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

SONOCO PRODUCTS COMPANY et al v. ACE INA INSURANCE 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: 
4:11-cv-02366 Search Pacer
ACE Group party(s): 
Opposing Party: 
Sonoco Products Company
Court Type: 
Federal
US District Court: 
District of South Carolina
Date Filed: 
Sep 2 2011

""FIRST CLAIM FOR RELIEF
(Declaratory Judgment)

24. The Plaintiffs incorporate into this cause of action all of the allegations above as fully as if repeated verbatim herein.

25. This is a civil action for a declaratory judgment pursuant to Rule 57 of the South Carolina Rules of Civil Procedure and S.C. Code Ann. § 15-53-10, et seq.I, known as the Uniform Declaratory Judgments Act, for the purpose of determining questions of actual controversy and coverage between the parties as more fully described below.

26. The coverage term for both the Canadian Policy and the Master Policy was April 1, 2010 through April 1,2011.

The Canadian Policy

27. The named insured under the Canadian Policy is Sonoco Canada.

28. The Canadian Policy covers "[a]ll property of the Insured which is owned, leased or occupied by the Insured, or for which they are legally liable for or have assumed responsibiUty for, situated anywhere in Canada."

29. The Canadian Policy covers "all-risks of direct physical loss or damage from any cause other than as hereinafter excluded."

30. On July 16, 2010 following a rain storm, there was a roof collapse at Sonoco Canada's Trent Valley Mill located in Trenton, Ontario, resulting in physical loss with direct and resulting damage.

31. Plaintiffs are entitled to a declaration that the losses and damages incurred as a result of the July 16,2010 roof collapse are covered losses under the Canadian Policy.

The Master Policy

32. The Master Policy's named insureds are "Sonoco Products Company and its affiliated, subsidiary and associated companies and/ or corporations . . . ." As a subsidiary corporation, Sonoco Canada is a named insured under the Master Policy.

33. Sonoco Canada's Trent Valley Mill was as an Insured Location as defined in the Master Policy's Declarations.

34. The Master Policy covers "property, as described in this Policy, against ALL RISKS OF DIRECT PHYSICAL LOSS OR DAMAGE occurring during the period of this Policy, except as hereinafter excluded, while located as described in this Policy."

35. The Master Policy further provides as follows:

L. DIFFERENCE IN CONDITIONS

This Policy is designated the Master Global Insuring Policy for Insured Locations under this Policy and which are insured under an underlying policy(ies) issued by this Company or its representative companies. As respects such Insured Locations, this Policy covers:
1. The difference in definitions, perils, conditions or coverages between any underlying policy and this Policy;....

36. On luly 16, 2010 following a rain storm, there was a roof collapse at Sonoco Canada's Trent Valley Mill located in Trenton, Ontario, resulting in physical loss with direct and resulting damage. Master PoUcy Insurers have denied coverage for the 2010 Roof Collapse.

37. Plaintiffs are entitled to a declaration that the losses incurred as a result of the July 16, 2010 Roof Collapse are covered losses under the Master Policy.

FOR A SECOND CAUSE OF ACTION
(Estoppel to Deny Coverage / Waiver of Right to Deny Coverage / Reformation of Contract by Waiver and/or Estoppel)

38. The Plaintiffs incorporate into this cause of action all of the allegations above as fully as if repeated verbatim herein.

39. On or about December 16, 2005, there was a roof collapse at the Trent Valley Mill following a snow storm ("2005 Roof Collapse"), which resulted in a claim by Sonoco and/or Sonoco Canada under the then existing Canadian Policy.

40. In 2005, Zurich Insurance Company insured the Canadian Policy and was fronting insurer under the Master Policy with Westport Insurance Corporation, certain underwriters of Lloyd's of London, and National Union Insurance Co. each insuring part of the risk.

41. Plaintiffs' insurers for the 2005 Roof Collapse initially denied coverage predicated on a policy exclusion for "rust or corrosion" claiming that the accumulated snow did not cause the collapse, the rusted condition of the roof did.

42. Although Plaintiffs' insurers initially denied coverage for the 2005 Roof Collapse, coverage was subsequently acknowledged and accepted and the claim was paid without legal process.

