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[FILED;

NEW YORK COUNTY CLERK

08/10/20111

INDEX NO. 652232/2011 RECEIVED NYSCEF: 08/10/2011

NYSCEF DOC. NO. 1

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK

AMERICAN GUARANTEE & LIABILITY COMPANY, Plaintiff, Index No.: Date Purchased: ILLINOIS UNION INSURANCE COMPANY, NY A TO Z CONSTRUCTION GROUP INC, Defendants.

SUMMONS

Plaintiff Designates New York County as the place of trial The basis of venue is the residence of Plaintiff

To:

Illinois Union Insurance Company 525 W. Monroe Street, Suite 400 Chicago, IL 60661 c/o New York Secretary of State Office of the Department of State One Commerce Plaza, 99 Washington Avenue Albany, NY 12231 YOU ARE SUMMONED to answer the Complaint in this action and to serve a copy of

your Answer, or, if the Complaint is not served with this Summons, to serve a Notice of Appearance, on the plaintiffs attorneys within twenty (20) days after the service of this Summons, exclusive of the day of service (or within thirty (30) days after the service is complete if this Summons is not personally delivered to you within the State of New York); and in case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the Complaint. Plaintiff designates New York County as the place of trial. The basis of venue is the residence of Plaintiff American Guarantee & Liability Company.

Dated: New York, NY August 10,2011

COUGHLIN DUFFY LLP By: Adam M. Smith, Esq. Wall Street Plaza 88 Pine Street, 5 th Floor New York, New York 10005 (212)483-0105 Attorneys for Plaintiff, American Guarantee & Liability Insurance Company

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK

AMERICAN GUARANTEE & LIABILITY COMPANY, Plaintiff, v. ILLINOIS UNION INSURANCE COMPANY, NY A TO Z CONSTRUCTION GROUP INC, Defendants. Index No.: Date Purchased:

SUMMONS

Plaintiff Designates New York County as the place of trial The basis of venue is the residence of Plaintiff

To:

NY A to Z Construction Group, Inc. 216-04 Jamaica Ave. Queens Village, NY 11428 YOU ARE SUMMONED to answer the Complaint in this action and to serve a copy of

your Answer, or, if the Complaint is not served with this Summons, to serve a Notice of Appearance, on the plaintiffs attorneys within twenty (20) days after the service of this Summons, exclusive of the day of service (or within thirty (30) days after the service is complete if this Summons is not personally delivered to you within the State of New York); and in case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the Complaint. Plaintiff designates New York County as the place of trial. The basis of venue is the residence of Plaintiff American Guarantee & Liability Company.

Dated: New York, NY August 10,2011

COUGHLIN DUFFY LLP By: Adam M. Smith, Esq. Wall Street Plaza 88 Pine Street, 5th Floor New York, New York 10005 (212)483-0105 Attorneys for Plaintiff, American Guarantee & Liability Insurance Company

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK

AMERICAN GUARANTEE & LIABILITY COMPANY, Plaintiff,

Index No. COMPLAINT

ILLINOIS UNION INSURANCE COMPANY, NY A TO Z CONSTRUCTION GROUP INC, Defendants. Plaintiff, American Guarantee & Liability Insurance Company (hereinafter "American Guarantee"), by way of Complaint for Declaratory Judgment and for Damages against Defendant, Illinois Union Insurance Company (hereinafter "Illinois Union") alleges as follows:

NATURE OF THE ACTION 1. This action arises from a tort claim filed and pending in the Supreme Court of the

State of New York, County of Kings, entitled Rapalo v. MJRB Kings Highway Realty LLC, NY A to Z Construction Group, Inc., Index No. 7314/09 ("Rapalo Action"). 2. In this action, American Guarantee seeks a declaration that Illinois Union, under

its primary policy, (1) improperly denied a defense for the Rapalo Action to American Guarantee's and Illinois Union's mutual insured, NY A To Z Construction Group, Inc. ("NY A to Z"); and (2) must defend and indemnify NY A To Z for the Rapalo Action. In addition, American Guarantee seeks damages caused by Illinois Union's breach of contract, which necessitated American Guarantee incurring costs associated with the defense of NY A to Z in the Rapalo Action.

