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

VOORHEES 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: 
2:15-cv-01193 Search Pacer
ACE Group party(s): 
Opposing Party: 
Daniel Matthew Voorhees
Court Type: 
Federal
US District Court: 
Eastern District of Wisconsin
Date Filed: 
Oct 8 2015

COMPLAINT

COMES NOW the plaintiffs, Daniel Matthew Voorhees abo M/Y Broadwater and
Broadwater Marine, Ltd., by and through its attorney, Frank R. Terschan, and Terschan,
Steinle, Hodan & Ganzer, Ltd. and as a complaint against the Defendant, ACE American
Insurance Company, allege the following:

PARTIES

1. Plaintiff Daniel Matthew Voorhees is the beneficial owner of M/Y
Broadwater. He is a resident of the District of Columbia. For purposes of the present
dispute, he is listed in the applicable insurance policy with a mailing address of:
Broadwater Marine c/o BGC, 500 W Brown Deer Road #101, Milwaukee, WI 53217.

  1. Claimant Broadwater Marine, Ltd. is a Cayman Islands holding company
    with a mailing address on the applicable insurance policy of: Broadwater Marine do
    BGC, 500 W Brown Deer Road #101, Milwaukee, WI 53217.
  2. ACE American Insurance Company (“ACE”) is an insurance company
    with a mailing address listed on its insurance policy as: 436 Walnut Street, P.O. Box
    1000, Philadelphia, PA 19106-3703. Upon information and belief, ACE is licensed to
    and does insurance business in Wisconsin.

JURISDICTION AND VENUE

  1. Pursuant to Wis. Stat. § 801.05, this Court has jurisdiction over ACE
    because ACE is a corporation that is engaged in substantial and not isolated activities
    within this state, and has sufficient minimum contacts with Wisconsin so as to render the
    exercise of jurisdiction by the Wisconsin courts permissible under traditional notions of
    fair play and substantial justice.
  2. Venue is proper in this Court pursuant to the venue clause in the
    applicable insurance policy, which states that disputes arising under the policy shall be
    venued where the policyholder lists its address on the policy declarations page.

GENERAL ALLEGATIONS

  1. This is a dispute over insurance coverage for damages, expenses, and lost
    charter income for the yacht M/Y Broadwater.
  2. Plaintiffs purchased from ACE marine insurance policy number YMY
    Y09164510 (the “Policy”), which, among other things, promises to pay for damages to
    the yacht, consequential damages, and extra expenses, and to reimburse the owner for lost
  3. charter income. A copy of the Policy, as contained in plaintiffs’ files, is attached hereto
    as Exhibit A.

  4. In April 2014, Plaintiffs purchased a 1990 163 foot Feadship custom yacht
    named M/Y Inevitable (renamed M/Y Broadwater) for $9.5 million.
  5. The yacht underwent an extensive pre-purchase survey and sea trial in
    March 2014 in Fort Lauderdale, Florida. No engine or power issues were discovered
    during the pre-purchase survey and sea trial.
  6. ACE reviewed the pre-purchase survey prior to writing the Policy. During
    underwriting of the Policy, ACE issued a Survey Recommendation Compliance
    Certification which required that certain repairs be made to the yacht by September 17,
    2014.
  7. The Policy took effect on April 17, 2014.
  8. At the time of purchase, the yacht was moored in Nassau, Bahamas. After
    plaintiffs took possession of the yacht, it was sailed to Fort Lauderdale, Florida. During
    the crossing, the yacht experienced sudden engine and power system failure that resulted
    in significant damage to the yacht. Subsequent investigation revealed extensive damage
    to the yacht’s generators, exhaust, and power systems, rendering the vessel inoperable.
  9. Plaintiffs were under contract to charter the yacht to Millennium Charters
    in West Palm Beach, Florida. As a result of the damage, the charter contract, worth
    $450,000, was cancelled.
  10. Extensive repairs of the yacht were undertaken over the subsequent year,
    at a total cost of nearly $ 1 million.
  11. Plaintiffs provided timely notice to ACE of the damage to the yacht. In
    August 2014, ACE disclaimed any obligation to pay for the damage to the yacht on the
    basis that the damage pre-existed the ACE policy period. ACE took this position despite
    the fact that the yacht was extensively surveyed prior to ACE underwriting the coverage
    and ACE signed off on the survey. No relevant pre-existing damage was noted on the
    survey that ACE approved or on ACE’s Survey Recommendation Compliance
    Certification.
  12. ACE subsequently revoked its disclaimer in September 2014 and provided
    plaintiffs with a Proof of Loss form to complete. Plaintiffs timely completed the Proof of
    Loss form.
  13. In October 2014, ACE requested additional damages documentation,
    access to the yacht for inspection purposes, and stated that it wished to conduct an
    examination under oath.
  14. In November 2014, while at Bahia Mar Marina in Fort Lauderdale,

