main street title & settlement services, llc v. ace american insurance company et al complaint

8/8/2019 MAIN STREET TITLE & SETTLEMENT SERVICES, LLC v. ACE AMERICAN INSURANCE COMPANY et al Complaint

1/19

Case 2:10-cv-06410-JLL -CCC Document 1-1 Filed 12/10/10 Page 2 of 53 Page

SUPERIOR COURT tIIlSEN COUNTYF I LED

The Law Offices of Robert G. Ricco, Esq.ATTORNEYS AT LAW811 Westwood AvenueRiver Vale, NEW JERSEY 07675Telephone: (201) 497-6524Attorneys for Plaintiffs.MAIN STREET TITLE &

SETTLEMENT SERVICES, LLC,Plaintiffs,

-against-ACE AMERICAN INSURANCECOMPANY, ACE USA, John and JaneDoes 1-100; and XYZ CORPS. 1-100,XYZ LLCS. 1-100,

Defendants

NOV 0.,3'2010

....'Pf CLERK

SUPERIOR COURT OF NEW JERSEY. EQUITY/ DIVISION: BERGEN

C O ~ _ I 0 5 6 ~ - ' O Docket No: BER " --------/10CIVIL ACTION

VERIFIED COMPLAINT .

. ,Plaintiff MAIN STREET TITLE & SETTLEMENT SERVICES LLC, doing business at 190Main street, Hackensack, NJ, by way of Verified Complaint says:i . ' On .ot about December 11, 2008, The Main Street Title & Settlement Services, LLC.,

. 0 ~ r e m a f t e r ''M;ain Street", or Plaintiff: and .similarly all references in plura l shall apply to same):enteied: mto, a co'iitract o r . ~ ~ e w i t ~ : ACE American Insurance Company and ACE l1SA,(hereinafter cOllectively referred t ~ ' as "ACE") for errors and omissions coveragci (See insurance

, .. ' :bmder Attached hereto as EXlilbit A).

2. . The iriSurance was to provide retroactive coverage for all prior years of Main Street. .operationS, and slated to begin on January 6, 2009. (See Contract oflnsuIance dated attached to

.. the Complaint hereto as Exhibit "B")."

1


2/19


3. In June of2009, Main Street was served with a lawsuit by Loir Ann Palumbo, namelyPalumbo v. Main Street, Index No., Pas-L-248S..09, the allegations ofwhich are discussed in thesupporting memorandum of law.4. Main Street never had knowledge of this claim brought by Lori Ann Palumbo until it wasserved in the summer of2009, and filed by Palumbo in court on June 5, 2009.5. Main Street did not obtain knowledge or information about this claim prior to theinception date of the policy.6. During the litigation initiated by Lori Ann Palumbo, her attorneys produced a letter datedDecember 11,2008 purportedly notifying Main Street of the claim, but Main Street neverreceived that letter.7. The letter produced was not certified, and no certified receipt was produced.8. ' Main Street was in the business of moving to a new location, at 190 Main Street, andaJteady bad changed its postal address by notification to the post office.

It no longer received mail at the old address, 210 River Street, because the post officetefused to deliver there once the change of address was filed.10, Maul S t r ~ 'is unsure what the post office did with mailaddressed to 210 'Main S t r ~ e t , ,but Some mail ' ~ V e d w e e k ~ s ,later adVising Main' Street notify addressors to send to the newaddress. Main Street nt:;ver received such a notice or the p u r p O ~ e d letter dated December 11.: '2008,11. 1n any event, the'purported December 11, 2008 letter was never received.

, ii', Based on this ietter which ACE incorrectly believed Main Street bad received, it:, deCided ~ o ' d ~ l i t i e and withdraw, coverage arid cease its q e f e ~ e ofMairi Street durin8 ijtigatiQD ". ' . " . ,. . '.. .. "

on the eve of triaL

2


3/19


* :. '

13. Main Street was forced to pay its own counsel, and defend itself and remains prejudicedby this outrageous conduct on the part ofACE, which smacks ofbad faith.

14. The nature of what Lori Ann Palumbo alleged, namely that Main Street had wiredmoney without authority to her joint marital bank account , is a rank lie. Not only did MainStreet have written authority from her, but it was confirmed by telephone by a Main Streetemployee.15., Furthermore, Lori Ann Palumbo asserted that her husband stole the money, but neverproved it was stolen. Therefore, her claim was frivolous at best, and fraudulent at worst.

