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

SELECT BUILD ILLINOIS, LLC et al 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: 
1:14-cv-08653 Search Pacer
ACE Group party(s): 
Opposing Party: 
Select Build Illinois, LLC
Court Type: 
Federal
US District Court: 
Northern District of Illinois
Date Filed: 
Oct 31 2014

COMPLAINT FOR DECLARATORY JUDGMENT
NOW COME the Plaintiffs, Select Build Illinois, LLC and Ivan Holle, by
attorneys, HORWITZ, HORWITZ AND ASSOCIATES, LTD., pursuant to '735 ILCS
and as their Complaint for Declaratory Judgment against Defendant
AMERICAN INSURANCE COMPANY, state as follows:

THE PARTIES
Plaintiff Select Build Illinois, LLC, is a limited liability company ar('Et was
1.
formerly !mown as RCI Construction, LLC.
Plaintiff Ivan Holle is an individual who resides in the State of Illinois and
2.
is the tort plaintiff in an underlying lawsuit in the Circuit Court of Cook County, Illinois,
F-
County Department, Law Division, numbered 11 L 004355.
3. Defendant ACE American Insurance Company is an insurance company
domiciled in the State of Pennsylvania. It is authorized to and does issue insurance
policies in the State of Illinois and in Cook County.
4. Venue for this case in Cook County is proper pursuant to 735 ILCS 5/2-
101 because ACE does business in Cook County and/or the transaction or a part thereof
out of which the dispute arises occurred in Cook County, Illinois.
5. On May 30, 2007, Plaintiff! van Holle was employed by Plaintiff Select
Build Illinois, LLC.
6. Select Build was a subcontractor to Realen Homes, L.P., and was
performing carpentry work at a residential housing development in Illinois.
7. During the construction, a wall fell on Ivan Holle causing him severe
injury, pain, and anguish.
8. Due to this work incident, Ivan Holle suffered career-ending injuries to his
neck, back and shoulder. He has undergone surgery for his shoulder, and further
procedures are reconnended to fuse his lumbar vertebrae.
9. On April 2 7, 2011, Ivan Holle commenced a tort action against the
underlying defendant Realen Homes, L.P., in the Circuit Court of Cook County, Illinois,
County Department, Law Division, numbered 11 L 004355. On May 12,2011, Holle
filed the First Amended Complaint in that action.
10. Because the underlying defendant Realen Homes is bankrupt, Ivan Holle
has agreed to pursue only Realen Homes's available liability insurance proceeds in the
underlying tort action, as is permitted under the bankruptcy laws. See In re Hendrix, 986
F.2d 195 (7th Cir. 1993).
11. That insurance is with ACE American Insurance Company, but ACE
contends that it can shift its obligations under its policy to Select Build so that it does not
have to pay Real en Homes's ongoing defense costs in Holle's underlying tort action or
provide any coverage for Holle's claim.
12. An actual controversy exists between the Plaintiffs and ACE concerning
the parties' rights and obligations under the ACE policy, and pursuant to 735 ILCS 5/2-
701, this Court is vested with the power to declare the rights and liabilities of the parties
hereto and to give such other and further relief as may be necessary.

THE ACE INSURANCE POLICY
13. RCI Construction (now known as Select Build, the Plaintiff) was a Named
Insured under a liability insurance policy issued by ACE American Insurance Company
to Building Materials Holding Corporation, Policy XSL G2170250A ("Policy"), for the
period November 11, 2006 to November 11,2007. A copy of the Policy is attached
hereto as Exhibit A.
14. Pursuant to the Policy, Building Materials Holding Corporation and its
numerous affiliated companies, including RCI Construction, were Named Insureds.
15. RCI Construction changed its name to Select Build Illinois, LLC, so
Select Build is a Named Insured under the Policy.
16. The Policy was in full force and effect at the time of Ivan Holle's injury
on May 30,2007.

