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

OLD BRIDGE MUNICIPAL UTILITIES AUTHORITY v. WESTCHESTER FIRE 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: 
3:12-cv-06232 Search Pacer
ACE Group party(s): 
Opposing Party: 
Old Bridge Municiapl Utilities Authority
Court Type: 
Federal
US District Court: 
District of New Jersey
Date Filed: 
Oct 4 2012

"FIRST COUNT
(Breach of Contract - Insurance Policy)

1. Plaintiff is a municipal utilities authority and an independent political subdivision of the State of New Jersey, organized and operating under the New Jersey Municipal Utilities Authority Law,N.J.S.A. 40:14B-1 etseq. ("MUALaw").

2. In that capacity, it is responsible for providing drinking water to, and for removing wastewater from, the Township of Old Bridge, Middlesex County, New Jersey.

3. Defendant Westchester Fire Insurance Company ("WFIC") is an insurance company duly authorized to do business in New Jersey, with a corporate mailing address, according to its website, of P.O. Box 1000,436 Walnut Street, Routing WB04H, Philadelphia, Pennsylvania.

4. Defendant ACE Westchester Specialty Group ("ACE" and together with WFIC, "Defendants") is on information and belief an affiliate or parent of WFIC, and also maintains offices at 436 Walnut Street, Routing WB04H, Philadelphia, Pennsylvania. ACE also maintains a claims office located at 11575 Great Oaks Parkway, Suite 200, Alpharetta, Georgia 30022.

5. Fictitious Corporations 1 through 10 have been identified as defendants in the event that further investigation and discovery reveal the existence of any additional affiliates of Defendants which may have issued the insurance policy which is the subject of this action.

6. Defendants insured the Authority under a "Municipal Advantage Public Entity Liability Policy" bearing Policy No. G24098369 001 (the "Policy"), which was issued by WFIC to the Authority, for an effective period of November 8,2009 to November 8,2010.

7. On or about September 29,2010, the Authority was sued in the United States District Court for the District of New Jersey, in a matter captioned Brunetti, et al v. Old Bridge Municipal Utilities Authority, etal., Case No. 10-cv-05018 (the "Federal Action") (the Plaintiffs in thataction will be referred to as "Brunetti").

8. Notably, in addition to bringing suit against the Authority, the Federal Action also named as individual defendants the Commissioners of the Authority, its Executive Director, its Staff Engineer, and Professional Consultants of the Authority (collectively the "D&O Defendants"), in their individual capacities, alleging a violation of the Brunetti Plaintiffs federally protected civil rights (42 U.S.C. §§1983 and 1985 and the Federal Racketeering Influence and Corrupt Organizations Act ("RICO") 18 U.S.C. § 1962(c).

9. Plaintiff, through its insurance agents, submitted a claim to Defendants on or about October 2010, seeking a defense of the Federal Action under the Policy.

10. Plaintiff complied with all the requirements of the Defendants' insurance policy as set forth in its claim procedure, and expected to be covered under the Policy in connection with the defense of the Federal Actioa

11. By correspondence dated October 26, 2010 and November 2, 2010 respectively, Defendants agreed to furnish the Authority and the D&O Defendants with a defense of the Federal Action, subject to a reservation of rights to deny or limit coverage upon further investigation.

12. Defense counsel was subsequently assigned by Defendants to defendant the Authority and the D&O Defendants against the Federal Actioa

13. As a result of successful motion practice in the Federal Action by defense counsel, the Federal Action was dismissed.

14. Following that dismissal, Brunetti filed their Complaint in the Superior Court ofNew Jersey, Middlesex County, on June 13, 2011 captioned Brunetti, et al v. Old Bridge Municipal Utilities Authority, etal Docket No. MID-L-4383-11 (the "2011 State Action") alleging violations of both the Federal RICO statute and NJ.S. A. 2C:41-1 etseq. the News Jersey RICO statue naming the Authority and the D & O Defendants again.

15. Defendants continued to provide the Authority and the D&O Defendants with a defense under the Policy in the 2011 State Action, utilizing defense counsel assigned to defend in the Federal Action for that purpose.

16. By letter dated July 24,2012 however, Defendants notified Plaintiff that upon further review of the matter, they were denying coverage to the Authority and the D&O Defendants under the Policy, and withdrawing their defense of the 2011 State Action in 30 days. Attached hereto as Exhibit "A" is that letter dated July 24,2012.

17. The July 24,2012 letter of Defendants provided the basis for the denial of coverage and withdrawal of the defense.

18. The primary basis for the denial of coverage and withdrawal of the defense was Defendants' belief that the Federal Action and the 2011 State Action arose from "Interrelated Wrongful Acts" that were also alleged in an earlier, Second Supplemental Complaint filed in the Superior Court of New Jersey, Middlesex County on February 27,2009, outside the Policy period, and captioned Oaks Development Corp. etal. v. Planning Board of the Township of Old Bridge, et al, Docket No. MJD-L-1902-05 (the "2009 State Action" and together with the Federal Action and the 2011 State Action, collectively the "Actions").

