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MCCARTHY BUILDING COMPAINIES INC. v. ACE AMERICAN INSURANCE COMPANY complaint

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.

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COMPLAINT
LA01\KronK\547968.3
Kelley Drye & Warren LLP
Michael J. O’Connor (State Bar No. 090017)
Ken D. Kronstadt (State Bar No. 259996)
10100 Santa Monica Boulevard
Twenty-Third Floor
Los Angeles, CA 90067-4008
Telephone: (310) 712-6100
Facsimile: (310) 712-6199
moconnor@kelleydrye.com
kkronstadt@kelleydrye.com
Attorneys for Plaintiff McCarthy Building
Companies, Inc.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
MCCARTHY BUILDING COMPANIES,
INC., a Missouri Corporation,
Plaintiff,
v.
ACE AMERICAN INSURANCE
COMPANY, a Pennsylvania Corporation,
Defendants.
Case No.
COMPLAINT FOR:
(1) BREACH OF CONTRACT
(2) DECLARATORY RELIEF
DEMAND FOR JURY TRIAL
Case 2:15-cv-02924-CAS-AGR Document 1 Filed 04/20/15 Page 1 of 8 Page ID #:1
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COMPLAINT
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Plaintiff McCarthy Building Companies, Inc. (“McCarthy”) for its complaint
against Defendant ACE American Insurance Company (“ACE”), alleges as follows:
NATURE OF THE CASE
1. This action arises from ACE’s wrongful failure to honor its obligations
to McCarthy, its insured under an “ACE Construction Risk Policy” issued by ACE
and providing insurance coverage for, inter alia, the Division 13 Bus Maintenance
and Operations Facility (the “Project”) located at 920 North Vignes Street, Los
Angeles, California, for which McCarthy was the general contractor. In March
2014, during the Policy period, the Project was damaged due to a partial collapse of
a concrete deck at the Project site. McCarthy has requested that ACE confirm that
its claim is covered under the policy and that ACE will reimburse McCarthy for all
amounts that McCarthy has paid or will become obligated to pay arising from the
property damage underlying McCarthy’s claim. Despite its obligations to
McCarthy, ACE unjustifiably refused to honor McCarthy’s claim for the damage to
the Project. By this lawsuit, McCarthy seeks the insurance coverage to which it is
entitled under the Policy.
PARTIES
2. At all times herein mentioned, McCarthy was and is a corporation duly
organized and existing under the laws of the State of Missouri, authorized to
conduct business in the State of California.
3. McCarthy is informed and based thereon alleges that ACE is an
insurance company organized under the laws of the State of Pennsylvania, which is
engaged in, among other things, the business of selling policies of insurance,
including in the State of California. McCarthy is informed and based thereon
alleges that ACE’s principal place of business is located in Philadelphia,
Pennsylvania.
/ / /
Case 2:15-cv-02924-CAS-AGR Document 1 Filed 04/20/15 Page 2 of 8 Page ID #:2
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COMPLAINT
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JURISDICTION AND VENUE
4. The jurisdiction of this Court over the subject matter is predicated on
28 U.S.C. §1332. The amount in controversy exceeds $75,000, exclusive of interest
and costs.
5. Venue is proper in this district pursuant to 28 U.S.C. §1391(a)(2).
THE POLICY
6. In April 2012, for good and valuable consideration, ACE issued a
Construction Risk Policy, policy number I210643361 001 (the “Policy”), naming
McCarthy as an insured. The Policy provided insurance coverage for, inter alia, the
Project, for which McCarthy was hired by the Los Angeles County Metropolitan
Transit Authority (“L.A. Metro”) to act as the general contractor, for the period from
July 23, 2012 to June 23, 2014 up to the total Project value at the time of loss of
$73,364,803.
7. The Policy’s “Insuring Agreement” insures against “direct physical
Loss to property of every kind and description intended to become a permanent part
of, or be consumed in, the construction, fabrication, assembly, installation, erection
or alteration of the Insured Project,” subject to any applicable exclusions. Among
other things, the Policy requires ACE to pay McCarthy the cost to repair or replace
the insured property damage with material of like kind or quality, less betterment,
including contractor’s profit and reasonable overhead. A true and correct copy of
the Policy is attached hereto as Exhibit A, and is incorporated herein by this
reference.
UNDERLYING LOSS/DAMAGE AND TENDER
8. On or about May 14, 2012, McCarthy contracted with L.A. Metro to
construct the Project.
9. The Project consisted of constructing a bus maintenance, operations,
and service facility designed to accommodate a fleet of two hundred buses located
Case 2:15-cv-02924-CAS-AGR Document 1 Filed 04/20/15 Page 3 of 8 Page ID #:3
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COMPLAINT
LA01\KronK\547968.3
in downtown Los Angeles, including a maintenance building, multi-level structured
parking garage, and maintenance and transportation offices and support areas.
10. On March 28, 2014, during both the Policy period and the course of
scheduled construction, the Project was damaged due to a partial collapse of a
concrete deck at the Project site. The partial collapse of the concrete deck caused
direct physical damage to the concrete deck and to other portions of the Project.
The damage to the Project falls within the Policy’s Insuring Agreement and is not
subject to any exclusions in the Policy.
11. McCarthy has duly tendered to ACE a claim for all Policy benefits due
McCarthy as a result of the partial collapse of the concrete deck (the “Claim”).
12. McCarthy has further complied with all of the applicable terms and
conditions under the Policy and timely and properly notified ACE of the damage
that resulted from the events described above.
LOSS ADJUSTMENT
13. In June 2014, McCarthy made demand for payment of the Claim to
ACE in a timely and appropriate manner, and McCarthy has timely provided ACE
with all supporting documents and information ACE has requested.
14. ACE had over a year to complete its investigation. At the time of the
