Exhibit,Appendix: E.E. Cruz & Company, Inc. v. Starr Surplus Lines Insurance Company

On June 08, 2020 a Exhibit,Appendix was filed involving a dispute between E.E. Cruz & Company, Inc., and Starr Surplus Lines Insurance Company, for Commercial - Insurance in the District Court of New York County.

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FILED: NEW YORK COUNTY CLERK 09/04/2020
01/12/2021 11:56
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PM INDEX NO. 652321/2020
NYSCEF DOC. NO. 4
17 RECEIVED NYSCEF: 09/04/2020
01/12/2021

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
---------------------------------------------------------------- X
E.E. CRUZ & COMPANY, INC.

Plaintiff,
Index No.: 652321/2020

- against -
COMPLAINT

STARR SURPLUS LINES INSURANCE COMPANY

Defendant.
--------------------------------------------------------------- X

Plaintiff, E.E. Cruz & Company, Inc. (“Cruz”), by and through its attorneys, Saxe

Doernberger & Vita, P.C. alleges as follows:

PARTIES

1. Plaintiff, Cruz, is a corporation organized and existing under the laws of the State of New

Jersey, with its principal place of business in New York, New York.

2. Upon information and belief, the Defendant, Starr Surplus Lines Insurance Company

(“Starr”), is a corporation organized and existing under the laws of the State of New York,

with its principal place of business located in New York, New York.

FACTUAL ALLEGATIONS

The Insured Project

3. On or about May 5, 2017, Cruz entered into a design-build contract with the New York

State Department of Transportation (“NYSDOT”) for the repair and replacement of three

bridges in Westchester County, New York – one located on East 3rd Street and Hutchinson

River Parkway in Pelham, New York, and two located on Route 987D over the Saw Mill

River in Greenburgh, New York (“the Project”).

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4. The Project required Cruz to replace the three existing bridge substructures and

superstructures with enlarged structures. The placement of the new structures were

determined, in part, by a hydraulic analysis of the surrounding areas, and required the

construction of a total of twenty (20) drilled shafts, which were to provide the foundation

for the bridges.

5. The installation of the drilled shafts for the Project began on or about March 20, 2018.

6. By mid-November 2018, Cruz had successfully completed installation of seventeen (17)

drilled shafts without incident.

7. On November 16, 2018, Cruz began construction of the eighteenth (18th) drilled shaft (“the

Subject Drilled Shaft”) utilizing the same construction means and methods used on the

prior seventeen drilled shafts. The construction of the Subject Drilled Shaft was completed

as expected.

8. However, quality control testing, which was conducted as a matter of course on the Project,

demonstrated physical damage to the Subject Drilled Shaft as a result of water and/or silt

infiltration.

9. After retesting and consultation with an outside engineering firm, it was determined that

the physical structural integrity of the Subject Drilled Shaft was compromised, requiring

that it be removed and replaced with an enlarged footing on top of micro-piles.

10. As a result of the physical damage to the Subject Drilled Shaft, Cruz incurred significant

additional costs.

11. The Subject Drilled Shaft was on the critical path and resulted in an increased cost to

complete the Project. Cruz had to formulate a new construction schedule that required it

to reorder and re-sequence work on the project. Specifically, construction of pier caps,

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installation of steel beams, construction of the roadway deck, and the opening of the

roadway to traffic could not proceed until the Subject Drilled Shaft was remediated.

12. The remediation measures, impact on sequencing, and increased construction costs were a

direct result of the physical damage sustained to the Subject Drilled Shaft.

The Insurance Policy

13. Starr issued a Construction All Risks Policy (Policy No. SLSTCON11432617) (“Policy”)

to Cruz for the period of June 1, 2017 to April 10, 2019.

14. The Policy insured Cruz against “all risks of direct physical loss of or damage to property

insured while at the location of the INSURED PROJECT . . . occurring during the Period

of Insurance of this Policy.”

15. The Policy defines “PROPERTY INSURED” to include “[a]ll materials, supplies,

equipment, machinery, and other property of a similar nature, being property of the Insured

or of others for which the Insured may be contractually responsible, . . . when used or to

be used in or incidental to the demolition of existing structures, site preparation, fabrication

or assembly, installation or erection or the construction of or alteration, renovation,

rehabilitation of the INSURED PROJECT . . . .”

16. Pursuant to the Policy, “PROPERTY INSURED” also includes “[a]ll scaffolding, form

work, fences, shoring, hoarding, falsework and temporary building all incidental to the

project . . . .”

