Complaint,Petition: Menlo Energy Florida, Llc v. Certain Underwriters At Lloyds London are Names-Members of Lloyds Syndicates 510, 1084, 3000, 2623, 623, 2121, 1036, 4444, 958, 33, 4000, 2003, 1880, 510, 5000, 609, 5151, 4020 and Great Lakes Reinsurance (UK) PLC, Gcube Underwriting Limited, Gcube Insurance Services, Inc., Abc Corporations I-Ix

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                                INDEX   NO.   650271/2014
FILED:      NEW            YORK     COUNTY       CLERK        01/11/2016        08:13      PM
NYSCEF   DOC.   NO.        46                                                                      RECEIVED    NYSCEF:    01/11/2016



           SUPREME COURT OF THE STATE OF NEW YORK
           COUNTY OF NEW YORK
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           MENLO ENERGY FLORIDA, LLC,

                                                 Plaintiff,

                                         Vs,
                                                                                         Index No. 650271/2014
           CERTAIN UNDERWRITERS AT LLOYD’S LONDON,
           AND SUBSCRIBERS UNDER POLICY #B1134297401, as
           Renewed and renumbered, including Names/ Members of
           Lloyd’s Syndicate 510, Lloyd’s Syndicate 1084,                                AMENDED       COMPLAINT
           Lioyd’s Syndicate 3000, Lloyd’s Syndicate 2623,
           Lioyd’s Syndicate 623, Lloyd’s Syndicate 2121,
           Lloyd’s         Syndicate 1036, Lloyd’s Syndicate 4444,
           Lloyd’s         Syndicate 2003, Lloyd’s Syndicate 1880,
           Lloyd’s         Syndicate 5000, Lloyd’s Syndicate 609,
           Lloyd’s         Syndicate 5151, Lloyd’s Syndicate 4020,
           GREAT            LAKES REINSURANCE (UK) PLC, GCUBE
           UNDERWRITING LIMITED, GCUBE INSURANCE
           SERVICES, INC., and ABC CORPORATIONS L-IX,
                                                 Defendants.
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                      Plaintiff, Menlo Energy Florida, LLC (“Menlo”), by and through its attorneys,

           COSTIGAN LAW PLLC, alleges upon knowledge as to itself and its own actions and upon

           information and belief as to all other matters as follows:

                                                                PARTIES

                       1          At all times relevant hereto, Menlo was, and still is, a limited liability company

           organized and existing under the laws of the State of Florida, with its principal place of business

           at 555 California Street, San Francisco, CA 94104,

                      2           Defendants, Certain Underwriters at Lloyd’s (“Lloyd’s Underwriters”), the

           Names/ Members of Lloyd’s Syndicates 510, 1084, 3000, 2623, 623, 2121, 1036, 4444, 958, 33,

           4000, 2003, 1880, 510, 5000, 609, 5151, 4020, and Great Lakes Reinsurance (UK) PLC, and

           were subscribers to policy # Bl 134297401 (the "Policy"). A true and correct copy of relevant

                                                                     1
parts of the Policy is attached herein as Exhibit A.


       3.       Under the Policy, defendants have appointed the firm of Mendes & Mount, LLP

750 Seventh Avenue, New York, New York 10019, to accept service of processon theirbchalf.

                                 JURISDICTION          AND VENUE

       4.       Jurisdiction is proper in this Court pursuant to NY GOL § 5-1402. The parties

here entered into contracts of insurance with an underlying transaction involving more than one

million dollars and, by contract, agreed to the jurisdiction of the courts in the state of New York

and aNew York choice of law provision.

       5        Venue is proper in this Court pursuant to NY CPLR § 503(a)

                                  NATURE
                                    OF THE ACTION
       6        This is a breach of contract action arising from the defendants’ refusal to pay

covered claims. As described herein, due solely to defendants' failure to honor their obligations

as set forth in the Policy, Menlo’s business and business reputation have been irreparably

harmed. Menlo seeks compensatory and consequential, and bad-faith punitive damages arising

from said breaches and wrongful conduct.

      7        Menlo, a family owned company, is and at all relevant times was, an energy

services business operating within the State of Florida, County of Pasco, that primarily rans

biodiesel and glycerin refineries (the Refineries").

      8        Due to defendants’ wrongful denial of coverage herein, Menlo has suffered

irreparable harm to its business, has lost its crude supply and customers, been forced to lay-off

essential employees, has been unable to pay monthly rent, and has been unable to pay other bills

and obligations that have come due in the normal course of its business.

      9        Menlo agreed to insure its Refineries with the defendants, who, in turn, agreed to

provide insurance coverage under broad forms of property and business interruption insurance.
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10.     Defendants aggressively sought the opportunity to insure the Refineries, through

its solicitation of Menlo's predecessor in interest to the Refineries ("Former Owners"), causing

Menlo to forego other viable and financially sound insurers when Menlo purchased the Refineries

from Former Owners in or around April 2013.

       11.     Upon information and belief, at the time the insurance coverage was agreed to by

Former Owners and defendants, it was the understanding and contemplation of the parties that

loss or damage to any of the property insured could result in a serious disruption of the business

involving the insured properties, including the essential biodiesel and glycerin operations of the

Refineries.

       12.     In consideration of defendants' acceptance of that risk of loss and the attendant

consequences, including the interruption of Former Owners’ business and the cost to repair or

replace the property, defendants required, and Former Owners agreed to pay, a premium of some

$49,663.00 (plus applicable taxes and fees), which included premiums charged for loss or

damage to property    coverage   ("Property   Coverage") and business      interruption   coverage

("Business InterruptionCoverage").


