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GROUP 1 AUTOMOTIVE, INC. et al v. ACE AMERICAN INSURANCE COMPANY et al

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: 
1:14-cv-00334 Search Pacer
ACE Group party(s): 
Opposing Party: 
Group 1 Automotive, Inc.
Court Type: 
Federal
US District Court: 
Southern District of Mississippi
Date Filed: 
Aug 28 2014

COMPLAINT
COME NOW the Plaintiffs Group 1 Automotive, Inc. and GPI MS-N,
Inc., doing business as Pat Peck Nissan, and file this, their
Complaint against the Defendants, ACE American Insurance Company
and Arthur J. Gallagher Risk Management Services, Inc., and would
show unto the Court as follows, to-wit:
PARTIES
I.
Plaintiff Group 1 Automotive, Inc. ("Group 1") is a Delaware
corporation with its principal place of business in the State of
Texas. Group 1 is authorized to do business in -he State of
Mississippi.
II.
Plaintiff GPI MS-N, Inc. ("GPI") is a Delaware corporation
with its principal place of business in the State of Texas. GPI is
authorized to do business in the State of Mississippi, and conducts
business in this State as Pat Peck Nissan in Gulfport, Mississippi.
Defendant ACE American Insurance Company ("ACE") is a
Pennsylvania corporation with its principal place of business in
the State of Pennsylvania. ACE is licensed and authorized to
conduct insurance business in the State of Mississippi, and has
done and is doing such business in this State. ACE may be served
with process by and through its registered agent, CT Corporation
System of Mississippi, 645 Lakeland Drive East, Suite 101, Flowood,
MS 39232.
IV.
Defendant Arthur J. Gallagher Risk Management Services, Inc.
("Arthur J. Gallagher"! is an Illinois corporation with its
principal place of business in the State of Illinois. Arthur J.
Gallagher is registered and authorized to conduct business in the
State of Mississippi, and has done and is doing such business in
this State. Arthur J. Gallagher may be served with process by and
through its registered agent, Corporation Service Company, 506
South President Street, Jackson, MS 39201.
JURISDICTION AND VENUE
V.
Each of the Defendants is amenable to personal jurisdiction in
the State of Mississippi. Each Defendant has done and is doing
business in the State of Mississippi and/or is maintaining minimum
contacts with the State of Mississippi, and is subject to service
of process in this State. The Court has jurisdiction over the
subject matter pursuant to Miss. Code Ann. § 9-7-81. Venue is
proper in this county and judicial district pursuant to Miss. Code
Ann. § 11-11-3, as a substantial event that caused the Plaintiffs'
injury occurred in the Second Judicial District of Harrison County,
Mississippi.
FACTS
VI.
Plaintiff Group 1 Automotive, Inc. ("Group 1") is a Texasbased
automotive retailer that owns and operates over one hundred
automobile dealerships in the United States.
VII.
Plaintiff GPI MS-N, Inc. ("GPI") is a wholly-owned subsidiary
of Group 1. At all times relevant herein, GPI owned and operated a
automobile dealership commonly referred to as Pat Peck Nissan from
its business location on U.S. Highway 49 in Gulfport, Mississippi.
VIII.
Between 2004 and 2007, Group 1 purchased insurance coverage
for "Garage Operations" under a series of commercial liability
insurance policies issued and sold to it by Defendant ACE American
Insurance Company ("ACE"). These garage policies were brokered by
Defendant Arthur J. Gallagher Risk Management Services, Inc.
("Arthur J. Gallagher") which has at all times relevant hereto
acted as a professional insurance agent on behalf of Group 1, its
principal. GPI was named as an "insured" in these policies.
IX.
The ACE garage policies issued and sold to Group 1 and GPI
provided up to one millions dollars($1,000,000) in liability
insurance coverage for Garage Operations. However, Group 1/GPI
requested and the policies ostensibly provided limited liability
coverage for Group 1/GPl's customers such that a dealership
customer was a Group 1 and/or GPI "insured" only if he or she had
no other available insurance; and even then, he or she was an
"insured," only up to the mandatory minimum amount of operator
liability coverage required under state law. Thus, pursuant to the
limitation of liability clause in the Group 1 and GPI garage
policies, a Group 1/GPI customer in Mississippi would be insured,
if at all, for liabilities not exceeding $25,000.00 by operation of
the Mississippi Safety-Responsibility Act.