17. The Policy defines “INSURED PROJECT” as “[t]he work which the Insured is

contractually obligated to perform, the value of which is included in the estimated TOTAL

CONTRACT VALUE, and in accordance with the contract documents being more fully

described and located as set forth in the Declarations.”

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18. The Declarations Page of the Policy defines the “Insured Project” as “the replacement of

three bridges, one on East 3rd Street over Route 907W and the Hutchinson River in Pelham,

NY 190 feet long and the other two on Route 987D over the Saw Mill River in Greenburgh,

NY, 190 feet and 150 feet long.”

19. The Policy is an all-risk policy that covers all fortuitous losses that an insured peril causes,

including increased costs to complete construction of undamaged property, unless such

losses are expressly excluded.

20. The Policy does not contain an exclusion for the increased costs to complete construction

of undamaged property.

The Covered Claims and Starr’s Coverage Position

21. Direct physical damage to the Subject Drilled Shaft caused Cruz to sustain significant

costs, both to remediate the Drilled Shaft and to continue construction on the Project (the

“Covered Losses”).

22. The Insuring Agreement provides coverage for “all risks of physical loss or damage.” The

subject loss includes both costs to repair the Drilled Shaft (i.e., direct physical loss) and

increased costs to continue construction on the Project as a direct result of that physical

loss (i.e., impact costs).

23. Based on the Policy language, the entirety of Cruz’s claim is covered.

24. At all relevant times, the Policy was in full force and effect.

25. Cruz put Starr on notice of the Covered Losses on or about December 20, 2018.

26. Cruz fulfilled all of its conditions and obligations under the Policy.

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27. On November 15, 2019, Cruz produced to Starr a complete analysis and summary, with

backup, of its Covered Losses. To date, despite Cruz’s demand, Starr has failed or declined

to pay any portion of the claim.

28. On November 18, 2019, Starr issued a letter to Cruz requesting additional information,

reserving rights with respect to specific exclusions contained in the Policy, and expressly

indicating that it was not denying coverage.

29. Thereafter, Cruz worked with Starr to produce additional available information in response

to its request, which included technical information regarding the construction of the

Subject Drilled Shaft.

30. On May 12, 2020, approximately six months after the Covered Claim analysis was

provided, Starr, for the first time, denied coverage for the increased costs of construction

arising out of the physical damage to the Subject Drilled Shaft.

31. Starr argued, also for the first time, that Cruz could have purchased specific additional

coverage for the impact costs – “Contractor’s Extra Expense Coverage” – yet declined the

coverage. Starr further asserted that this purported omission from the Policy operated as a

de facto exclusion.

32. The Policy does not contain an exclusion for damages resulting from the increased costs of

construction to undamaged work.

33. “Contractor Extra Expense” is a clarification of existing coverage, not an addition or

extension of “new” coverage, as Starr’s position implied.

34. On investigation, Cruz determined that: (1) Starr routinely provides the “Contractor Extra

Expense” clarification for no additional premium; (2) it was intended to be included on the

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Policy; (3) its omission from the Policy was never identified in the Policy quote or binder

or discussed with Cruz; and (4) Cruz never “declined” to purchase it (as Starr contended).

35. Rather, Starr unilaterally changed the Policy terms – after it was bound and in effect –

without Cruz’s knowledge, by issuing a declarations page that indicated, for the first time

and buried in a laundry list of approximately 20 items, the words “not covered” next to the

phrase “Contractor’s Extra Expense.” The quote, binder, and Policy are attached hereto as

Exhibits A, B, and C respectively.

36. The Contractor’s Extra Expense coverage grant is present in the Policy, and there is no

exclusion for this coverage anywhere in the Policy.

37. To date, despite numerous demands, Starr has issued no payment towards the Covered

Losses.

AS FOR A FIRST CAUSE OF ACTION (DECLARATORY JUDGMENT PURSUANT
TO NY CPLR § 3001)
38. Cruz repeats and realleges all the allegations contained in Paragraphs 1 through 37 as if

fully set forth herein.

39. Pursuant to the terms of the Policy, Starr is required to provide coverage for the physical

damage and delay costs associated with the Covered Losses.

40. A dispute has arisen between Cruz and Starr concerning whether Starr is obligated to

provide coverage under the Policy for the Covered Losses.

41. There now exists an actual, justiciable controversy between Cruz and Starr concerning

Starr’s obligations under the Policy with respect to the Covered Losses.

42. A declaratory judgment, pursuant to NY CPLR § 3001, is necessary and appropriate to

determine the rights and duties of Cruz and Starr under the Policy with respect to the

Covered Losses.

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AS FOR A SECOND CAUSE OF ACTION (BREACH OF CONTRACT AND
COVENANT OF GOOD FAITH AND FAIR DEALING)

43. Cruz repeats and realleges all the allegations contained in Paragraphs 1 through 42 as if

fully set forth herein.

