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

WESTCHESTER SURPLUS LINES INSURANCE COMPANY v. CLANCY & THEYS CONSTRUCTION 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: 
5:12-cv-00636 Search Pacer
Court Type: 
Federal
US District Court: 
Eastern District of North Carolina
Date Filed: 
Sep 28 2012

"WESTCHESTER’S REQUEST FOR DECLARATORY RELIEF

71. Westchester incorporates each of the preceding paragraphs into its request for declaratory relief as iffully set out herein.

72. Westchester is entitled to a declaration that it is not obligated to defend or indemnify Clancy or the Joint Venture from any “claim” arising out of the construction of the Project. joint venture is not an insured.

73. As noted above, the Joint Venture is not an Insured.

74. The Joint Venture is not listed in the Declarations as a Named Insured.

75. No provision of the Policy including the Joint Venture endorsement extends coverage to the Joint Venture.

76. Because the Joint Venture is not an insured under the Policy, Westchester is entitled to a declaration that it has no obligation to defend or indemnify the Joint Venture. no claim against clancy.

77. To fall within the Insuring Agreement of the Professional Liability Coverage Endorsement, there must be a “claim” against an Insured.

78. Clancy is the only Named Insured.

79. The Joint Venture is not a Named Insured.

80. The Joint Venture is not an insured by virtue of the Joint Venture Endorsement.

81. The Joint Venture is not an insured by virtue of any other Policy provision.

82. The Joint Venture is not Clancy.

83. A claim against the Joint Venture is not a claim against Clancy.

84. Clancy has not provided any evidence or information to Westchester suggesting that Capstone or any other individual or entity is making or intends to make a Claim against Clancy.

85. Because there is no claim against an Insured, Westchester has no obligation to defend or indemnify Clancy.

86. To fall within the applicable Insuring Agreement, Clancy must become “legally obligated to pay” sums “as damages” because of “claim(s).”

87. Although there is no claim against Clancy, Capstone’s requests of the Joint Venture – even if they could be interpreted as requests of Clancy – do not constitute damages.

88. Instead, Capstone asked the Joint Venture to perform under its contract with Capstone, and it appears that the Joint Venture did perform.

89. Any pass-through loss that Clancy might sustain by virtue of its participation in the Joint Venture is not and will not constitute damages Clancy is obligated to pay to a third party.

90. Because there are no damages that Clancy has or will become legally obligated to pay, Westchester has no obligation to defend or indemnify Clancy.

91. The contemplated mediation process is not a “suit” against Clancy.

92. The Policy only obligates Westchester to defend Clancy in the event of a suit.

93. The contemplated mediation process does not fall within the definition of a “suit” because it is not an “alternative dispute resolution proceeding in which … damages are claimed” against Clancy.

94. The contemplated mediation process does not fall within the definition of a “suit” because it is not an “alternative dispute resolution proceeding … to which” Clancy is submitting with Westchester’s consent.

95. Instead, the contemplated mediation process was initiated by the Joint Venture for the purpose of recouping its losses against its subcontractors.

96. Capstone, whom Clancy contends has made a claim against the Joint Venture, is not participating in the process.

97. No claim for damages against Clancy will be compromised or settled at the contemplated mediation.

98. Westchester is, therefore, entitled to a declaration that it is not obligated to defend Clancy in connection with the mediation process.

99. Westchester is also entitled to a declaration that it is not obligated to indemnify Clancy as part of the mediation process.

100. As noted above, there is no claim against Clancy.

101. With that said, were a proper claim to be brought against Clancy in connection with the foundation settlement issue, it would still be barred by the Policy’s Contractual Liability Exclusion.

102. The Joint Venture’s liability to Capstone is defined by the construction contract between the Joint Venture and Capstone.

103. As a joint venture participant, Clancy’s liability to the joint venture is defined by the Joint Venture Agreement.

104. If Capstone were making a claim for damages against the Joint Venture, Clancy would only be liable for damages assessed against the Joint Venture to the extent that it assumed liability within the Joint Venture Agreement.

105. Because the only potential claim that might be asserted against Clancy arises from liability assumed by Clancy under the Joint Venture Agreement, Westchester is entitled to a declaration that it has no obligation to defend or indemnify Clancy.