        13,    Former Owner paid the premium required by defendants and Former Owner and

Menlo have faithfully discharged all of their obligations under the Policy issued by defendants to

Former Owners and covering the period April 12, 2013 to April 11, 2014.

       14,     Upon purchasing the Refineries in or around April 2013, Menlo received an

assignment of the Policy from the Former Owners.

       15.     In or around April 2013, defendants agreed to the assignment of the policy from

Former Owners to Menlo. A copy of the Policy was issued by defendants in the name of Menlo.

        16.    On or about July 26, 2013, the Refineries’ turbine lost its vertex by some micro-

centimeters and its axis went awry. The turbine emitted a loud clanking sound, raising an alarm,

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and was promptly shut down by the Refineries’ staff. Without the perfect vacuum created by a

properly functioning turbine, the plant could not distill the vapors and remove impurities from the

crude.   On the advice of the turbine’s vendor, a subsidiary of General Electric, the entire plant had

to be shut down.

         17.      The vendor sent out a crew to examine the turbine and, in the course of that

examination, the crew dismantled the entire vacuum train. The vendor then indicated that Menlo

transport the turbine and pumps to GE's factory in the Midwest. The roof to the building housing

the turbine and pumps had to be demolished and a crane summoned to remove the turbine and

pumps.

         18.      After receiving the apparatus from Menlo, GE redid the alignment, changed some

parts, and sent the turbine back. A crew from GE installed the refurbished equipment. As the

plant was put back on-line, however, Menlo noticed within a couple of hours that the vacuum

wasn't holding.

          19,     Once again GE directed that Menlo ship the turbine back and Menlo did so. On

examination, GE noticed that it may have not properly tested the alignment after its initial work.

GE fixed it again. The turbine was returned to the plant in Florida and re-installed, Only after

these two laborious attempts, which took about two months altogether, did Menio’s plant again

become operational.

         20.      In the interim, Menlo lost its crude supply and its customers. Menlo was forced to

lay off essential staff and was unable to pay its monthly lease and other obligations. Furthermore,

these developments damaged Menlo’s reputation within the relevant business communities.

Ultimately, Menlo had to shut the plant down entirely.

         21.      Menlo filed a timely claim with defendants in or around July 2013.

         22.      In or around July 2013, Defendants acknowledged receipt of the claim and
requested that Menlo provide evidence supporting Menlo's property damage and business

interruption losses, Menlo promptly provided that evidence.

         23.      Nonetheless, the defendants denied coverage in bad faith and specifically

refused to make interim payments as required by the Policy. The defendants’ denials of

coverage were premised on reasons having no applicability to the above-cited Property

Coverage and Business Interruption Coverage, evidencing their bad faith.

        24,      Menlo has sought to mitigate its damages throughout.

                   AS AND FOR A FIRST CAUSE OF ACTION
                  (Breach of Contract - Business Income Coverage)

        25.      Menlo repeats the allegations in the prior paragraphs of this Amended Complaint

as if set forth at length herein.

        26.      The Policy's Business Interruption Coverage obligated defendants to pay any loss

of income which Menlo incurred due to the actual suspension of its operations caused by or as a

result of direct physical loss or damage by a covered peril to property at the Refineries.

        27,      On July 26, 2013, Menlo’s operations were suspended as a result of direct

physical loss or damage by a covered peril to its property at the Refineries. This has been

confirmed by York Special Loss Adjusting (“York”), the "independent" adjuster engaged by the

defendants,'!   Menlo has, accordingly, incurred an interruption to its business income which is

covered under the Policy's Business Interruption Coverage.

        28,      The Policy requires defendants to cover Menlo’s loss of business income and,

specifically, to make interim payments covering such loss. Defendants have, without just cause,

refused to pay any amounts under the Policy whatsoever, whether interim or otherwise, in utter



        1
                 Though described as “independent,” York in fact receives a substantial volume of
its business from the defendants and, as a practical matter, acts on their behalf.

                                                   5
bad faith breach of the Policy.

                  AS AND FOR A SECOND CAUSE OF ACTION
                (Breach of Contract -- Property Damage Coverage)

          29.   Menlo repeats the allegations in the prior paragraphs of the Complaint as if set

forth at length herein.

          30,   The Policy covers property damage at the Refineries.

          31.   The Refineries suffered a covered loss on or around July 26, 2013.

          32.   The Policy's terms require defendants to reimburse the repair and/or replacement

cost of the equipment damaged.

          33.   York, the "independent" adjustor has acknowledged Menlo's property damage

claim as legitimate and have determined the loss exceeds the $50,000 Policy deductible, such

that Menlo is entitled to payment(s) from defendants,

          34.   The terms of the Policy provide that Menlo is entitled receive interim payments

on coverage due.

          35.   Defendants, without good cause have failed to make any payments whatsoever to
Menlo.

         WHEREFORE, Menlo requests Judgment:

         @      as to its First Cause of Action, in an amount to be proven at trial up to the

$1,976,000 insurance policy limit, plus consequential damages, prejudgment interest, and

Menlo’s costs and reasonable attorneys' fees;

         (b)    as to its Second Cause of Action, in an amount to be proven at trial up to the

$10,368,000 insurance policy limit, plus consequential damages and Menlo’s costs and

reasonable attorneys' fees; and
(c)     such other and further relief as this Court deems just and proper.

Dated: December 23, 2015
       New York, New York



                                             Yours, ete.,

                                             COSTIGAN LAW PLLC
                                                            ~
                                                                         ——_—_—
                                             BY.                         a.
                                                       Williaa F. Costigan
                                             747 Third Ave — F12
                                             New York, NY 10017
                                             Tel No: (646) 722-2699
                                             New York, New York 10007