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

LIBERTY MUTUAL FIRE INSURANCE COMPANY v. ACE AMERICAN 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-01481 Search Pacer
ACE Group party(s): 
Opposing Party: 
LIBERTY MUTUAL FIRE INSURANCE COMPANY
Court Type: 
Federal
US District Court: 
District of New Jersey
Date Filed: 
Feb 27 2015

Plaintiff, Liberty Mutual Fire Insurance Company (“Liberty Mutual”), by and through its
attorneys, Finazzo Cossolini O’Leary Meola & Hager, L.L.C., by way of Complaint for
Declaratory Judgment against Defendant, ACE American Insurance Company (“Ace”), states as
follows:

ALLEGATIONS PURSUANT TO LOCAL RULE lO.lfal
1. Plaintiff has its principal place of business at 175 Berkeley Street, Boston,
Massachusetts. Upon information and belief, Ace has its principal place of business at 436
Walnut Street, Philadelphia, Pennsylvania.

SUMMARY OF ACTION
2. This is an action for declaratory judgment to determine the rights, duties and
liabilities of the parties related to the indemnity and defense costs incurred by the parties’ mutual
insured, Black Bear Distribution, LLC (“Black Bear”), arising from a fire in a warehouse
partially occupied and operated by Black Bear at 1000 Coopertown Road, Delanco, New Jersey
on September 1, 2013. Because Ace has disputed its obligation to pay such defense and
indemnification costs, Liberty Mutual seeks a declaration of the rights, duties and liabilities of
the parties under the insurance policies issued or subscribed by the parties with respect to an
underlying subrogation action brought by Lexington Insurance Company (“Lexington”).

THE PARTIES
3. Liberty Mutual is a corporation duly organized under the laws of Massachusetts
with its principal place of business at 175 Berkeley Street, Boston, Massachusetts.
4. Liberty Mutual is licensed to, and does, engage in the business of insurance in the
State of New Jersey.
5. Ace is a corporation duly organized under the laws of Pennsylvania with its
principal place of business at 436 Walnut Street, Philadelphia, Pennsylvania.
6. Ace is licensed to, and does, engage in the business of insurance in the State of
New Jersey.

JURISDICTION AND VENUE
7. There is now existing between the parties an actual controversy for which
Plaintiff is entitled to have a declaration of its rights pursuant to 28 U.S.C. § 2201 and 28 U.S.C.
§ 2202 because of the facts, conditions and circumstances hereinafter set forth.
8. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C.
§1332 by reason of diversity of citizenship between the parties in that Defendant is a citizen of
Pennsylvania, and Liberty Mutual is a citizen of another state, and the matter in controversy
exceeds the sum or value of $75,000, exclusive of interest and costs.
9. Venue is proper in this district pursuant to 28 U.S.C. § 1391(b)(2) in that the claim
arises from a fire that occurred at property located at 1000 Coopertown Road, Delanco, New
Jersey (the “Property”).

