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FILED: NEW YORK YORK
COUNTY COUNTY
CLERK 01/09/2019 05:46 PM INDEX INDEX 652336/2018
NO.
NO. 652336/2018
FILED : NEW CLERK 05/11/2018 03:33 PM|
NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 01/09/2019
NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 05/11/2018
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
Index No.:
ZURICH AMERICAN INSURANCE COMPANY,
Plaintiff, SUMMONS
-against-
FIRST SPECIALTY INSURANCE CORPORATION,
WESTERN BEEF RETAIL, INC. and WESTERN
BEEF PROPERTIES, INC.
Defendants.
TO THE ABOVE-NAMED DEFENDANTS,
YOU ARE HEREBY SUMMONED to answer the Complaint in this action and to serve
a copy of your answer on the attorneys for Plaintiff Zurich American Insurance Company within
twenty (20) days after service of this Summons, exclusive of the day of service; or within thirty
(30) days after service is complete if this Summons is not personally delivered to you within the
State of New York; and in the case of your failure to appear or answer, judgment will be taken
against you by default for the relief demanded in the Complaint.
Dated: New York, New York
May 11, 2018
COUGHLIN DUFFY LLP
By:
GabrieLE ÃŽ)arwick, Esc).
Lindsey LaFond, Esq.
Wall Street Plaza
28th
88 Pine Street, Floor
New York, NY 10005
Attorneys for Plaintiff
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FILED:
FILED : NEW YORK
NEW YORK COUNTY
COUNTY CLERK
CLERK 01/09/2019
05/11/2018 05:46
03:33 PM
PM|
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NYSCEF
NYSCEF DOC.
DOC. NO.
NO. 29
1 RECEIVED
RECEIVED NYSCEF:
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TO:
First Specialty Insurance Corporation
5200 Metcalf Avenue
Overland Park, KS
(via NY Department of Financial Services)
Western Beef Properties, Inc.
(via Secretary of State)
Western Beef Retail, Inc.
(via Secretary of State)
2
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FILED:
FILED : NEW YORK
NEW YORK COUNTY
COUNTY CLERK
CLERK 01/09/2019
05/11/2018 05:46
03:33 PM
PM|
INDEX
INDEX NO.
NO. 652336/2018
652336/2018
NYSCEF
NYSCEF DOC.
DOC. NO.
NO. 29
2 RECEIVED
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
Index No.:
ZURICH AMERICAN INSURANCE COMPANY,
Plaintiff, COMPLAINT FOR
DECLARATORY RELIEF AND
-agamst-
DAMAGES
FIRST SPECIALTY INSURANCE CORPORATION,
WESTERN BEEF RETAIL, INC. and WESTERN
BEEF PROPERTIES, INC.
Defendants.
Plaintiff, Zurich American Insurance Company ("Zurich"), by and through its attorneys,
Coughlin Duffy LLP, by way of Complaint for Declaratory Judgment against Defendants, First
Specialty Insurance Corporation ("First Specialty"), Western Beef Retail, Inc. ("WB Retail") and
Western Beef Properties, Inc. ("WB Properties") (collectively "Defendants"), alleges as follows:
NATURE OF THE ACTION
Defendants'
1. This declaratory judgment and breach of contract action arises from
abandonment of Zurich's insured, Serota Roosevelt LLC ("Serota"), on the first day of trial in a
personal injury lawsuit styled Desmond Garrett v. Serota Roosevelt LLC, et al., bearing Index No.
702978/2016 (the "Underlying Action").
2. Desmond Garrett sued Serota, WB Retail, and WB Properties (WB Retail and WB
Properties are collectively referred to as "Western Beef") for a trip and fall that occurred on the
sidewalk outside the Western Beef supermarket located at 322 Nassau Road, Roosevelt, New
York, 11575 (the "Premises") before he entered the store.
3. Without so much as a tender, First Specialty, WB Retail, WB Properties, and their
third-party administrator, Broadspire, promptly assumed Serota's defense for the Underlying
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FILED:
FILED : NEW YORK
NEW YORK COUNTY
COUNTY CLERK
CLERK 01/09/2019
05/11/2018 05:46
03:33 PM
PM|
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Action. They issued no reservation of rights and appointed a single law firm to jointly represent
Serota, the landlord, and Western Beef, the tenant.