Florida, the yacht suffered additional damage to its hull and propulsion system that
necessitated additional repairs.

  1. In November 2014, ACE hired Bryan Emond of SEA, Ltd. to inspect the

yacht.

  1. In November 2014, plaintiffs provided extensive documentary evidence to
    ACE in response to ACE’s requests for information.

In December 2014, ACE requested additional information regarding the
loss. Additional information was provided to ACE in response to the request.

  1. In January 2015, ACE requested more information regarding the loss, and
    also requested a new, more detailed Proof of Loss.
  2. In a March 16, 2015 letter, ACE claims adjuster Stuart Bamhardt
    requested additional information, and stated that ACE’s “preliminary analysis” indicated
    no relation between the April 2014 incident and the costs of repair. Mr. Bamhardt’s
    letter stated that “[o]ur investigation remains ongoing and we will be happy to consider
    any further documentation substantiating these charges.”
  3. In May 2015, plaintiffs submitted a revised and more detailed Proof of
    Loss to ACE. Plaintiffs also requested that ACE follow the dispute resolution procedure
    in the Policy, including arbitration, to resolve any disputed portions of the claim.
  4. In May 2015, plaintiffs entered into a charter agreement to charter a
    replacement yacht due to the ongoing repairs to M/Y Broadwater. The cost for the
    replacement yacht charter was approximately $183,000.
  5. In a June 9, 2015 letter, ACE adjuster Stuart Bamhardt stated that the
    revised Proof of Loss was “rejected without prejudice” due to insufficient detail.
  6. On June 23, 2015, plaintiffs submitted a third Proof of Loss to ACE.
  7. Also on June 23, 2015, plaintiffs received a copy of a letter dated June 22,
    2015 from ACE’s Stuart Bamhardt stating that his investigation revealed that the amount
    of damage caused to the yacht as a result of the November 2014 incident at Bahia Mar
    Marina in Fort Lauderdale fell below the deductible.
  8. On June 24, 2015, ACE remitted to plaintiffs a check in the amount of
    $800, representing what ACE asserted it owed on the claim.
  9. On June 24, 2015, plaintiffs served ACE with an Arbitration Demand.
  10. On July 31, 2015, ACE’s counsel wrote a letter stating that ACE would
    not participate in arbitration because the request for arbitration was untimely under the
    policy, citing the Policy’s one-year suit limitation clause. In this letter, ACE also rejected
    plaintiffs third Proof of Loss and invited plaintiffs to correct deficiencies in the Proof of
    Loss and resubmit another revised Proof of Loss.

CLAIMS FOR RELIEF
COUNT I - BREACH OF CONTRACT

  1. The preceding paragraphs are hereby incorporated and realleged as if fully
    stated herein.
  2. The Policy is a valid and enforceable contract of insurance, for which all
    premiums have been paid.
  3. Plaintiffs have performed all of their obligations under the Policy, and any
    and all conditions precedent to plaintiffs’ rights under that Policy have been satisfied,
    waived, or defendant is equitably estopped from relying on them.
  4. Pursuant to the terms and conditions of the Policy, ACE has breached its
    obligation to pay plaintiffs for losses they suffered as a result of damage to and loss of
    use of M/Y Broadwater.
  5. As a direct and proximate result of ACE’s breach, plaintiffs have been
    deprived the benefits of the insurance coverage for which they paid substantial premiums.