THE PARTIES 3. Plaintiff American Guarantee is a New York Corporation engaged in the

insurance business with a statutory home office located at One Liberty Plaza, 165 Broadway, 53rd Floor, New York, New York 10006, and a main administrative office or principal place of business located at 1400 American Lane, Schaumbcrg, Illinois 60196. It is authorized to transact business and has transacted business in the State of New York. 4. Upon information and belief, Illinois Union is a Pennsylvania Corporation with its

principal place of business located at 525 W. Monroe Street, Suite 400, Chicago, IL 60661 that is authorized to, and does, engage in the business of insurance in New York. 5. Upon information and belief, NY A To Z is a New York Corporation with its

principal place of business located at 216-04 Jamaica Ave, Queens Village, NY 11428 that is authorized to, and does, engage in the business of construction in New York. 6. NY A to Z is named in this action as an interested party because it is an insured

under the Illinois Union primary policy. JURISDICTION AND VENUE 7. This Court has jurisdiction under CPLR 3001, which provides for exclusive

jurisdiction over declaratory judgment proceedings. An actual controversy exists among the parties to this action pertaining to the interpretation of the terms and conditions of insurance policies issued by American Guarantee and Illinois Union to NY A to Z. 8. 301 and 302. 9. Venue lies in the Supreme Court of New York, County of New York, under This Court has personal jurisdiction over defendants pursuant to CPLR Sections

CPLR Section 503(a) as at least one of the parties resides in the County of New York.

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THE RAPALO ACTION 10. This action arises from a lawsuit that was filed by Luis Rapalo ("Rapalo") in the

Supreme Court of the Stale of New York, County of Kings, entitled Rapalo V. MJRB Kings Highway Realty LLC, NY A To Z Construction Group, Inc., Index No. 7314/09 (the "Rapalo Action"). 11. In the Rapalo Action, plaintiff asserted personal injury claims against MJRB

Kings Highway Realty LLC (hereinafter "MJRB"), and NY A To Z arising from an alleged accident that occurred on January 30, 2009, at a construction project located at 1623 Kings Highway, Brooklyn, New York (the "Project"). 12. accident. 13. In connection with the Project, MJRB hired NY A to Z to serve as general MJRB was the owner of the property at 1623 Kings Highway at the time of the

contractor on the construction site. 14. In connection with the project, MJRB and/or NY A to Z hired an unknown entity,

of which Mr. Rapalo was an employee, to perform construction services. 15. According to the complaint filed in the Rapalo Action, Mr. Rapalo was working

on an outside wooden scaffold when the scaffold broke causing him to fall approximately two stories. 16. Mr. Rapalo claimed that he has sustained serious and severe injuries as a result of

the accident including, but not limited to, a fractured skull. THE INSURANCE POLICIES 17. American Guarantee issued umbrella policy AUC 5327456-05 to IRF

Construction Group, a risk purchasing group, covering the period from October 1, 2008, to

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October 1, 2010, with limits of $5 million per occurrence and $5 million in the aggregate, in excess of a $1 million primary policy (the "American Guarantee Policy.") 18. NY A to Z was a "Participant/Named Insured" for the period October 2, 2008 to

March 7, 2009 on the American Guarantee Policy 19. Illinois Union issued commercial general liability policy number G224010946001

to NY A to Z effective March 7, 2008 to March 7, 2009 with limits of $1 million per occurrence, and $2 million in the aggregate (the "Illinois Union Policy"). 20. policy. 21. The Illinois Union Policy includes the following policy language: SECTION I. COVERAGES COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY 1. Insuring Agreement a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. 22. The Illinois Union Policy further provides: SECTION IV - COMMERCIAL GENERAL LIABILITY CONDITIONS Duties in the event of Occurrence, Offense, Claim or Suit You must see to it that we are notified as soon as practicable of an "occurrence" or an offense which may result in a claim. . . . You and any other involved insured must: Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or "suit"; The Illinois Union Policy is primary and underlies the American Guarantee

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CLAIM CORRESPONDENCE RELATED TO THE RAPALO ACTION 23. Upon information and belief, MJRB, through a letter by Ace Westchester

Specialty Group, dated February 27, 2009, tendered a claim for the alleged accident to Illinois Union and NY A to Z. 24. Illinois Union received that February 27, 2009 tender letter from MJRB no later

than on March 10,2009. 25. On March 11, 2009, Handwerger and Sons ("H&S"), NY A to Z's broker, faxed a

letter to American Guarantee stating that they are putting the umbrella insurer on notice because the insured has been brought into a lawsuit involving injury to an employee of a subcontractor. 26. By letter dated March 27, 2009, Illinois Union disclaimed coverage to NY A to Z

for the accident on the grounds of late notice of occurrence. 27. follows: We call your attention to the fact that the alleged occurrence took place on or about January 20 [sic] 2009. Our first notice of this injury claim was on or about March 10, 2009 via a tender letter from MJRB Kings Highway Realty, LLC. Accordingly, it is evident that NY A to Z Construction Group, Inc. has violated the above stated conditions of the ILU policy regarding notice of an occurrence; ILU hereby declines coverage to NY A to Z for this matter. 28. On or about August 20, 2009, NY A to Z, through its broker, provided Illinois Illinois Union's March 27 letter to NY A to Z provided, in relevant part, as

Union with a copy of the Summons and Complaint in the Rapalo Action. 29. On or about September 18, 2009, Illinois Union again disclaimed coverage, this

time based upon late notice of claim in violation of the terms and conditions of the Illinois Union Policy.