43. The payment for the 2005 Roof Collapse included payment for damage to the actual roof components that were claimed by the insurers to have been rusted and corroded and which were claimed to have caused the collapse.

44. Many of the basic facts for both the 2005 Roof Collapse and the 2010 Roof Collapse are identical. Common facts include:
• Both claims involved a roof collapse.
• Both collapses occurred in Canada.
• Both collapses occurred after precipitation accumulated on the roofs (snow in 2005 and rain in 2010).
• Both collapses occurred in the exact same building and the very same roof at the Trent Valley Mill.
• Prior to both collapses, there was documented evidence from the months immediately preceding the collapse that certain specific and identified components of the roof structure had become deteriorated and corroded.
• Prior to each collapse, maintenance repairs were in fact scheduled to be made to certain specific and identified corroded roof components that were involved in the collapse.
• In both collapses, the roof collapsed onto and damaged other non*roof property.

45. The payment on the 2005 claim was fully disclosed in Plaintiffs' 2010 Global Policy Placement Application and Defendants had ready access to all relevant adjusting and claims information related to the 2005 Roof Collapse, including the initial declination of coverage based on claimed corrosion language in the 2005 policy.

46. With actual and/or constructive knowledge of the facts and circumstances of the 2005 Roof Collapse, the Defendants issued the 2010 Canadian Policy and Master Policy, which policies contained substantively similar or identical insuring language as the 2005 Canadian
Policy and Master Policy, and Defendants thereby led Plaintiffs to believe and rely that if a collapse occurred under the 2010 Canadian or Master Policy that was similar to the 2005 Roof Collapse, that such collapse would in fact be covered under the 2010 Canadian and Master policies.

47. As the Defendants have now denied coverage for the 2010 Roof Collapse, Defendants misled Plaintiffs into believing and relying that the 2010 Roof Collapse would be covered under the 2010 Canadian and Master policies.

48. In reliance on the payments, representations and misrepresentations of Defendants that a collapse similar to the collapse that occurred in 2005 would be covered, Plaintiffs did not purchase additional insurance to cover similar roof collapse scenarios, nor did they change the Canadian Policy or the Master Policy language going forward.

49. Accordingly, the Defendants are either estopped from denying coverage or have waived any right to deny coverage as to the July 16,2010 roof collapse.

50. In addition, or in the alternative, the Canadian Policy and Master Plolicy should be reformed to provide coverage for the 2010 Roof Collapse.

51. Plaintiffs are entitled to recover all actual and consequential damages from the Defendants for the July 16, 2010 roof collapse under both the Canadian Policy and the Maister Policy, plus interest, expert fees and costs and attorney's fees and costs as provided by common and statutory law or by contract.

FOR A THIRD CAUSE OF ACTION
(Breach of Contract - Common Law)

52. The Plaintiffs incorporate into this cause of action all of the allegations above as fully as if repeated verbatim herein.

53. Sonoco Canada, for good and valuable consideration, entered into the Canadian Policy which is valid and enforceable insurance contract.

54. Plaintiffs, for good and valuable consideration, entered into the Master Policy with Defendants ACE American Insurance Company, National Union Fire Insurance Company of Pittsburgh d/b/a Chartis Insurance, Westport Insurance Corporation d/b/a Industrial Risk Insurers, and Munich Reinsurance America, Lie, each of which are valid and enforceable contracts.

55. The Defendants breached the terms of their respective policies by wrongfully refusing to pay benefits and provide coverage for the damage resulting from the 2010 Roof Collapse, which was covered under the provisions of the Canadian Policy and/or the Master Policy.

56. None of the exclusions from coverage, conditions, or stipulations contained in the Canadian Policy or the Master Policy apply to limit or eliminate coverage under the facts and circumstances of this case.

57. Plaintiffs have suffered damages as a result of the Defendants' breaches of their respective contracts, including actual and consequential damages arising from the 2010 Roof Collapse, business interruption, interest, expert and engineering fees and attorney's fees and costs.

58. Plaintiffs are entitled to recover all actual and consequential damages from the Defendants for breach of contract, plus interest, expert fees and costs and attorney's fees and costs as provided by common and statutory law or by contract.