X.
On October 30, 2005, Arthur J. Gallagher and Group 1 entered
into a Compensation Agreement ("the Agreement") whereby Arthur J.
Gallagher agreed to provide professional insurance agent and
brokerage services to Group 1 for a two-year period. Arthur J.
Gallagher's responsibilities to Group 1 under the Agreement
included the provision of professional consultation regarding
availability and initiation of coverage, interpretation of
coverage/limits/deductibles and related terms, underwriting |
conditions, recommendations as to placement of coverages, placement I
of coverage, and other services. Pursuant to the Agreement, Arthur
J. Gallagher specifically agreed to provide to Group 1 professional
consultation services with respect to Garage Liability including
"Garage Operations" coverage. See Compensation Agreement attached
hereto as Exhibit "A."
XI.
In 2006, Arthur J. Gallagher, acting on behalf of Group 1 and
pursuant to the Agreement, negotiated with ACE to renew Group
l/GPIrs Garage Liability Policy. At no time during this period of
negotiations did Group 1 request or authorize Arthur J. Gallagher
and/or ACE to remove, revise or amend the limitation of customer
liability coverage that they had theretofore sold to Group 1 and
provided for Garage Operations. At no time during this period of
negotiations did Arthur J. Gallagher or ACE discuss with Group 1
the possibility that the limitation of customer liability provision
from the prior two year policy might not to be carried forward or
otherwise included in the new 2006-2007 policy.
XII.
On November 1, 2006, ACE sold and issued a renewal Garage
Liability policy. Policy No. GAR H7673164 ("the garage policy") to
Group 1 and GPI providing coverage for "Garage Operations" from
November 1, 2006 until November 1, 2007. A copy of the relevant
parts of the policy is attached as Ex. "B." The language of the
"Garage Operations" coverage section was identical to the policies
previously procured by Arthur J. Gallagher and sold and issued by
ACE, and provided the same limitation of customer liability
provision as follows:
3.Who Is An Insured
a.The following are "insureds" for covered "autos":
(2) Anyone else while using with your permission a
covered "auto" you own, hire or borrow except:
(d) Your customers, if your business is shown
in the Declarations as an "auto" dealership.
However, if a customer of yours:
fi) Has no other available insurance
(whether primary, excess or contingent),
they are an "insured" but only up to the
compulsory or financial responsibility
law limits where the "auto" is
principally garaged.
(ii) Has other available insurance
(whether primary, excess or contingent)
less than the compulsory or financial
responsibility law limits where the
"auto" is principally garaged, they are
"insured" only for the amount by which
the compulsory or financial
responsibility law limits exceed the
limit of their other insurance.
ITEM FIVE
LIABILITY COVERAGE FOR YOUR CUSTOMERS
In accordance with paragraph a. (2) (d) of Who Is An
Insured Under Section II - Liability Coverage,
Liability Coverage for your customers is limited
unless indicated below by "X".
D If this box is checked Paragraph a.(2)(d) of Who
Is An Insured under Section II - Liability
Coverage does not apply.
ij This box was not checked in the garage policy.
XIII.
On May 21, 2007, Nathaniel Fortson ("Fortson") was a GPI
customer within the meaning and contemplation of section of the
policy referenced above. On that day, Fortson was operating a
Nissan Altima allegedly owned by GPI when he was involved in a
serious motor vehicle accident with a third party, Donna Ray,
("Ray") in the Second Judicial District of Harrison County,
Mississippi.
XIV.
Prior to and at the time of the motor vehicle accident,
Fortson had added the Nissan Altima as an insured vehicle under his
personal automobile liability insurance policy with Safe Auto
Insurance Company. Fortson's policy provided liability coverage up
to the minimum financial responsibility limits imposed by
Mississippi law. Accordingly, by virtue of the limitation of
customer liability provision, Fortson became removed from and did
not meet the definition of an "insured" under the garage policy
issued by ACE and sold to Group 1 and GPI.
