ACE American Insurance Company filed a complaint against Travelers Indemnity Company of Connecticut seeking declaratory relief and damages for Travelers' failure to defend their mutual insured, Savannah Properties Associates, in an underlying lawsuit. ACE provided Savannah's defense under its policy but is seeking contribution from Travelers, whose policies were also in effect. While Travelers acknowledged coverage, it failed to reimburse ACE for defense costs exceeding $900,000 in the resolved lawsuit. ACE requests Travelers be declared in breach of its duty to defend and liable for the defense costs and statutory penalties.
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ACE AMERICAN INSURANCE COMPANY v. TRAVELERS INDEMNITY COMPANY OF CONNECTICUT complaint
ACE American Insurance Company filed a complaint against Travelers Indemnity Company of Connecticut seeking declaratory relief and damages for Travelers' failure to defend their mutual insured, Savannah Properties Associates, in an underlying lawsuit. ACE provided Savannah's defense under its policy but is seeking contribution from Travelers, whose policies were also in effect. While Travelers acknowledged coverage, it failed to reimburse ACE for defense costs exceeding $900,000 in the resolved lawsuit. ACE requests Travelers be declared in breach of its duty to defend and liable for the defense costs and statutory penalties.
ACE American Insurance Company filed a complaint against Travelers Indemnity Company of Connecticut seeking declaratory relief and damages for Travelers' failure to defend their mutual insured, Savannah Properties Associates, in an underlying lawsuit. ACE provided Savannah's defense under its policy but is seeking contribution from Travelers, whose policies were also in effect. While Travelers acknowledged coverage, it failed to reimburse ACE for defense costs exceeding $900,000 in the resolved lawsuit. ACE requests Travelers be declared in breach of its duty to defend and liable for the defense costs and statutory penalties.
TRAVELERS INDEMNITY COMPANY OF CONNECTICUT JURY TRIAL DEMANDED Defendant.
ACE AMERICAN INSURANCE COMPANYS COMPLAINT AND REQUEST FOR DECLARATORY JUDGMENT Plaintiff ACE American Insurance Company (Plaintiff or ACE), as subrogee of Savannah Properties Associates, L.P. (Savannah), files this Complaint and Request for Declaratory J udgment against Defendant Travelers Indemnity Company of Connecticut (Travelers) and in support of its Complaint, alleges as follows: I. NATURE OF THE ACTION 1. ACE brings this action for contribution and breach of contract for Travelers failure to defend Savannah and declaratory relief pursuant to 28 U.S.C. 2201 et seq. seeking a judicial declaration that Travelers breached its duty to defend Savannah against the claims asserted against it in the underlying lawsuit styled: D.R. Horton Texas, Ltd., et al. v. Savannah Properties Associates L.P., et al., in the 362 nd District Court of Denton County, Texas, Cause No. 2009-40118-362 (D.R. Horton lawsuit). (A copy of Plaintiffs Original Petition is attached hereto as Exhibit A). II. PARTIES 2. ACE is incorporated and has its principal place of business in Pennsylvania. Case 4:14-cv-00334-ALM Document 1 Filed 05/23/14 Page 1 of 7 PageID #: 1 2
3. Travelers is incorporated and has its principal place of business in Connecticut. It is licensed to do business in Texas. III. JURISDICTION AND VENUE 4. The jurisdiction of this Court is based upon complete diversity of citizenship pursuant to 28 U.S.C. 1332(a). The amount in controversy, exclusive of interest and costs, exceeds the sum of $75,000. 5. Venue is proper in the Northern District of Texas pursuant to 28 U.S.C. 1391(a) and (c) because the underlying lawsuit was in Denton County, involving property in Denton County, and Travelers failure to defend Savannah took place in Denton County. 6. An actual case or controversy of a justiciable nature exists between ACE and Travelers concerning its breach of the duty to defend Savannah under Travelers liability policies. IV. FACTS A. THE POLICIES 7. ACE issued a general liability policy that named Savannah as an insured, which was in effect from March 28, 2005 to April 1, 2006 (policy number G21626715) (the ACE Policy). (A copy of the ACE Policy is attached hereto as Exhibit B). 8. Travelers issued three general liability policies that named Savannah as an insured from December 31, 2003 through March 14, 2005 as follows: December 31, 2003 to December 31, 2004 (policy No. Y-660-709K4903- TCT-03); December 31, 2004 to February 28, 2005 (policy No. Y-660-709K4903-TCT- 04); and Case 4:14-cv-00334-ALM Document 1 Filed 05/23/14 Page 2 of 7 PageID #: 2 3
February 28, 2005 to March 14, 2005 (policy No. Y-660-709K4903-TCT-05) (collectively, the Travelers Policies). (A copy of the Travelers Policies is attached hereto as Exhibit C). B. THE UNDERLYING LAWSUIT 9. In the D.R. Horton lawsuit, Plaintiffs alleged that the Defendants represented that the soil on the lots sold to Plaintiffs was properly prepared for residential construction purposes, but failed to properly prepare the soil. Plaintiffs claimed that Savannah breached its contracts with Plaintiffs and breached express and common law implied warranties. Plaintiffs also alleged that the Defendants were negligent. 10. Shortly after the D.R. Horton lawsuit was filed, ACE was notified of this lawsuit and it provided a defense to Savannah under a reservation of rights pursuant to the ACE Policy. 