Defendants'
4. That law firm, under direction and control, steered Serota and Western
Beef through discovery, determined the case strategy, engaged in settlement discussions on
Serota's behalf, and planned on try the case.
5. On the first day of trial, Defendants invoked the factual record their appointed
counsel developed to break their agreement to defend and indemnify Serota, claiming that Serota,
not Western Beef, was liable for the accident. They demanded that Serota and its commercial
general liability insurer, Zurich, settle the case, and that Serota agree to indemnify Western Beef.
Zurich and Serota refused this prejudicial demand and urged Defendants to reconsider their
position in light to the clear harm they had caused to Serota and to Zurich. Defendants were well
aware that until Western Beef's eve of trial demand, Zurich had not been involved in the case,
having closed its file more than a year earlier after being advised that Defendants has retained
counsel for Serota.
6. Defendants refused, forced Serota to try the case, and used the factual record their
counsel developed to shift liability onto Serota, resulting in a $295,000 verdict against it.
7. Serota and Zurich bring this suit to compel Defendants to honor their agreement to
defend and indemnify Serota and to obtain reimbursement of the costs they have expended and
Defendants'
will expend as a result of wrongful abandonment.
THE PARTIES
8. Zurich is a New York corporation engaged in the insurance business with a
statutory home office located at 4 World Trade Center, 150 Greenwich Street, New York, New
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FILED : NEW YORK
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York 10007, and a principal place of business located at 1299 Zurich Way, Schaumburg, Illinois
60196.
9. First Specialty is a Missouri corporation engaged in the insurance business with an
administrative office located at 5200 Metcalf Avenue, Overland Park, KS 66202. First Specialty
is authorized to, and does engage in the business of insurance in New York through licensed
wholesale brokers as a non-admitted insurer.
10. WB Properties is a New York corporation with a principal place of business located
at 47-05 Metropolitan Avenue, Ridgewood, New York, 11385. WB Properties is authorized to and
does transact business in the State of New York.
11. WB Retail is a New York corporation with a principal place of business located at
47-05 Metropolitan Avenue, Ridgewood, New York, 11385. WB Retail is authorized to and does
transact business in the State of New York.
JURISDICTION AND VENUE
12. This Court has jurisdiction under CPLR Section 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 policy issued
by First Specialty.
13. This Court has personal jurisdiction over defendants pursuant to CPLR Sections
301 and 302.
14. Venue lies in the Supreme Court of New York, County of New York, under CPLR
Section 503(a) as at least one of the parties resides in the County of New York.
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FILED:
FILED : NEW YORK
NEW YORK COUNTY
COUNTY CLERK
CLERK 01/09/2019
05/11/2018 05:46
03:33 PM
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FACTUALBACKGROUND
The Underlying Action
15. This matter arises out of an accident that allegedly occurred on or about August 14,
2015, at a retail premises leased to WB Retail by Serota, located at 322 Nassau Road, Roosevelt,
New York, 11575 (the "Premises"). On that date, the Claimant, Desmond Garrett, allegedly tripped
and fell on the sidewalk in front of the Premises before entering the store.
16. On or about March 14, 2016, the Claimant filed the Underlying Action against
"A."
Serota and Western Beef. A copy of the complaint is attached hereto as Exhibit
17. The complaint in the Underlying Action alleges, inter alia, that the Clairñant was
sidewalk"
"caused to fall due to the defective condition of the where he was walking, located in
front of the Premises. The Claimant alleges that his injuries were due to Serota's and Western
Beef's negligence.
Annointment of Counsel for Serota and Western Beef
18. Upon information and belief, Broadspire is the third-party administrator for
Western Beef and First Specialty under the commercial general liability policy issued by First
Specialty to Cactus Holdings, Inc. under policy number IRA 2000002 02, effective November 15,
2014 to November 15, 2015, with limits of $1,000,000 per occurrence and $2,000,000 in the
aggregate, subject to a $450,000 Self-Insured Retention (the "First Specialty Policy").
19. Upon information and belief, Broadspire, with First Specialty's and Western Beef's
knowledge and consent, appointed the law firm Robert E. Brown, P.C. (the "Brown Law Firm")
as counsel for Serota and Western Beef in the Underlying Action.