XV.
Thereafter, Ray filed a lawsuit against Fortson for personal
injuries she allegedly sustained in the motor vehicle accident.
Fortson's personal liability insurer tendered its policy limits of
$25,000, and Ray subsequently obtained a consent judgment against
Fortson for $557,291.00. A copy of the consent Judgment is
attached as Ex. "C."
XVI.
Ray also filed a declaratory judgment action against Group 1,
GPI and ACE in Harrison County Circuit Court seeking a declaration
that Fortson was an "insured" under the garage policy. Throughout
the course of this declaratory judgment litigation, both before the
Circuit Court and in its dealings with all other parties, ACE
consistently took the position that Fortson was not entitled to
coverage under Lhe ACE garage policy issued and sold to Group 1/GPI
because Fortson did not meet the definition of an "insured" by
virtue of the limitation of customer liability provision contained
in the policy. ACE's position at all times before the Circuit Court
and in its dealings with the other parties was consistent with
Group 1 and GPI's understanding and interpretation of the liability
coverage provided to them under the ACE garage policy.
XVII.
On October 18, 2013, the Harrison County Circuit Court held
that the customer limitation of liability provision did not apply
to Fortson because Group 1 and/or GPI was not shown or identified
as an "auto dealership" in the garage policy declarations drafted
by ACE and approved by Arthur J. Gallagher. Accordingly, the Court
held that Fortson was insured under the ACE garage policy for the
full amount of the consent judgment taken against him by Ray in the
personal injury lawsuit. The Court entered an Order Granting '
Summary Judgment with Findings of Fact and Conclusions of Law
consistent with this ruling on November 25, 2013. A copy of that
Order is attached as Ex- "D."
XVIII.
The language of the 2004-2005 garage policy and, upon
information and belief, the 2005-2006 garage policy procured by
Arthur J. Gallagher in its capacity as agent and broker and sold
and issued by ACE to Group 1 and GPI included the same definitions
of "Who Is An Insured" as the subject 2006-2007 garage policy, and
contain the same limitation of customer liability provision.
Moreover, all three policies clearly reflected that the limitation
of liability provision was intended to be in effect. However, only
the subject 2006-2007 ACE garage policy failed to designate Group
1 and/or GPI as an "auto dealership" in the Declarations.
Furthermore, the 2004-2005 and 2005-2006 policies specifically
reference a list of "Location[s] where [an insured] Conducts Garage
Operations" under the "Auto Dealer's Supplementary Schedule." The
"Auto Dealer's Supplementary Schedule" procured by Arthur J.
Gallagher in the subject 2006-2007 ACE garage policy was left
blank.
XIX.
The ACE garage policy sold and issued to Group 1 and GPI
included a Deductible Endorsement which required the insured to pay
j up to one million dollars ($1,000,000,00) for all sums an "insured" •
was obligated to pay for a covered loss under the policy. Because •
the ACE garage policy's limitation of customer liability provision j
was held not to apply to Fortson's claim, Group 1 and GPI have
become financially responsible for the entire $557,291.00 judgment
in favor of Ray and against Fortson in the personal injury action.
COUNT ONE - BREACH OF CONTRACT
XX.
1. Plaintiffs Group 1 and GPI hereby incorporate and adopt by
reference each and every allegation set forth in Paragraphs I - XIX
of this Complaint.
2. At all times relevant herein, Arthur J. Gallagher was
acting on behalf of Group 1 and/or GPI pursuant to the terms of the
Compensation Agreement whereby Arthur J. Gallagher agreed to
provide insurance agent and brokerage services to Group 1 including
the provision of professional consultation regarding availability
and initiation of coverage, interpretation of
coverage/limits/deductibles and related terms, underwriting
conditions, recommendations as to placement of coverages, placement
of coverage, and other services.