44. The Covered Losses and all resulting damages are covered under the Policy.

45. Starr’s issuance of the Policy to Cruz created a contractual relationship between Cruz and

Starr.

46. Starr has failed, refused, or neglected to pay for the Covered Losses pursuant to the Policy

and is in breach of its contractual obligations to Cruz.

47. Starr’s breach of its obligations to Cruz under the Policy constitutes a breach of contract.

48. Starr’s contractual relationship with Cruz is also subject to the implied-in-law duty to act

fairly and in good faith in order to not deprive Cruz of the benefits of the Policy.

49. Starr has not attempted in good faith to effectuate prompt, fair, and equitable payment of

the Covered Losses, even though coverage for the Covered Losses and all resulting

damages under the Policy have become reasonably clear.

50. Starr’s refusal to pay the Covered Losses is wrongful, without just cause, and in violation

of the terms and conditions of the Policies.

51. Starr’s conduct in intentionally refusing to pay Cruz for all claims arising out of the

Covered Losses was malicious, fraudulent, oppressive, and otherwise reflected a conscious

disregard for Cruz’s rights under the Policy.

52. Starr breached the covenant of good faith and fair dealing by repeatedly failing to provide

timely coverage positions with respect to the Covered Losses, and by refusing to pay the

Covered Losses.

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53. By reason of the aforesaid wrongful actions by Starr, Cruz has been forced to retain counsel

and commence this action against Starr and will be forced to undertake such other and

further steps as necessary to fully and adequately protect its interests.

54. By reason of the foregoing, Cruz has suffered, and continues to suffer, damages, including,

but not limited to, the total amount of damages caused by the Covered Losses, loss of

profits, interest from the dates of the Covered Losses, reasonable attorney’s fees, and

increased damages by reason of the conduct of Starr with respect to the Covered Losses.

AS FOR A THIRD CAUSE OF ACTION (BREACH OF CONTRACT AND COVENANT
OF GOOD FAITH AND FAIR DEALING)

55. Cruz repeats and realleges all the allegations contained in Paragraphs 1 through 54 as if

fully set forth herein.

56. Starr marketed the Completed Value Construction All Risks insurance policies as covering

a wide array of losses associated with construction projects.

57. Starr denied coverage in part on the grounds that Cruz did not purchase the Contractor’s

Extra Expense sublimit, which featured coverage that was already included in Cruz’s

purchase of the all-risk Policy.

58. Starr’s attempt to market coverage that Cruz had already purchased as part of its all-risk

Policy and then deny coverage on the ground that it had not purchased this “extension” is

wrongful, without just cause, and in violation of the terms and conditions of the Policy.

59. Starr’s conduct in intentionally refusing to pay Cruz for all claims arising out of the

Covered Losses on the grounds that Cruz did not elect to purchase coverage that it had

already paid a premium for was malicious, fraudulent, oppressive, and otherwise reflected

a conscious disregard for Cruz’s rights under the Policy.

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60. By reason of the aforesaid wrongful actions by Starr, Cruz has been forced to retain counsel

and commence this action against Starr and will be forced to undertake such other and

further steps as necessary to fully and adequately protect its interests.

61. By reason of the foregoing, Cruz has suffered, and continues to suffer, damages, including,

but not limited to, the total amount of damages caused by the Covered Losses, loss of

profits, interest from the dates of the Covered Losses, reasonable attorney’s fees, and

increased damages by reason of the conduct of Starr with respect to the Covered Losses.

AS FOR A FOURTH CAUSE OF ACTION (NEGLIGENT MISREPRESENTATION)

62. Cruz repeats and realleges all the allegations contained in Paragraphs 1 through 61 as if

fully set forth herein.

63. Starr marketed the Completed Value Construction All Risks insurance policies as covering

a wide array of losses associated with construction projects.

64. Cruz procured the Policy with the understanding that certain losses arising out of the

Project would be covered in a timely manner.

65. Cruz reasonably relied on Starr’s representations concerning the extent of coverage

afforded under the Policy.

66. Cruz expended its own resources towards repairs and remediation associated with the

Covered Losses with the understanding that Starr would reimburse those costs in

accordance with the terms of the Policy.

67. Starr has failed to adhere to its own representations with respect to coverage afforded under

the Policy by refusing or otherwise failing to issue timely payments for the Covered Losses.

AS FOR A FIFTH CAUSE OF ACTION (Deceptive Business Practices GBL §349)

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68. Cruz repeats and realleges all the allegations contained in Paragraphs 1 through 67 as if

fully set forth herein.

