediate notice" to mean that
notice must be given within seven (7) days after Plaintiff first becomes aware of a storage tank
incident. Hence, Plaintiff reported its claim prior to June 15, 2006.
Mourn S itiz & Di-Santis, P.C.
27. On June 3, 2010 the undersigned counsel on behalf of Co-Free sent Ace
a letter requesting that the claim be reconsidered under the 2005 Policy and its applicable
six-month reporting period. Since the 2005 Policy had been cancelled with an effective
date of May 9, 2006, the six-month reporting period did not expire until November 9,
2006, and the claim reported on June 14, 2006 was therefore timely under the 2005
Policy.
28. On June 23, 2010. Ace responded to Co-Free's June 3, 2010 request for
reconsideration, Ace agreed that the claim should be considered filed under the 2005
Policy and that the Retroactive Date is May 9, 2004. Ace, however, denied coverage
based on its assertion that the storage tank incident occurred prior to May 9, 2004. Ace's
letter is attached hereto as Exhibit E.
29. All conditions precedent to the initiation and maintenance of this action
have been complied with or waived or have occurred.
COUNT I - Declaratory Relief
30. Co-Free realleges and incorporates by reference paragraphs 1 through 29
above as though fully restated herein.
31. Co-Free is in doubt of its rights under the Policies and seeks a
declaration of its rights and a finding by this Court that the costs incurred and to be
incurred for "Corrective action costs" for the "pollution conditions" described herein
result from a "storage tank incident" that occurred after the May 9, 2004 Retroactive
Date and are covered under the Policies issued by Illinois Union.
32. There exists a bona fide actual, present, and practical need for the
declaration of coverage available and Co-Free’s rights under the Policies.
Moi.ou Sm z & Di-.Santis, P.C.
33. There exists a present ascertained or ascertainable set o f facts or present
controversy concerning Co-Free's rights under the Policies and the subject matter
described herein.
34. All proper and present interests are before the Court by proper process.
35. Co-Free is entitled to recovery of attorneys' fees and court costs pursuant to
Sections 86.081 and 627.428, Florida Statutes.
36. Co-Free has no adequate remedy at law.
WHEREFORE, Plaintiff, Co-Free, Inc., respectfully requests that the Court enter
judgment declaring that there is coverage under one of the Policies and that Illinois Union
has a duty to pay costs incurred and to be incurred for Corrective action costs resulting
from the pollution conditions that arose from the storage tank incident that is the subject
of this action and awarding costs and attorneys' fees and such other relief deemed
appropriate and just.

COUNT II - Breach of Contract
37. C'o-Free realleges and incorporates by reference paragraphs 1 through
36 above as though fully restated herein.
38. Illinois Union issued the Policies pursuant to which Co-Free is an
insured and the underground storage tanks at Jiffy #305 are "Covered Underground
Storage Tanks" at the facility.
moi on Sm z & Di-Santis, P.C.
39. The Policies provide coverage for corrective action costs which Co-Free is
legally obligated to pay as a result of pollution conditions arising from a storage tank
incident that occurred after the retroactive date and which was reported to Illinois Union
in writing during the 2006 Policy Period or 2005 Policy Extended Reporting Period.
40. The Policies are contracts pursuant to which Illinois Union agreed to
provide insurance coverage for the Facility in exchange for the payment of premiums.
Co-Free timely paid all premiums for the Policies.
41. Illinois Union, through its agent Ace. has breached its agreement to provide
insurance coverage for corrective action costs with respect to the storage tank incident
described above.
42. As a direct result of Illinois Union's breach, the Plaintiff has
incurred damages, including, but not limited to corrective action costs, legal fees, and
court costs.
43. Co-Free is entitled to recover attorneys' fees and court costs incurred as a
consequence of Illinois Union’s breach pursuant to sections 86.081 and 627.428, Florida
Statutes.
WHEREFORE, Plaintiff, Co-Free, Inc., demands judgment against. Illinois Union
for damages, prejudgment interest, attorneys' fees and costs, and such other relief
deemed appropriate and just.

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.