19. Notably however, the D&O Defendants are not parties to the 2009 State Action, and are subject to unique RICO allegations against only them in both the Federal Action, and the 2011 State Action.

20. Similarly, the plaintiffs in the 2009 State Action are different from those plaintiffs set forth in both the Federal Action and the 2011 State Action.

21. Nonetheless, Defendants maintain that the allegations of the 2009 State Action are similar in many respects to those of the Federal Action and the 2011 State Action, and that the 3 actions are therefore •interrelated' under the Policy for coverage purposes.

22. According to Defendants, since the 3 actions are interrelated with a common nexus, and the 2009 State Action was filed outside the Policy coverage period on February 27,2009, all of the Actions were therefore "first made" outside of the Policy coverage period. Policy, Section Vin.B.2.

23. Defendants also maintain that Interrelated Wrongful Acts, such as those alleged to have occurred in all of the Actions and stemming initially from the 2009 State Action, exclude coverage under Section IV of the Policy (Exclusions).

24. Plaintiff submits and maintains that there is a factual dispute over whether the allegations of the Federal Action and the 2011 State Action are in fact "Interrelated Wrongful Acts" with the 2009 State Action under the Policy for coverage exclusion purposes.

25. As indicated, the D&O Defendants are not parties to the earlier 2009 State Action, and are subject to unique RICO allegations against only them in both the Federal Action, and the 2011 State Action.

26. RICO allegations were raised for the first time in the Federal Action in 2010, during the Policy coverage period

27. And as noted, the plaintiffs in the Federal Action and the 2011 State Action are not the same as the plaintiffs in the 2009 State Action.

28. It is therefore clear that the Federal Action, and the subsequent 2011 State Action, are not "Interrelated Wrongful Acts" with the 2009 State Action for coverage purposes. They arose and were 'first made' during the coverage period and a defense should have been continued under the Policy for the 2011 State Action as a result.

29. There is clearly a factual dispute over whether the Actions are Interrelated Wrongful Acts, and Defendants should have continued to provide a defense to the 2011 State Action as a result.

30. Plaintiff reasonably expected the insurance Policy to cover the defense of the 2011 State Action, and Defendants have wrongfully and willfully denied a continued defense under this coverage, resulting in harm to Plaintiff and a breach of the Policy.

31. As a result of the aforesaid conduct and withdrawal of coverage defense, Plaintiff has been damaged.

WHEREFORE, Plaintiff demands judgment against the Defendants, Westchester Fire Insurance Company and ACE Westchester Specialty Group, jointly and severally, for:
a. Damages.
b. Costs of suit.
c. Legal fees.
d. Such other relief as the Court may grant, including restoration of a defense of the 2011 State Action.

SECOND COUNT
(Specific Performance)
1. Plaintiff repeats the allegations of the First Count, and incorporates them herein as if set forth at length.

2. For the reasons set forth above, Defendants have an obligation to provide a continued defense of the 2011 State Action under the Policy to the Authority, and the D&O Defendants.

3. A continued defense is not being provided by Defendants, Plaintiff is suffering damages in the form of added attorney's fees and costs in defending the 2011 State Action, which otherwise would have been covered by the Policy - had Defendants continued to provide a defense under its terms.

4. Said costs and damages should have been paid for by the Defendants under the Policy.

5. Defendants have an obligation to specifically perform under the Policy by providing a defense to the Authority and the D&O Defendants in the 2011 State Action, which should be ordered by this Court consistent with the terms and conditions thereof.

WHEREFORE, Plaintiff demands judgment against the Defendants, Westchester Fire Insurance Company and ACE Westchester Specialty Group, jointly and severally, for:
a. Specific Performance of the Policy, and Defendants' obligation to supply a continued defense of the 2011 State Action to the Authority and the D&O Defendants.
b. Damages.
c. Costs of suit.
d. Legal fees.
e. Such other relief as the Court may grant.

THIRD COUNT
(Declaratory Relief)

1. Plaintiff repeats all the allegations of the First Count and Second Count, and incorporates mem herein by reference as if set forth at length,

2. Thereis clearly an actual and justiciable controversy between the Parties with respect to the scope of coverage of, and the entitlement to a defense under, the provisions of the Policy as they relate to the provision of a defense in connection with the 2011 State Action.

3. Pursuant to N. J. S.A. 2A:16-50to 62,theNew Jersey Declaratory Judgment Act, the controversy between the Parties over the scope of the Policy is one that requires this Court to declare the scope and intent of coverage in light of the actual dispute over its terms.

WHEREFORE, Plaintiff demands judgment against Defendants, Westchester Fire Insurance Company and ACE Westchester Specialty Group, jointly and severally, for:
a, A declaration from this Court with respect to the rights and obligations of the Parties under the Policy, specifically with regard to Defendants' obligation to provide a continued defense of the 2011 State Action thereunder."

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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