106. As noted above, there is no claim against Clancy.

107. With that said, were a proper claim to be brought against Clancy in connection with the foundation settlement issue, it still would be barred by the Policy’s Expressed Warranties and Guarantees Exclusion.

108. The Joint Venture’s liability to Capstone is defined by the construction contract between the Joint Venture and Capstone.

109. That construction contract contains numerous express warranties and guarantees – most notably that the project would perform as designed and intended.

110. To the extent that Capstone has made a claim against the Joint Venture, that claim arises out of the express warranties and guarantees in the construction contract.

111. Because the only potential claim that might be asserted against Clancy would arise out of the same express warranties and guarantees, Westchester is entitled to a declaration that it has no obligation to defend or indemnify Clancy.

112. Again, there is no claim against Clancy.

113. With that said however, the amounts sought in connection with the anticipated mediation process are amounts incurred by the Joint Venture to complete the Project.

114. Amounts incurred by the Joint Venture to complete the Project are the internal expenses of the Joint Venture.

115. To the extent Clancy contends it is liable for its share of the Joint Venture’s internal expenses, the Policy’s internal expenses exclusions bars coverage for such a claim.

116. Westchester is, therefore, entitled to a declaration that it has no obligation to defend or indemnify Clancy.

117. The Joint Venture has entered into an agreement with Capstone by which Capstone permitted the Joint Venture to complete the Project subject to certain financial and other accommodations.

118. Upon information and belief, Capstone has resolved any claim it might have made or might make against the Joint Venture.

119. If Clancy contends it is liable to pay amounts to Capstone by virtue of the Joint Venture’s agreement with Capstone, such amounts are due under a settlement agreement that was entered into without Westchester’s consent or knowledge.

120. Westchester is not obligated to indemnify or reimburse Clancy or the Joint Venture for a settlement with Capstone that was negotiated without Westchester’s consent, and, therefore, Westchester is entitled to a declaration that it has no obligation to indemnify Clancy.

WESTCHESTER’S ALTERNATIVE CLAIM FOR BREACH OF CONTRACT

121. Westchester incorporates each of the preceding paragraphs by reference as if fully set out and realleged herein.

122. The Policy is a contract between Clancy and Westchester.

123. If this Honorable Court were to conclude that the Joint Venture is an insured or if this Honorable Court were to conclude that a claim against the Joint Venture is a claim against Clancy, then the Joint Venture’s settlement of Capstone’s claims against it constitutes a breach of the Policy’s voluntary payment provision and also a breach of Clancy’s obligation to cooperate under the Policy.

124. If this Honorable Court were to conclude that the Joint Venture is an insured or if this Honorable Court were to conclude that a claim against the Joint Venture is a claim against Clancy, then the Joint= Venture’s settlement of Capstone’s claims against it constitutes a compromise of Westchester’s subrogation rights against other potentially liable individuals and entities in breach of the Policy’s subrogation provisions.

125. If this Honorable Court were to conclude that the Joint Venture is an insured or if this Honorable Court were to conclude that a claim against the Joint Venture is a claim against Clancy, then Clancy has breached its contract with Westchester and Westchester is entitled to a declaration that it has no obligation to cover Clancy because of Clancy’s material breach of contract.

126. If this Honorable Court were to conclude that the Joint Venture is an insured or if this Honorable Court were to conclude that a claim against the Joint Venture is a claim against Clancy, then Westchester is entitled to damages exceeding the jurisdictional amount as a result of Clancy’s breach of contract.

WHEREFORE, Westchester respectfully requests of this Honorable Court the following:
a. A declaration that the Joint Venture is not an Insured;
b. A declaration that there is no claim against Clancy;
c. A declaration that Westchester is not obligated to defend Clancy;
d. A declaration that Westchester is not obligated to participate in the ongoing mediation process;
e. A declaration that Westchester is not obligated to indemnify Clancy;
f. A declaration that Clancy has breached its contract with Westchester;
g. In the alternative, an award of damages against Clancy for Clancy’s breach of contract;
h. An award of the costs and fees incurred by Westchester in the pursuit and prosecution of this action;
i. A trial by jury of all issues so triable; and
j. An award of such other legal or equitable relief as this Honorable Court may deem 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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