FOR A FOURTH CAUSE OF ACTION
(Breach of Insurance Contract— South Carolina Claims Practices Act)

59. The Plaintiffs incorporate into this cause of action all of the allegations above as fully as if repeated verbatim herein.

60. The parties, for good and valuable consideration, entered into their respective policies, each of which are valid and enforceable insurance contracts.

61. The Defendants breached the terms of their respective policies by wrongfully refusing to pay benefits and provide coverage for the damage caused by the 2010 Roof Collapse, which was covered under the provisions of their respective policies.

62. Upon information and belief, the Defendants have acted unreasonably and in bad faith in refusing to pay benefits and provide coverage in one or more of the following particulars:

a. In failing to independently and adequately investigate the claim for coverage in order to properly determine that coverage applies;
b. In failing to determine and agree that coverage applies in light of the evidence related to the roof collapse in 2010 and in light of the coverage provided for the 2005 roof collapse;
c. In asserting defenses that do not apply under the facts and circumstances of thiscase;
d. In knowingly and/or negligently misrepresenting pertinent facts and conclusions relating to coverage;
e. In providing deceptive or misleading information with respect to coverage or defenses;
f. By invoking or threatening to invoke defenses, not in good faith and with a reasonable expectation of prevailing with respect to the defers, but for the primary purpose of discouraging or reducing a claim; and
g. In failing to attempt in good faith to effect prompt, fair, and equitable settlement of a claim in which liability had become reasonably clear.

63. Plaintiffs are entitled to recover all actual and consequential damages from the Defendants for breach of contract under South Carolina Code Ann. § 38-59-10 et seq., the South Carolina Claims Practices Act, interest, plus attorney's fees and costs as provided by common and statutory law or by contract

FOR A FIFTH CAUSE OF ACTION
(Bad Faith Refusal to Pay Insurance Benefits -Common Law)

64. The Plaintiffs incorporate into this cause of action all of the allegations above as fully as if repeated verbatim herein.

65. The parties, for good and valuable consideration, entered into the respective policies, each of which are valid and enforceable insurance contracts.

66. The Defendants have intentionally and unreasonably refused to pay benefits or provide coverage under the respective policies for the roof collapse at the Trent Valley Mill on July 16, 2010.

67. Plaintiffs have provided Defendants or their agent with documentation and evidence to support their position that the 2010 Roof Collapse was a covered loss, but the Defendants have denied coverage without a legitimate explanation.

68. Plaintiffs have suffered damages as a result, including actual and consequential damages arising from the roof collapse, business interruption, interest, and attorney's fees aiid costs incurred in this action, plus punitive damages.

FOR A SIXTH CAUSE OF ACTION
(Bad Faith Refusal to Pay Insurance Benefits -South Carolina Claims Practices Act)

69. The Plaintiffs incorporate into this cause of action all of the allegations ibove as rally as if repeated verbatim herein.

70. The parties, for good and valuable consideration, entered into the respective policies, each of which are valid and enforceable insurance contracts.

71. The Defendants have wrongfully refused to pay benefits and provide coverage to Plaintiffs for claims arising from the 2010 Roof Collapse, despite the Defendants' duty to do so under their respective policies.

72. The Defendants have acted unreasonably and in bad faith in refusing to pay benefits and provide coverage in one or more of the following particulars:
a. La failing to independently and adequately investigate the claim for coverage in order to properly determine that coverage applies;
b. In failing to determine and agree that coverage applies in light of the evidence related to the roof collapse in 2010 and in light of the coverage provided for the 2005 roof collapse;
c. In asserting defenses that do not apply under the facts and circumstances of this case;
d. In knowingly and/or negligently misrepresenting pertinent facts \ and conclusions relating to coverage;
e. In providing deceptive or misleading information with respect to coverage or defenses;
f. By invoking or threatening to invoke defenses, not in good faith and with a reasonable expectation of prevailing with respect to the defense, but for the primary purpose of discouraging or reducing a claim; and
g. In tailing to attempt in good faith to effect prompt, fair, and equitable settlement of a claim in which liability had become reasonably clear.

73. As a result of the foregoing actions, Plaintiffs have suffered damages, including actual and consequential damages arising from the 2010 Roof Collapse, business interruption, interest, and attorney's fees and costs incurred in this action."

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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