COUNT II - EQUITABLE ESTOPPEL

  1. The preceding paragraphs are hereby incorporated and realleged as if fully
    stated herein.
  2. ACE is equitably estopped from relying on the one-year suit limitation
    provision in the Policy because ACE induced plaintiffs to withhold initiating suit or
    arbitration through its actions and communications with plaintiffs.
  3. Plaintiffs reasonably relied to their detriment on ACE’s promises to
    investigate the claim and consider revised Proofs of Loss.
  4. After the inducement for delay ceased, plaintiffs did not unreasonably
    delay in attempting to bring an arbitration proceeding and then, when ACE refused to
    participate in arbitration, this action.
  5. Due to ACE’s fraudulent and inequitable conduct, ACE should be
    estopped from asserting a statute of limitations defense.

COUNT III - BREACH OF GOOD FAITH AND FAIR DEALING

  1. The preceding paragraphs are hereby incorporated and realleged as if fully
    stated herein.
  2. The Policy is a valid and enforceable contract of insurance, for which all
    premiums have been paid.
  3. Plaintiffs have performed all of their obligations under the Policy, and any
    and all conditions precedent to plaintiffs’ rights under that Policy have been satisfied or
    waived.
  4. Because of the fiduciary relationship between an insurer and its insured,
    which arises from the duty of good faith and fair dealing implied in every contract,
    plaintiffs had a right to expect to be treated fairly and to have legitimate claims paid
    promptly.
  5. ACE acted in bad faith towards plaintiffs by stringing plaintiffs along and
    by conducting its claim investigation in such a way as to prevent it from learning the true
    facts upon which the plaintiffs’ claim is based.
  6. ACE knew or should have known that it had no reasonable basis to deny
    plaintiffs’ claim, and its improper investigation and repeated delay and rejection of
    plaintiffs’ Proofs of Loss reflect an absence of honest, intelligent action and consideration
    of its insureds’ claim and reckless disregard for its insureds’ rights under the Policy.
  7. Among other things, ACE’s bad faith claims handling included the
    following violations of Wis. Admin. Code Sec. INS 6.11(3):
  8. Failure to promptly acknowledge pertinent communications with respect to claims
    arising under insurance policies;
  9. Failure to initiate and conclude a claims investigation with all reasonable
    dispatch;
  10. Failure to promptly provide necessary claims forms, instructions and reasonable
    assistance to insureds and claimants under its insurance policies;
  11. Failure to attempt in good faith to effectuate fair and equitable settlement of
    claims submitted in which liability has become reasonably clear;
  12. Failure, where appropriate, to make use of arbitration procedures authorized or
    permitted under any insurance policy;
  13. Failure to affirm or deny coverage of claims within a reasonable time after proof
    of loss has been completed; and
  14. Knowingly misrepresenting to claimants pertinent facts or policy provisions
    relating to coverages involved.
  15. As a direct and proximate result of ACE’s bad faith conduct, plaintiffs
    have sustained and incurred, and are continuing to incur, substantial damages and
    expenses.
  16. As a direct, foreseeable and proximate result of ACE’s bad faith conduct
    and breach of its obligations to plaintiffs, plaintiffs are entitled to recover the full amount
    of their damages, including all incidental, consequential and compensable damages,
    along with pre and post-judgment interest and attorneys’ fees.

RELIEF REQUESTED
WHEREFORE, based upon the forgoing allegations, plaintiffs request that this
Court enter judgment for damages in favor of plaintiffs and against defendant, in an
amount to be determined at trial, but believed to be in excess of $ 1 million, and award
plaintiffs their reasonable attorneys’ fees and costs, along with pre and post-judgment
interest, and any other and further relief the Court deems just, equitable, and proper.

JURY TRIAL DEMANDED
Plaintiffs respectfully request a jury trial on all claims, as well as on each defense
which may be raised by defendant, that are triable to a jury.

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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