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FILED:
FILED : NEW YORK
NEW YORK COUNTY
COUNTY CLERK
CLERK 01/09/2019
05/11/2018 05:46
03:33 PM
PM|
INDEX
INDEX NO.
NO. 652336/2018
652336/2018
NYSCEF
NYSCEF DOC.
DOC. NO.
NO. 29
2 RECEIVED
RECEIVED NYSCEF:
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20. Broadspire, First Specialty and Western Beef did not ask for Serota's permission
for the joint representation and did not obtain a conflict waiver from Serota for it to be jointly
defended with Western Beef in the Underlying Action.
21. Neither before nor after appointing the Brown Law Firm to represent Serota did
Broadspire, First Specialty or Western Beef issue a reservation of rights letter. Indeed, they issued
no written correspondence to Serota detailing the tenns of their assumption and control of its
defense.
22. When Zurich learned of the Brown Law Firm's joint representation, it repeatedly
contacted Broadspire to confinn that Broadspire, First Specialty and Western Beef had agreed to
defend and indemnify Serota in the Underlying Action up to the full limits of the First Specialty
Policy.
23. Broadspire never responded to Zurich's inquiries.
The Management of Serota's Defense
24. Throughout the litigation, the Brown Law Firm reported to and took instruction
from Broadspire, First Specialty and Western Beef.
25. Meanwhile, the Brown Law Finn, Broadspire, First Specialty and Western Beef
provided no status reports or updates to Serota or Zurich.
26. Because Defendants and Broadspire caused the Brown Law Firm to jointly defend
Western Beef and Serota and controlled their defense, the Brown Law Finn did not and could not
assert a cross-claim for common law or contractual indemnification or contribution on behalf of
Serota against Western Beef.
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FILED:
FILED : NEW YORK
NEW YORK COUNTY
COUNTY CLERK
CLERK 01/09/2019
05/11/2018 05:46
03:33 PM
PM|
INDEX
INDEX NO.
NO. 652336/2018
652336/2018
NYSCEF
NYSCEF DOC.
DOC. NO.
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2 RECEIVED
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27. Because Defendants and Broadspire caused the Brown Law Firm to jointly defend
Western Beef and Serota and controlled their defense, the Brown Law Firm could not and did not
file a motion for summary judgment on behalf of Serota against Western Beef for indemnification.
28. And because Defendants and Broadspire caused the Brown Law Firm to jointly
defend Western Beef and Serota and controlled their defense, the Brown Law Finn could not and
did not seek to develop facts or steer the case strategy to focus on Western Beef's liability for the
Underlying Action.
29. To that end, the Brown Law Firm did not produce Serota for a deposition and did
not produce any Western Beef employees for a deposition to demonstrate that Western Beef was
responsible, in whole or in part, for the accident. Nor could it, as the Brown Law Firm was under
Broadspire's, First Specialty's and Western Beef's control.
30. Not only did Defendants fail to produce Serota for a deposition, but at no point
before the case was sent out for trial did the Brown Law Firm contact Serota to discuss (a)
ownership of the location of the sidewalk where the accident occurred, (b) Western Beef's
obligations under the lease, (c) Serota's obligations under the lease, (d) Serota's perspective on its
liability for the Underlying Action, or (e) the potential liability of third parties, such as the Town
of Hempstead.
31. Upon infonnation and belief, the Brown Law Finn did not believe any of the
aforementioned investigation and discovery was necessary in light of Broadspire's, First
Specialty's and Western Beef's agreement to indemnify Serota for the Underlying Action and its
view that Western Beef, not Serota, was liable for the accident.
32. Consistent with that belief, when the parties to the Underlying Action participated
in a mediation, neither Serota nor Zurich were made aware of it or asked to participate. Instead,
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FILED:
FILED : NEW YORK
NEW YORK COUNTY
COUNTY CLERK
CLERK 01/09/2019
05/11/2018 05:46
03:33 PM
PM|
INDEX
INDEX NO.
NO. 652336/2018
652336/2018
NYSCEF
NYSCEF DOC.
DOC. NO.
NO. 29
2 RECEIVED