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30.

On November 13, 2009, American Guarantee wrote to Illinois Union to demand

that it immediately withdraw its denial of coverage in this matter and undertake the defense of NY A to Z. 31. The November 13, 2009 letter from American Guarantee stated that Illinois Union

erred in its refusal to defend NY A to Z in the matter. The letter stated in relevant part: [I]t is [American Guarantee's] understanding that NY A to Z alleges it became aware of the occurrence at the same time as Illinois Union. If this is accurate, and we have seen nothing yet to indicate otherwise, NY A to Z did not violate its obligation under the Illinois Union policy. Accordingly, we believe there was insufficient information on which to base Illinois Union's disclaimer. 32. In addition, the letter stated that if American Guarantee is required to defend NY

A to Z, it will seek reimbursement of all fees and costs incurred with respect to the defense of NY A to Z due to Illinois Union's denial. 33. Throughout the commencement of the Rapalo Action, and despite the explicit

request from American Guarantee, Illinois Union has not undertaken a defense of NY A to Z as required under their policy. 34. On November 13, 2009, in light of the failure of Illinois Union to undertake a

defense of NY A to Z, American Guarantee agreed to defend NY A to Z in regards to the Rapalo Action, subject to a full and complete reservation of rights. 35. American Guarantee has retained counsel to defend NY A to Z in the Rapalo

Action subject to a full and complete reservation of rights. AS AND FOR A FIRST CAUSE OF ACTION FOR DECLARATORY JUDGMENT AGAINST ILLINOIS UNION 36. American Guarantee repeats and realleges each and every allegation in the

foregoing paragraphs as if fully set forth herein.

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37.

The Illinois Union Policy obligates Illinois Union to defend and indemnify NY A

to Z in the Rapalo Action. 38. 39. Illinois Union has improperly denied coverage to NY A to Z. An actual and justiciable controversy exists between NY A to Z, American

Guarantee and Illinois Union regarding Illinois Union's obligation to defend and indemnify NY A to Z, up to and including the policy limits, for any settlement or judgment in the Rapalo Action. 40. As a result of Illinois Union's wrongful disclaimer, American Guarantee has

incurred and will continue to incur costs and fees in connection with the Rapalo Action. AS AND FOR A SECOND CAUSE OF ACTION FOR DAMAGES AGAINST ILLINOIS UNION 41. Plaintiff repeats and realleges each and every allegation in the foregoing

paragraphs as if fully set forth herein. 42. Illinois Union, as the primary insurer of NY A to Z, has a duty to defend NY A to

Z to the extent of their policy limits in regards to the Rapalo Action. 43. Illinois Union breached its obligations under its policy by refusing to defend NY

A to Z in the Rapalo Action. 44. American Guarantee has suffered damages as a result of Illinois Union's denial in

an amount to be proven at trial but not less than the amount that American Guarantee paid for the defense of NY A to Z when Illinois Union improperly denied coverage. 45. An actual and justiciable controversy exists between American Guarantee and

Illinois Union regarding Illinois Union's failure to defend NY A to Z in the Rapalo Action. WHEREFORE, Plaintiff American Guarantee respectfully requests that the Court enter a judgment:

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Declaring that: (a) Illinois Union improperly denied a defense for the Rapalo Action to American Guarantee's and Illinois Union's mutual insured, NY A to Z; and (b) Illinois Union must defend and indemnify NY A to Z for the Rapalo Action; Awarding money damages to American Guarantee from Illinois Union for all defense costs incurred by American Guarantee in the defense of NY A to Z in the Rapalo Action, as well as all attorneys' fees, costs, and expenses that it has incurred in prosecuting this action; and For such other and further relief as the Court deems just and proper. Dated; New York, New York August 10, 2011
COUGHLIN DUFFY

By: Adam M. Smith, Esq, Wall Street Plaza 88 Pine Street, 28th Floor New York, New York 10005 (212)483-0105 Attorneys for Plaintiff, American Guarantee & Liability Insurance Company

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