THE PARTIES’ INSURANCE OBLIGATIONS
10. Liberty Mutual issued Policy No. YU2-L9L-544897-043 (the “Liberty Mutual
Policy”) to Dietz & Watson, Inc. with an inception date of August 1, 2013, and an expiration
date of August 1, 2014, under which the Property was an insured location.
11. The Liberty Mutual Policy contains Endorsement Form 1100 01-04, which names
Black Bear as an Additional Named Insured.
12. The Liberty Mutual Policy contains an “Other Insurance” provision which states
in part:
Q. Other Insurance
1. If there is any other insurance that would
apply in the absence of this policy, we will
pay for a covered loss only after the limits
of all other applicable insurance are
exhausted.
2. If this policy is deemed by law to contribute
to a loss with other insurance, we will pay
only our proportionate share of the loss, up
to the applicable limit of liability. Our
share will be the proportion that the
applicable limit of liability of this policy
bears to the total applicable limits of
liability available from all insurance.
13. Ace issued Policy No. 2112025A 003 (the “Ace Policy”), a Warehouse Legal
Liability Policy with an inception date of November 1, 2012 and an expiration date of November
1,2013.
14. Black Bear is the Named Insured under the Ace Policy.
15. The Ace Policy also contains an “Other Insurance” provision which states:
F. Other Insurance
1. You may have other insurance subject to the
same plan, terms, conditions and provisions as the
insurance under this Coverage Part. If you do, we
will pay our share of the covered loss or damage.
Our share is the proportion that the applicable Limit
of Insurance under this Coverage Paid bears to the
Limits of Insurance of all insurance covering on the
same basis.
2. If there is other insurance covering the same loss
or damage, other than that described in 1. above, we
will pay only for the amount of covered loss or
damage in excess of the amount due from that other
insurance, whether you can collect on it or not. But
we will not pay more than the applicable Limit of
Insurance.
16. At all times relevant to this matter, Black Bear occupied and operated a portion of
a warehouse at the Property under a lease or sublease with Dietz & Watson, Inc.
17. Black Bear stored products at the warehouse for its various customers, including
products belonging to Walcefern Food Corporation (“Walcefern”).
18. On or about September 1, 2013, a fire occurred at the warehouse and destroyed
the warehouse and its contents, including the products belonging to Walcefern.
19. According to allegations by Lexington Insurance Company (“Lexington”) in an
action filed and pending in state court in New Jersey and bearing the caption of Lexington
Insurance Company as subrogee of Wakefern Food Corp. v. Black Bear Distribution. LLC. et
al.. Docket No. BUR-L-2201-14 (the “Underlying Action”), Lexington provided property
insurance to Wakefern for the products destroyed at the warehouse.
20. Furthermore, in the Underlying Action, Lexington has alleged that it made
payments to Wakefern in excess of $4 million for the loss of its property from the fire, and to
the extent of such payments, Lexington became subrogated to Wakefern’s claims against third
parties, if any, who are liable for the destruction of Wakefern’s goods.
21. The Warehouse Legal Liability Coverage Form ACE0296 (07/11) of the Ace
Policy provides in part:
We will defend on your behalf any suits including
compulsory arbitration proceedings, brought against
you by the Owners of Covered Property, as defined
in Paragraph A.l .a., claiming monetary damages for
loss. We will defend such suits even if their
allegations are groundless, false or fraudulent . . .
22. The Warehouse Legal Liability Coverage Form of the Ace Policy also states:
This policy covers those sums you become legally
obligated to pay, caused by your negligence, for
risks of direct physical loss to Covered Property
belonging to your customers, imposed upon you as
a warehouseman or bailee, except those Causes of
Loss listed in the Exclusions.
23. Pursuant to the terms of the Warehouse Legal Liability Coverage Form and the
other terms of the Ace Policy, Ace is obligated to defend and indemnify Black Bear for the
claims asserted in the Underlying Action.
24. Black Bear provided timely notice of the Underlying Action to both Liberty
Mutual and Ace and demanded that both defend and indemnify it in accordance with the terms of
their respective policies.
25. Upon receiving Black Bear’s tender of its defense in the underlying action,
Liberty Mutual promptly informed Black Bear that it would defend and indemnify Black Bear in
accordance with the terms and conditions of the Liberty Mutual Policy, including the Other
Insurance provision, which renders Liberty Mutual’s coverage excess to Ace’s coverage for the
claims asserted against Black Bear in the Underlying Action.
26. Despite Black Bear’s timely notice and the tender of its defense, Ace failed to
promptly inform Black Bear of its coverage position or to undertake Black Bear’s defense in the
Underlying Action.
27. As a consequence of Ace’s failure, Liberty Mutual was forced to undertake the
defense of Black Bear in the Underlying Action in order to prevent Black Bear’s rights from
being prejudiced and to protect the interests of Black Bear in accordance with the terms of the
Liberty Mutual Policy.
28. After Liberty Mutual was forced to assume Black Bear’s defense, Ace advised
Black Bear and Liberty Mutual that it would contribute only 5.88% towards the cost of
defending and indemnifying Black Bear in the Underlying Action.
29. As a direct and proximate result of Ace’s wrongful refusal to defend and
indemnify Black Bear as its primary insurer in the Underlying Action, Liberty Mutual has
incurred and will continue to incur costs in defending Black Bear which are the obligation of Ace
as Black Bear’s primary insurer.