11. On May 24, 2010, Savannah tendered the D.R. Horton lawsuit to Travelers, seeking a defense pursuant to the Travelers Policies. Travelers did not respond until J anuary 2013, at which time Travelers agreed that the Travelers Policies provided coverage to Savannah for the claims asserted against it in the D.R. Horton lawsuit and agreed to join ACE in providing a defense to Savannah in that lawsuit. 12. ACE spent approximately $902,211.09 to defend Savannah in the D.R. Horton lawsuit, which was resolved in favor of Savannah and was recently affirmed on appeal. 13. Although Travelers agreed over a year ago to join ACE in providing a defense to Savannah in the D.R. Horton lawsuit, Travelers failed to pay for any of Savannahs defense fees and costs. C. THE COVERAGE DISPUTE 14. Both ACE and Travelers had an obligation under their respective policies to provide a defense to Savannah for the claims made against it the D.R. Horton lawsuit. Travelers Case 4:14-cv-00334-ALM Document 1 Filed 05/23/14 Page 3 of 7 PageID #: 3 4
has readily admitted it had such an obligation, and on April 15, 2013, Travelers confirmed in writing that it would defend Savannah and share in Savannahs defense along with ACE. 15. To date, however, Travelers has not paid for any of the defense fees or costs associated with defending Savannah in the D.R. Horton lawsuit, nor has it reimbursed ACE for any such defense fees or costs ACE incurred in defending Savannah, despite numerous requests from ACE and Savannahs defense counsel. 16. ACE now seeks reimbursement from Travelers for its share of defense fees and costs Travelers was obligated to pay on behalf of Savannah under the Travelers Policies, yet failed to do. V. CONTRIBUTION 17. ACE realleges and incorporates by reference paragraphs 1-16. 18. ACE was required to retain the legal services of defense counsel and incurred attorneys fees on behalf of Savannah that were and are the obligation of Travelers under the Travelers Policies. 19. Pursuant to its contractual and equitable subrogation rights, ACE seeks recovery from Travelers for the amounts paid in the defense of Savannah in the D.R. Horton lawsuit. VI. COUNT I DECLARATORY RELIEF 20. ACE realleges and incorporates by reference paragraphs 1 19. 21. There is a real and immediate controversy between Plaintiff, as subrogees of Savannah, and Travelers with respect to the obligations of Travelers under the Travelers Policies to defend Savannah and reimburse ACE for defense fees and costs it expended in defending Savannah in the D.R. Horton lawsuit. Case 4:14-cv-00334-ALM Document 1 Filed 05/23/14 Page 4 of 7 PageID #: 4 5
22. Pursuant to 28 U.S.C. 2201, ACE requests the Court declare that Travelers was obligated to defend Savannah in the D.R. Horton lawsuit and that it breached that duty by failing to pay its share of defense costs in defending Savannah in that lawsuit. VII. COUNT II BREACH OF CONTRACT 23. ACE realleges and incorporates by reference paragraphs 1-22. 24. The allegations against Savannah in the D.R. Horton lawsuit triggered a duty to defend under the Travelers Policies and, therefore, obligated Travelers to defend Savannah in the D.R. Horton lawsuit under the terms of the Travelers Policies. 25. Additionally, Travelers agreed in writing to provide a defense to Savannah in the D.R. Horton lawsuit. 26. Travelers breached the Travelers Policies and its written agreement by failing to pay for any of the defense fees or costs incurred in defending Savannah in the D.R. Horton lawsuit. VIII. COUNT III - PROMPT PAYMENT VIOLATION
27. ACE realleges and incorporates by reference paragraphs 1-26. 28. A claim for defense costs is a first-party claim for purposes of the prompt payment statute. Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 20 (Tex. 2007) (the prompt payment statute, formerly article 21.55, and now codified as sections 542.051-.061 of the Texas Insurance Code, may be applied when an insurer wrongfully refuses to promptly pay a defense benefit owed to the insured). A prompt payment claim combines an insurers contractual and statutory liability into one cause of action. Harris v. Am. Prot. Ins. Co., 158 S.W.3d 614, 621 (Tex. App.-Fort Worth 2005, no pet.). Because Travelers breached its contract by refusing to accept the tender of Savannahs defense, Travelers is liable to ACE for the 18% Case 4:14-cv-00334-ALM Document 1 Filed 05/23/14 Page 5 of 7 PageID #: 5 6
penalty on the defense costs ACE has incurred in protecting the interests of Savannah in the D.R. Horton lawsuit. IX. REQUEST FOR ATTORNEYS' FEES AND COSTS 29. ACE requests this Court award Plaintiff its reasonable and necessary attorneys fees and costs incurred as allowed by Sections 38.001 and 37.009 of the Texas Civil Practice & Remedies Code. ACE further requests that the Court award any other relief to which it may be justly entitled. X. JURY DEMAND 30. ACE demands a trial by jury on all issues of fact. PRAYER For the foregoing reasons, ACE prays that this Court grant the relief requested above, its reasonable and necessary attorneys fees, costs of court and any other relief to which ACE may be entitled. Respectfully submitted,
By: /s/ Edwin G. Preis, Jr. Edwin G. Preis, J r. State Bar No. 24029069 PREIS & ROY, PLC 102 Versailles Blvd., Suite 400 Post Office Drawer 94-C Lafayette, Louisiana 70509 Tel: (337) 237-6062 Fax: (337) 237-9129 egp@preisroy.com
ATTORNEY FOR ACE AMERICAN INSURANCE COMPANY
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OF COUNSEL:
Marjorie C. Nicol State Bar No.: 00784684 PREIS & ROY, PLC 24 Greenway Plaza, Suite 2050 Houston, Texas 77046 Tel: (713) 355-6062 Fax: (713) 572-9129 mnicol@preisroy.com
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