3. Pursuant to the Agreement, Arthur J. Gallagher was
obligated and bound to Group 1/GPI to procure Garage Operations
insurance coverage which limited the liability coverage to Group 1
and GPI's customers to, at most, the minimum financial
responsibility limits imposed by law.
4. Arthur J. Gallagher materially breached the Agreement with
Group 1 and/or GPI by failing to procure the requisite coverage for
Garage Operations with a valid and enforceable limitation of
customer liability provision in the policy. The Harrison County
Circuit Court so held on November 25, 2013.
5. As a result of Arthur J. Gallagher's material breach of
the Agreement, Group 1 and GPI suffered damages in the amount of
$557,291.00 together with interest, costs, attorneys fees and
litigation expenses.
COUNT TWO - NEGLIGENT DRAFTING
XXI.
1. Plaintiffs Group 1 and GPI hereby incorporate and adopt by
reference each and every allegation set forth in Paragraphs I - XIX
of this Complaint.
2. Defendants ACE and Arthur J. Gallagher had a duty of
professional competence and care in drafting the ACE garage policy,
including the declarations pages for the 2006-2007 policy, and
including the duty to ensure that every provision of coverage that
Group 1 bought and paid for was valid and enforceable and that the
policy complied with and fulfilled the intentions and agreement of
the parties to continue in effect all coverage terms and provisions
that had been in effect for the two prior years.
3. Defendants ACE and Arthur J. Gallagher materially breached
their respective professional duties of competence and care in
drafting to Group 1 and GPT. ACE and Arthur J. Gallagher's material
breaches of their respective duties include, but are not limited
to: (1) their failure to identify Group 1 and/or GPI as an "auto
dealership" in the declarations of the 2006-2007 garage policy, so
as to give effect to the limitation of customer liability
provision included in the Garage Operations coverage; and (2) their
failure to include GPI as a "Location where [an insured] Conducts
Garage Operations" under the "Auto Dealer's Supplementary
Schedule." The Harrison County Circuit Court so held on November
25, 2013.
4. As a direct and proximate result of ACE and Arthur J.
Gallagher's material breaches of their respective duties, the
Plaintiffs Group 1 and GPI suffered damages in the amount of
$557,291.00 together with interest, costs, attorneys fees and
litigation expenses.
COUNT THREE - NEGLIGENT PROCUREMENT
XXII.
1. Plaintiffs Group 1 and GPI hereby incorporate and adept by
reference each and every allegation set forth in Paragraphs I - XIX
of this Complaint.
2. Defendants ACE and Arthur J. Gallagher had a professional
duty of competence and care in procuring the insurance coverage
requested by Group 1 and GPI, including the duty to ensure that
Group 1 and GPI received the limitation of customer liability
coverage as requested, bargained for, bought and paid for.
3. Defendants ACE and Arthur J. Gallagher materially breached
i their respective professional duties of competence and care to
Group 1 and GPI by failing to provide a valid and enforceable
limitation of customer liability provision as part of Group 1 and
GPI's Garage Operations coverage. The Harrison County Circuit
Court so held on November 25, 2013.
4. As a direct and proximate result of ACE and Arthur J.
Gallagher's material breaches of their respective professional
duties of competence and care, the Plaintiffs Group 1 and GPI
suffered damages in the amount of $557,291.00 together with
interest, costs, attorneys fees and litigation expenses.
COUNT FOUR - FAILURE TO WARN
XXIII.
1. Plaintiffs Group 1 and GPI hereby incorporate and adopt by
reference each and every allegation set forth in Paragraphs I - XIX
of this Complaint.
2. Defendants ACE and Arthur J. Gallagher had procured and
sold to Group 1 an ACE garage policy for the years 2004-2005, and
2005-2006, as aforesaid.
3. Prior to the 2006-2007 policy year here in issue,
Defendants ACE and Arthur J. Gallagher knew or should have known
that Group 1 was relying on these Defendants to procure and provide
coverages identical in terms and scope with the coverages which
Group 1 had enjoyed for the two prior years. If there were going
to be any changes or revisions of the prior coverages, Defendants
ACE and Arthur J. Gallagher had respective professional duties of
competence and care to advise and warn Group 1 thereof at such a
point in time that Group 1 might take steps to avoid or protect
itself from any such changes or revisions. Group 1 and GPI
reasonably relied on Defendants ACE and Arthur J. Gallagher to
provide such timely advice and warnings.