FIRST COUNT
30. liberty Mutual repeats and incorporates the allegations in paragraphs 1 through
29 as if set forth at length herein.
31. Pursuant to the Other Insurance provisions of the Ace and Liberty Mutual
Policies, Ace provides primary insurance coverage to Black Bear with respect to the claims
asserted against it in the Underlying Action.
32. As Black Bear’s primary insurer in the Underlying Action, Ace is obligated to pay
all costs incurred in defending Black Bear and is obligated to indemnify Black Bear to the full
limits of the Ace Policy.
33. Pursuant to the Other Insurance provisions of the Ace and Liberty Mutual
Policies, Liberty Mutual provides excess insurance coverage to Black Bear with respect to the
claims asserted against it in the Underlying Action.
34. As Black Bear’s excess insurer in the Underlying Action, Liberty Mutual has no
obligation to defend Black Bear unless and until the limits of the Ace Policy are exhausted.
35. Ace has wrongfully refused to indemnify and defend Black Bear on a primary
basis with respect to the claims asserted in the Underlying Action.
36. As a direct and proximate result of Ace’s refusal to indemnify and defend Black
Bear as its primary insurer, Liberty Mutual has been forced to incur and will continue to incur
costs of defending Black Bear, which costs are properly the obligation of Ace.
37. By virtue of Ace’s wrongful refusal to fulfill its obligations as Black Bear’s
primary insurer, Liberty Mutual may be called upon to indemnify Black Bear against claims
asserted against it in the Underlying Action - an obligation which, in the first instance, is an
obligation of Ace as Black Bear’s primary insurer.

SECOND COUNT
(In the Alternative)
38. Liberty Mutual repeats and incorporates the allegations contained in paragraphs 1
through 29 as if set forth at length herein.
39. If the insurance provided to Black Bear under the Ace Policy and the Liberty
Mutual Policy is deemed to constitute contributing insurance, Ace and Liberty Mutual are
obligated to contribute equally to the cost of defending and indemnifying Black Bear with
respect to the Underlying Action.
40. Ace has wrongfully refused to contribute its 50% share of the cost to defend and
indemnify Black Bear with respect to the claims asserted in the Underlying Action.
41. As a direct and proximate result of Ace’s refusal to indemnify and defend Black
Bear on an equal basis with Liberty Mutual, Liberty Mutual has been forced to incur and will
continue to incur costs of defending Black Bear in excess of its 50% share, which costs are
properly the obligation of Ace.
42. By virtue of Ace’s wrongful refusal to contribute to the indemnification of Black
Bear in the Underlying Action on an equal basis with Liberty Mutual, Liberty Mutual may be
called upon to pay more than its 50% share of the cost of indemnifying Black Bear against
claims asserted in the Underlying Action - an obligation which should be borne equally by
Liberty Mutual and Ace.

WHEREFORE, Plaintiff demands judgment in its favor as follows:
a. For a declaration that the Ace Policy affords Black Bear primary coverage
for the claims asserted in the Underlying Action and that the Liberty
Mutual Policy affords excess coverage;
b. For a declaration that, as Black Bear’s primary insurer, Ace is obligated to
pay all defense costs for Black Bear in the Underlying Action until such
time as the limits of the Ace Policy are exhausted;
c. For a declaration that, as Black Bear’s primary insurer, Ace is obligated to
reimburse Liberty Mutual for all defense costs it has incurred or may incur
in defending Black Bear in the Underlying Action;
d. For a declaration that Ace is obligated to indemnify Black Bear for all
claims asserted against it in the Underlying Action to the full limit of
Ace’s Policy;
e. For a declaration that, as Black Bear’s excess insurer, Liberty Mutual has
no obligation to defend or indemnify Black Bear in the Underlying Action
until the limits of the Ace Policy are exhausted; and
f. Granting Liberty Mutual such other and further relief as this Court may
deem to be just and proper.
In the alternative, Liberty Mutual demands judgment in its favor against Ace as follows:
a. For a declaration that Liberty Mutual and Ace are obligated to contribute
on an equal basis with respect to the costs of defending Black Bear in the
Underlying Action.
b. For a declaration that Liberty Mutual and Ace are obligated to contribute
on an equal basis with respect to the indemnification of Black Bear in the
Underlying Action.
c. For a declaration that Ace is obligated to reimburse Liberty Mutual for
defense costs Liberty Mutual has incurred in the past or may incur in the
future in excess of its 50% share; and
d. Granting Liberty Mutual such other and further relief as this Court may
deem just and proper.

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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