REALEN HOMES IS AN ADDITIONAL INSURED
17. Realen Homes (the defendant in Holle's tort suit) had a Master Contract
dated November 15,2004 with Residential Carpentry, Iric. The Master Contract
obligated Residential Carpentry to make Realen Homes an additional insured nnder its
insurance policies.
On or about January 21,2005, with the consent ofRealen Homes,
18.
Residential Carpentry Inc. assigned its rights and obligations nnder the Master Contract
,]
'
(including the obligation to make Realen Homes an additional insured) to RCI
Construction, LLC (now known as Select Build, the Plaintiff).
19. Pursuant to the terms of the Master Contract and the "Who Is An Insured"
provisions of the ACE Policy, Realen Homes became an additional insured (but not fl
Named Insured) nnder the ACE Policy.
THE POLICY'S DEDUCTIBLE PROVISION
20. The ACE policy has a per occurrence coverage limit of$1.9 million above
a retained limit or self-insured retention of $100,000. (Policy, Declarations bates-
stamped page MARSH 0004).
21. But the Policy, at Endorsement No. 52, provides for a $1.9 million
"Deductible Per Occurrence" above the $100,000 retained limit in certain situations.
(Policy, Endorsement No. 52, Items 7 and S.d., at Bates-stamped page MARSH 0102).
22. Specifically, the "Deductible Per Occurrence" is defined by Endorsement
No. 52 as follows:
"Deductible Per Occurrence" shall mean the amonnt of "ultimate net loss"
nnder this policy which vou have a duty to pay in excess of the "retained
limit" and which arise from (i) any one "occurrence" to which insurance
applies nnder this policy or (ii) "personal and advertising injury" sustained
by any one person or organization.
(Policy, Endorsement No. 52 at Bates-stamped page MARSH 01 02) (emphasis added).
23. "You" is defined by the policy as the Named Insured, that is, Building
Material Holding Corporation and affiliates, including Select Build. (Policy, Form XS-
6U9lc at Bates-stamped pages MARSH 0009).
24. The "Deductible Per Occurrence" means the amount of "ultimate net loss"
which the Named Insured has a duty to pay in excess of the retained limit ... " The
definition of "ultimate net loss" in the Policy states:
"Ultimate net loss" means the total amount which the insured is legally
obligated to pay as damages due to an "occurrence or offense arising out
of covered clams or "suits" either by an adjudication or a settlement to
which we agree in writing . . . .
(Exhibit B, ACE policy, Form XS-6U9lc at Bates-stamped page MARSH 0025)
(emphasis added).
25. Under the foregoing Policy provisions, "Deductible Per Occurrence"
means the amount of damages that the Named Insured is legally obligated to pay due to a
judgment or settlement on a claim covered by the policy in excess of the retained limit
The deductible provision, therefore, only applies to claims against the Named Insured,
because only then might the Named Insured be legally obligated to pay damages.
26. The underlying tort suit by Ivan Holle is not against a Named Insured (for
example, Select Build) but is against Real en Homes, an additional insured. Consequently,
the Deductible Per Occurrence provision does not apply to Holle's suit against Realen
Homes, and ACE has a coverage obligation of up to $1.9 million above the retained li.mit
of$100,000.

THE POLICY'S BANKRUPTCY CLAUSE
27. The Policy specifically provides in its "Conditions" section: "Bankruptcy
or insolvency of the insured or ofthe insured's estate will not relieve us [ACE] of our
obligations under this policy." . (Policy at bates-stamped page MARSH 00 18).
28. By including this Bankruptcy term in the insurance policy, ACE agreed to
provide the obligated insurance coverage of $1.9 million regardless of any "baokruptcy
or insolvency" of the insured, Realen Homes.
THE POLICY'S PROVISIONS CONCERNING ALAE (Defense Expenses)
29. Under the Policy, the defense expenses ofRealen Homes in the underlying
tort action by Holle are part of what is called "allocated loss adjustment expense" or
ALAE.
30. The policy provides for the Named Insured, rather than ACE, to pay the
ALAE in certain circumstances. Paragraph 7 of Endorsement No. 52 provides:
You [the Named Insured] will pay all sums the insured becomes
legally obligated to pay within the Deductible Per Occurrence and all
"allocated loss adjustment expenses" related to such claims.
(Policy, Endorsement No. 52 at bates-stamped page MARSH 0102) (emphasis added).
31. As set forth above, a Deductible only arises on claims against a Named
Insured (because only then is the Named Insured liable for damages). Under Paragraph 7
of Endorsement 52, quoted above, the Named Insured's obligation to pay ALAE arises
on "such claims." "Such claims" refers to claims on which there might be a Deductible
obligation--on claims against a Named Insured.
32. Because the underlying tort claim by Holle is against an additional
insured, Real en Homes, not a Named Insured, the defense expenses ofRealen Homes in
the underlying action are not the obligation under the Policy of any Named Insured, such
as Select Build.

PRAYER FOR RELIEF
WHEREFORE, the Plaintiffs Select Build and Ivan Holle respectfully request this
Honorable Court to declare and adjudge the controversy as follows:
a) Declare that the Deductible Per Occurrence provision of the Policy only applies to
claims against Named Insureds;
b) Declare that the obligation to pay or reimburse ACE for allocated loss adjustment
expenses under the Policy only applies to claims against Named Insureds;
c) Declare that Select Build has no obligation to pay or reimburse ACE for a
Deductible in connection with the underlying tort action by Ivan Holle;
d) Declare that Select Build has no obligation to pay or reimburse ACE for Realen
Homes's defense expenses in connection with the underlying tort action by Ivan
Holle;
e) Declare that ACE has the obligation to provide coverage up to the per occurrence
limit of $1.9 million in the underlying tort action by Ivan Holle; and
f) Grant any other relief that this Court deems just and e
circumstances.

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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