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

IMG WORLDWIDE, INC. et al v. WESTCHESTER FIRE 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: 
1:11-cv-01594 Search Pacer
ACE Group party(s): 
Opposing Party: 
IMG Worldwide, Inc.
Court Type: 
Federal
US District Court: 
Northern District of Ohio
Date Filed: 
Aug 2 2011

"IMGA’s Claim Under the Westchester Policies

31. IMG and IMGA provided timely notice of the Gastaldi Lawsuit to Westchester. Thereafter, as IMG and IMGA did with Great Divide, the parties repeatedly communicated about coverage issues, and exchanged numerous letters concerning the Gastaldi Lawsuit, in which IMG and IMGA explained the bases for coverage under the Westchester Policies. Attached hereto as Exhibit H is a compilation of recent letters concerning their positions. As recently as March 14, 2011, Westchester reiterated its refusal to provide coverage.

32. The Gastaldi Lawsuit alleges, among other things, “Property Damage” caused by an “Occurrence” as those terms are defined by the Westchester Policies. Notably, the definitions of “Property Damage” and “Occurrence” in the Westchester Policies and Great Divide Policies are virtually identical.

33. Additionally, none of the exclusions or conditions contained in the Westchester Policies operate to preclude coverage for IMG and IMGA’s claims.

34. As discussed above, the 2005-06 Great Divide Policy’s $1 million “Property Damage” sub-limit has been exhausted. Under the 2005-06 Westchester Policy, Westchester is obligated to reimburse IMG and IMGA for that portion of the Gastaldi settlement payment in excess of the 2005-06 Great Divide Policy’s $1 million “Retained Limit.” Westchester has breached its obligation by refusing to pay IMG and IMGA $4 million.

35. To the extent any of the other Westchester Policies are deemed to apply, those policies apply excess of the $10,000 “Self-Insured Retention” in each
policy year, because insurance under the other Great Divide Policies is not available or collectible. In such event, Westchester has likewise breached its obligations under those policies.

36. In addition to its duty to indemnify, Westchester had a duty to defend IMG and IMGA in the Gastaldi Lawsuit under one or more of the Westchester Policies. As described above, the Gastaldi Lawsuit alleged “Property Damage” caused by an “Occurrence” under the Westchester Policies. Westchester breached this duty by refusing to honor its duty to defend IMG and IMGA in the Gastaldi Lawsuit.

37. Until the case settled, the Gastaldi plaintiffs sought damages well in excess of any limits afforded by IMG’s “Underlying Insurance.” Westchester’s refusal to acknowledge its duty to defend left IMG and IMGA uninsured and unprotected throughout the Gastaldi Lawsuit. Moreover, the applicable limits of the “Underlying Insurance” are exhausted, thereby also invoking Westchester’s duty to defend under these circumstances. Because of its breach, in addition to its indemnity obligation for the Gastaldi settlement payment in excess of the 2005-06 Great Divide Policy’s $1 million “Retained Limit,” Westchester is obligated under one or more of the Westchester Policies to pay the remaining amount of IMG and IMGA’s defense costs associated with the Gastaldi Lawsuit. The total amount of these defense costs exceeds $5 million, plus interest.

COUNT I
(Breach of Contract – Duty to Indemnify)

38. IMG and IMGA incorporate herein by reference paragraphs 1 through 37 of this Complaint as fully set forth herein.

39. IMG and IMGA have complied with all applicable conditions precedent contained in the Westchester Policies. Additionally, none of the exclusions in the Westchester Policies preclude coverage for IMG and IMGA’s claims.

40. Westchester has a duty to indemnify IMG and IMGA under one or more of the Westchester Policies because the Gastaldi Lawsuit sought alleged “Property Damage” caused by an “Occurrence.”

41. Westchester has materially breached its obligation under one or more of the Westchester Policies regarding its duty to indemnify IMG and IMGA in the Gastaldi Lawsuit for those sums in excess of the “Retained Limit,” as defined by the Westchester Policies.

42. As a direct and proximate result of Westchester’s breach, Westchester has deprived IMG and IMGA of the benefit of the insurance policies for which IMG has paid substantial premiums, and has caused IMG and IMGA to incur significant legal fees and expenses.

43. IMG and IMGA have been damaged in an amount to be proven at trial, plus interest and appropriate damages. As set forth above, this amount is $4 million, which is the difference between the $5 million settlement payment for the Gastaldi Lawsuit and the $1 million “Retained Limit” under the 2005-06 Great Divide Policy, plus interest and other appropriate damages.


COUNT II
(Breach of Contract -- Duty to Defend)

44. IMG and IMGA incorporate herein by reference paragraphs 1 through 43 of this Complaint as fully set forth herein.

45. Westchester had a duty to defend IMG and IMGA under the Westchester Policies because the Gastaldi Lawsuit alleged “Property Damage” caused by an “Occurrence.”

46. By failing to defend IMG and IMGA in the Gastaldi Lawsuit, Westchester materially breached its obligation under one or more of the Westchester Policies.

47. As a direct and proximate result of Westchester’s breach, Westchester has deprived IMG and IMGA of the benefit of the insurance for which IMG has paid substantial premiums to Westchester, and has caused IMG and IMGA to incur significant legal defense fees and expenses.

48. IMG and IMGA have been damaged in an amount to be proven at trial, which consists of unreimbursed defense costs associated with the Gastaldi Lawsuit, plus interest and other appropriate damages. This amount exceeds $5 million.


COUNT III
(Bad Faith Denial of Insurance Coverage)

49. IMGA incorporates herein by reference paragraphs 1 through 48 of this Complaint as fully set forth herein.

50. Westchester has wrongfully denied all coverage for the losses IMG and IMGA incurred in defending and settling the Gastaldi Lawsuit. Despite repeated requests, Westchester continues to refuse to acknowledge any coverage under the Westchester Policies.

51. Westchester’s wrongful denial of coverage constitutes bad faith. Among other things, Westchester had no reasonable justification for its denial of coverage.

52. Accordingly, IMG and IMGA are entitled to recover from Westchester extra-contractual damages, including without limitation compensatory damages flowing from Westchester’s bad faith denials, attorneys’ fees incurred by IMG and IMGA pursuing coverage in light of Westchester’s wrongful denial of coverage, pre-judgment interest, punitive damages, and such other relief as the Court deems appropriate.


COUNT IV
(Declaratory Judgment on Westchester’s Duty to Defend and Indemnify)

53. IMG and IMGA incorporate herein by reference paragraphs 1 through 52 of this Complaint as fully set forth herein.

54. Westchester owed IMG and IMGA a duty to defend and indemnify them in the Gastaldi Lawsuit.

55. Westchester’s failure to pay any of IMG and IMGA’s defense costs and settlement payment in connection with the Gastaldi Lawsuit constitutes a material breach of its duties and obligations under the Westchester Policies.

56. In light of the above, there exists an “actual controversy” between the parties appropriate for the entry of a declaratory judgment pursuant to 28 U.S.C. 2201, in IMG and IMGA’s favor.

57. IMG and IMGA are entitled to a declaration that Westchester breached one or more of the Westchester Policies; that Westchester had a duty to defend and indemnify IMG and IMGA in the Gastaldi Lawsuit; and that Westchester owes IMG and IMGA amounts to be determined 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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