4. Defendants ACE and Arthur J. Gallagher materially breached
their respective professional duties of competence and care to
advise and warn Group i and GPI as aforesaid. ACE and Arthur J.
Gallagher's material breaches of their respective duties include,
but are not limited to: (1) their failure to advise and warn that
Group 1 and/or GPI would not be identified as an "auto dealership"
in the declarations of the 2006-2007 garage policy, so as to give
effect to the limitation of customer liability provision included
in the Garage Operations coverage; and (2) their failure advise and
warn Group 1 and GPI that GPI would not be included as a "Location
where [an insured] Conducts Garage Operations" under the "Au~o
Dealer's Supplementary Schedule." The Harrison County Circuit Court
held on November 25, 2013, that neither Group 1 nor Pat Peck were
listed as auto dealerships. Group 1 and GPI had reasonably relied
to their detriment on their reasonable belief and assumption that
ACE and Arthur J. Gallagher would discharge their duties to advise
5. As a direct and proximate result of ACE and Arthur J.
Gallagher's material breaches of their respective professional
duties to advise and warn, and the detrimental reliance of Group 1
and GPI in the premises, the Plaintiffs Group 1 and GPI suffered
damages in the amount of $557,291.00 together with interest, costs,
attorneys fees and litigation expenses.
COUNT FIVE - WAIVER AND ESTOPPEL
XXIV.
1- Plaintiffs Group 1 and GPI hereby incorporate and adopt by
reference each and every allegation set forth in Paragraphs I - XIX
of this Complaint.
2. Plaintiffs Group 1 and GPI requested that the garage policy
provide a limitation of customer liability under the applicable
Garage Operations coverage. Plaintiffs reasonably relied upon
Arthur J. Gallagher's representations and assurances under the
Compensation Agreement that they would provide adequate, suitable
and acceptable coverage consistent with those coverages that ACE
and Arthur J. Gallagher had provided in the two prior years, as
aforesaid. Plaintiffs further relied upon the plain language of
the Garage Operations portion of the policy, and reasonably
believed that ACE drafted the 2006-2007 policy and declarations
such that it provided the requested and reasonably expected
continued coverage.
3. Throughout the course of litigation in both the personal
11injury action and subsequent declaratory judgment action, ACE
j j maintained and represented both to the Circuit Court and to all
.j other parties that Fortson was not an insured under the Garage
i
!| Operations coverage by virtue of the limitation of customer
liability provision. ACE asserted and argued to the Circuit Court
the validity and applicability of this limitation of liability
provision to, among others, the alleged "insured" Fortson; Group 1
and GPI; and the Harrison County Circuit Court.
4. Based upon the foregoing, ACE is equitably and/or
judicially estopped from arguing that the garage policy did not
provide or was not intended to provide for limitation of customer
liability under the Garage Operations coverage. Additionally, or in
the alternative, ACE has in law and in fact waived any argument
that ACE may ever have had that the garage policy did not provide
or include or was not intended to provide or include limitation of
customer liability under the Garage Operations coverage.
COUNT SIX - REFORMATION BASED UPON MUTUAL MISTAKE
XXV.
1. Plaintiffs Group 1 and GPI hereby incorporate and adopt by
reference each and every allegation set forth in Paragraphs I - XIX
of this Complaint.
2. Plaintiffs Group 1 and GPI requested that the garage policy
provide a limitation of customer liability under the applicable
iI Garage Operations coverage, continuing the coverages that Group 1
', \ and GPI had enjoyed for the two immediately preceding years. Group
j 1 and GPI reasonably believed that the ACE garage policy for 2006-
! 2007 provided the requested coverage and limitation of coverage, in
part because prior policies had included the appropriate
designation in the declarations. The inclusion of such a limitation
provision was material to Group 1 and GPI's agreement to be bound
by the terms of the ACS garage policy.