69. The Policy is a standard form Builder’s Risk Policy that, upon information and belief, is

regularly issued by Starr.

70. Starr, as a part of its usual and customary practice, issued a Policy to Cruz without fully

setting forth its terms. Specifically, Starr failed to advise Cruz that itdid not intend to

provide a clarification for Contractor’s Extra Expense.

71. Starr, as a part of its usual and customary practice, failed to respond to Cruz’s claim in a

timely matter.

72. Starr, as a part of its usual and customary practice, made numerous representations to Cruz

that it was not denying its claim, yet ultimately denied the bulk of its claim after a

significant delay.

73. Starr, as part of its usual and customary practice, denied the subject claim without factual

basis.

74. Accordingly, Starr committed deceptive acts and practices in violation of N.Y. Gen. Bus.

Law §349.

75. The policies and procedures followed by Starr in the handling of Cruz’s claim are harmful

not only to Cruz but to the public at large.

76. Cruz has suffered, and will continue to suffer, significant harm as a result of its reliance on

Starr’s misrepresentations regarding coverage under the Policy, including but not limited

to:

a) budgeting issues as a result of expanding its own funds towards repairs of

the Covered Losses; and

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b) loss of business opportunities as a result of its inability to accelerate the

Project following the Covered Losses.

WHEREFORE, Cruz prays for the following relief:

(1) On the First Cause of Action for Declaratory Judgment against Starr, a judicial

determination that Starr is required to provide coverage under the Policy for the Covered

Losses;

(2) On the Second and Third Causes of Action for Breach of Contract and Covenant of

Good Faith and Fair Dealing, judgment in favor of Cruz and against Starr in an amount

equal to:

a. All of Cruz’s costs and damages arising from the Covered Losses;

b. Interest;

c. Consequential damages;

d. Reasonable attorney’s fees and costs in connection with this action; and

e. Such additional amounts as awarded by this Court based upon Starr’s bad faith,

and breach of covenant of good faith and fair dealing, in an amount to be

determined by this Court.

(4) On the Fourth Cause of Action for Negligent Misrepresentation, judgment in favor of

Cruz and against Starr in an amount equal to:

a. All of Starr’s costs and damages resulting from Cruz’s reliance on Starr’s

misrepresentations; and

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b. Such additional amounts as awarded by this Court based upon Starr’s negligent

misrepresentations in an amount to be determined by this Court.

(5) On the Fifth Cause of Action, violation of N.Y. Bus. Law §9349, judgment in favor of

Cruz and against Starr in an amount equal to:

a. All of Cruz’s costs and damages arising out of the Covered Loss;

b. Interest;

c. Return of the Policy premium;

d. Attorneys’ fees;

e. Punitive damages; and

f. Such additional amounts as awarded by this Court based upon Starr’s deceptive

business practices.

Dated: September 4, 2020
_______________________________
Gregory D. Podolak
Saxe Doernberger & Vita, P.C.
35 Nutmeg Drive, Suite 140
Trumbull, Connecticut 06611
Tel.: (203) 287-2100
gdp@sdvlaw.com
Attorneys for Plaintiff, E.E. Cruz & Company, Inc.

TO:
Charles Rocco
Foran Glennon Palandech Ponzi & Rudloff PC
40 Wall Street, 54th Floor
New York, New York 10005
Attorneys for Defendant, Starr Surplus Lines Insurance Company

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Case Info

Judge

Nancy M. Bannon Track Judge’s New Case

Case No.

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Document Filed Date

January 12, 2021

Case Filing Date

June 08, 2020

County

Parties

BREHONY, DAWN M Attorney for the Defendant
E.E. CRUZ & COMPANY, INC. Plaintiff
MANOBIANCA, STACY M. Attorney for the Plaintiff
NAGEL, ANNA Attorney for the Defendant
PODOLAK, GREGORY DAVID Attorney for the Plaintiff
ROCCO, CHARLES J Attorney for the Defendant
SMALL, BRYAN ANTHONY Attorney for the Plaintiff
STARR SURPLUS LINES INSURANCE COMPANY Defendant
VICERE, ASHLEY CHRISTINE Attorney for the Defendant
JOHN CHAMBERS Attorneys for Plaintiffs
STEFANI BONATO Attorney
MICHAEL ANGIULO Attorney
JONATHAN WOHL Attorney
STEPHANIE BARAN Attorneys for Defendants
THOMAS CAHILL Attorney
STEPHANIE BERSHAD Attorney

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Exhibit,Appendix: E.E. Cruz & Company, Inc. v. Starr Surplus Lines Insurance Company

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