filing of this Complaint, however, ACE still has not completed its assessment of the
Claim, nor has it provided a final coverage determination regarding the Claim.
15. During the 13-month period since McCarthy reported the loss/damage
to ACE, McCarthy has consistently complied with all the terms of the Policy.
16. Although ACE has failed to provide McCarthy with a final coverage
determination regarding its Claim, it has taken the position that certain cost
components of McCarthy’s Claim related to delays in completing the Project are not
covered under the Policy.
/ / /
Case 2:15-cv-02924-CAS-AGR Document 1 Filed 04/20/15 Page 4 of 8 Page ID #:4
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COMPLAINT
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17. As a result of the foregoing, ACE has refused to pay for approximately
$2.6 million of McCarthy’s Claim. In doing so, ACE has ignored and/or
misconstrued relevant provisions of, and language contained in, the Policy, and
misconstrued applicable authority relating to the Claims. In short, ACE has refused
to honor its obligations under the Policy, and willfully and without justification
failed to provide the contracted-for coverage.
FIRST CAUSE OF ACTION
(Breach of Contract)
18. McCarthy incorporates by reference the allegations contained in
Paragraphs 1 through 17, as though set forth fully herein.
19. The Policy has been in full force and effect at all relevant times,
insuring McCarthy for the damage caused to the Project.
20. McCarthy timely submitted the Claim to ACE on the grounds that the
cost to repair damage to the Project is covered under the Policy.
21. McCarthy has performed all conditions, terms and covenants it was
required to perform under the Policy, except for those obligations which because of
the breach by ACE of its obligations, it has been excused or prevented from
performing.
22. The Policy obligated ACE to pay, among other things, the cost to repair
or replace the insured property that was damaged with material of like kind and
quality, less betterment, including contractor’s reasonable profit and overhead.
23. ACE’s failure to confirm coverage for the damage to the Project and to
pay McCarthy’s Claim for the cost to repair the damage to the Project is a material
breach of its obligations under the Policy.
24. As a direct and proximate result of ACE’s breach of contract,
McCarthy has been damaged in an amount not less than $2.6 million, which ACE
/ / /
Case 2:15-cv-02924-CAS-AGR Document 1 Filed 04/20/15 Page 5 of 8 Page ID #:5
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COMPLAINT
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has wrongfully refused to pay. McCarthy will seek leave of Court to amend this
Complaint to state the actual amount of damages when known.
SECOND CAUSE OF ACTION
(Declaratory Relief)
25. McCarthy incorporates by reference the allegations contained in
Paragraphs 1 through 24, as though set forth fully herein.
26. An actual controversy has arisen and now exists between McCarthy, on
the one hand, and ACE, on the other hand, relating to their respective legal rights
and obligations under the Policy.
27. McCarthy contends that, pursuant to the terms of the Policy, the
entirety of its Claim for the cost to repair the damage to the Project is covered under
the Policy.
28. Separate and apart from McCarthy’s Claim, L.A. Metro has submitted
its own claim for costs related to the delay in completing the Project, which claim
McCarthy is informed and believes and based thereon alleges, is in an amount
exceeding $1.1 million, which McCarthy will contractually be responsible to pay
L.A. Metro if it is not paid by ACE, which amount ACE has also not agreed to pay.
McCarthy further contends that, pursuant to the terms of the Policy, the entirety to
L.A. Metro’s claim is covered under the Policy.
29. McCarthy is informed and believes and based thereon alleges that ACE
disputes the above-alleged contentions.
30. McCarthy seeks a declaration of the rights and obligations of the parties
under the Policy and specifically seek an adjudication that all of the costs McCarthy
has incurred and will incur to repair the damage to the Project are covered under the
Policy, and that L.A. Metro’s claim for costs related to the delay in completing the
Project that it has incurred and will incur are covered under the Policy.
/ / /
Case 2:15-cv-02924-CAS-AGR Document 1 Filed 04/20/15 Page 6 of 8 Page ID #:6
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COMPLAINT
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PRAYER FOR RELIEF
Wherefore, McCarthy prays for relief as follows:
ON THE FIRST CAUSE OF ACTION
1. For the Court to enter judgment against ACE in an amount not less than
$2.6 million, to be determined according to proof at trial, together with interest
thereon at the maximum statutory rate, fees and costs incurred herein, and such
other and further relief as the Court may deem just and proper.
ON THE SECOND CAUSE OF ACTION
2. For a declaration of rights and obligations of both McCarthy and ACE
under the Policy with respect to the Claim and to L.A. Metro’s claim.
ON ALL CAUSES OF ACTION
3. For all costs of suit incurred herein
4. For any and all further relief which the Court deems proper.
DATED: April 20, 2015 KELLEY DRYE & WARREN LLP
Michael J. O’Connor
Ken D. Kronstadt
By
/s/ Michael J. O’Connor
Michael J. O’Connor
Attorneys for Plaintiff McCarthy Building
Companies, Inc.
Case 2:15-cv-02924-CAS-AGR Document 1 Filed 04/20/15 Page 7 of 8 Page ID #:7
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COMPLAINT
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DEMAND FOR TRIAL BY JURY
McCarthy hereby demands trial by jury on all issues triable by jury.
DATED: April 20, 2015 KELLEY DRYE & WARREN LLP
Michael J. O’Connor
Ken D. Kronstadt
By
/s/ Michael J. O’Connor
Michael J. O’Connor
Attorneys for Plaintiff McCarthy Building
Companies, Inc.
Case 2:15-cv-02924-CAS-AGR Document 1 Filed 04/20/15 Page 8 of 8 Page ID #:8

Published under a Creative Commons License By attribution, non-commercial
date: 
Mon, 2015-04-20
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