3. ACE drafted the garage policy for 2006-2007 with the
intention of providing Group 1 and GPI with a valid and enforceable
limitation of customer liability provision. All previous policies
issued by ACE to Group 1 and GPI correctly designated them as an
"auto dealership" in the declarations and included the limitation
of customer liability provision. Furthermore, ACE's conduct
throughout the course of litigation in the subsequent declaratory
action evinced a belief and understanding that the subject garage
policy limited customer liability as set forth in the policy
language. ACE never intended that the garage policy for 2006-2007
would provide any coverages to Group 1 and GPI other than the
coverages that had been provided in the policies in effect in the
two prior years.
4. Under the complete terms under the 2006-2007 ACE garage
policy and all of its endorsements and provisions, it is clear that
GPI MS-N, Inc. d/b/a Pat Peck Nissan is an auto dealership and that
jit was the intention of ACE and Group 1 that GPI MS-N, Inc. would
be legally and effectively identified and listed as an auto
:j dealership. However, to the extent the Harrison County Circuit
Court has ruled that neither Group 1 nor Pat Peck Nissan are
designated as "auto" dealerships under the policy, Group 1 and GPI
MS-N, Inc. are entitled to have the ACE Insurance policy reformed
on the grounds of mutual mistake to name and designate GPI MS-N,
Inc. d/b/a Pat Peck Nissan as an auto dealership under all
provisions of the policy including Section 3.
5. ACE has previously stipulated with all other parties and
to the Circuit Court that GPI MS-N, Inc. is an auto dealership
pursuant to the Stipulated Facts filed with the Circuit Court in
Cause No. A2404-09-210 on October 11, 2013 in the declaratory
judgment action filed by Ray. A copy of the Stipulated Facts
agreed to by all parties in that case, including ACE, is attached
as Ex. "E."
6. Any failure to designate GPI MS-N, Inc. in the
declarations as an auto dealership is a mutual mistake by and
between ACE, Arthur J. Gallagher, Group 1 and GPI MS-N, Inc.
7. The remedy for mutual mistake is reformation of the
contract or other instrument. The insurance policy issued by ACE
is a contract between ACE, Group 1 Automotive, Inc. and GPI MS-N,
Inc., and may be reformed just as other contracts in cases such as
this case.
8. Based upon the foregoing, the ACE garage policy should be
reformed on the grounds of mutual mistake of material fact so as to
ij give effect to the limitation of customer liability provision
ji included within the garage policy and otherwise so as to provide
that for the policy year 2006-2007 Group 1 and GPI will enjoy the
exact same coverages and insurance protections and on the same
terms as obtained and were in effect for the two immediately
preceding policy years.
DEMAND FOR JURY TRIAL
XXVI.
The Plaintiffs hereby make demand for a trial by jury on all
issues.
DEMAND FOR RELIEF
XXVII.
Based upon the grounds set forth above in their Complaint
and/or proven at a trial in this cause, Group 1 and GPI demand
relief of and from ACE and/or Arthur J. Gallagher as follows:
1. An award of monetary damages to adequately and fairly
compensate Group 1 and GPI for the amount of the judgment entered
against Fortson in the personal injury lawsuit together will all
accrued interest allowed by law;
2. Attorney fees, costs and litigation expenses incurred in
the defense of the declaratory judgment action and the prosecution
of this action;
3. Equitable reformation of the subject garage policy based
upon mutual mistake of material fact to properly reflect that the
; policy of insurance issued by ACE American Insurance Company, being
! Policy No. GAR H07673164, be reformed to show the businesses listed
in the policy and identified in the policy documents, specifically
including GPI MS-N, Inc. {d/b/a Pat Peck Nissan), as an "auto"
dealership in the policy declarations; and
4. Other damages and equitable relief to be shown and proven
at the trial of this cause.
WHEREFORE, PREMISES CONSIDERED, Plaintiffs Group 1 Automotive,
Inc. and GPI MS-N, Inc. respectfully request that the Court enter
judgment in their favor for all relief requested herein and/or
proven at trial against the Defendants.

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.