16. Main Street never had an inkling that its wire transfer was improper, as the lawsuit camethree years later, and Lori Ann Palumbo never made a peep over-where the money was wired in

, all that time.17. Furthermore, Ms. Palumbo was. a well educated chiropractor, with her own business.Yet she allowed her husband to do all ofher finances, as she 'testified in her deposition taken inthe uriderlying case

AS AND FOR A'FI:RsT COUNT FOR BREACH OF CONTRACT AN DSPECIFIc PERFORMANcE

. .'18. Plaintiff hereby repeats, reiterates and re-alleges each and every of the foregoingallegations contained in paragraphs 1 through 17 as i fse t forth verbatim here.19. Upon infonnation and belie(' ACE breached their agreements with Main Street bydenying coverage an9, withdrawing its legal defense: of Main S t r e e ~ in the litigation brougl;tt .. a ~ t it:b; ~ r i Ann on t h ~ of ~ s e d upon a ~ ~ i d O O n ~ t i o n that Main .Street had knowledge of a pre-existing claim.

3


4/19


20. Upon information and belie: ACE breached their agreements with Main Street byfailing to fully investigate whether Main Street had the requisite knowledge of a claim thatultimately was b r o u ~ h t by Palumbo.21. Upon information and belief, ACE breached their agreements with Main Street bynarrowly interpreting .the exclusion based upon pre-existing knowledge of a claim incontravention ofwhat is nonnally expected by an insured in New Jersey, withdrawing its defenseon the eve of trial.22. Main Street has been damaged by the actions of the defendants in an amount to bedeterm.i.ned.

WHEREFORE, Defe'ndants seek a judgment with costs against Defendants as follows:A. Declaring that ACE owes Main Street a d e f ~ n s e in the underlying case as it is

. " in breach of contract and ordering the Defendants to specifically provide a defense to MainStreet under the t e ~ of the insurance contract that ACE entered into;

B. Awarding costs, and disbursements for this action and the defense of the.', underlying action, as well as indemnification for settlements, verdicts or judgments in the

, .:: 'tInder-lying action bJ:ou'ght agamst Main Street by Lori Ann Palumbo;C. AwardiDg actual damages;D. Awarding attorney 's 'fees and costs; and

..E.. Gnmting such other further and' different relief as the court deems just andequitable.

AS ANl>FoR A SECOND COUNT FOR NEGL1GENCE.. ' '23. :.. P1aititiffhereby tepeats, reiterates re-alleges'each and' every o n e " o f ~ e foregoing. : .-

f #. .... ....".. ,: ."' .. .allegations contained in paragraphs 1 through 22 as i f set forth verbatimhere.. .

4


5/19


24. That, the actions of the Defendants w ~ r e negligent as to Plaintiff and caused substantialdattJage to the Plaintiffs business by dropping its defense of the underlying lawsuit at theeleventh hour.25. Defendant ACE as an insurer had a duty to act professionally and yet negligentlyhandled the defense of the claim herein and relied upon incorrect assumptions to deprive MainStreet ofa defense.

26. Main Street has been damaged by the actions of the defendants in an amount to bedetermined.

WHEREFORE, Defendants seek a judgment with costs against Defendants as follows:A. Declaring that ACE owes Main Street a defense in the underlying case as it is

in breac}1 of contract .and ordering the Defendants to specifically provide a defense to Main,..Street under the term of the insurance contract that ACE entered into;

B. Awarding costs, and disbursements for this action and the defenSe of the.' : tinderlying action, as' well as indemnification for and settlements, verdicts or judgments in the'

" ," ,.: Underlying action brought against ~ a i n Street by Lori Ann Palumbo;. .C. Awarding actual damages;

D. Awarding attorney's fees and costS; andE. Granting such other further and different. relief as the' court deexm just 'and

equitable.

AS AND FORA'THIRD COtTItt FOR EQUITABLE ESTOPPEL,WAIVER AND 'DETRIMENTAL 'RELIANCE

27. Plaintif f hereby repeats, reiterates and re-alleges each and every one of the foregoingallegations contained iIi paragraphs 1 through 26 as i f set forth verbatim here.

5


6/19

Case 2:10-cv-06410-JLL -CCC Document 1-1 Filed 12/10/10 Page 7 of 53 PageI

28. That, the actions of the Defendants resulted in a detriment to Plaintiff after reasonablereliance and payment"ofpremium which should result in an estoppel of Defendant's actions todeny coverage, as Plaintiffs expectations of coverage were reasonable under the circumstances.Plaintiffrelied on the defense provided to it and is now in a terrible position on the eve of trial asit has to pay for and conduct its own defense without even the promise of indenmification.Defendants should be stopped from denying coverage and withdrawing a defense at this latestage of the case. Alternatively, Defendants should be deemed to have waived the exclusion theyrelied upon to waive coverage by not investigating these issues until the eve of trial.

WHEREFORE, Defendants seek a judgment with costs against Defendants as follows:A. Declaring that ACE owes Main Street a defense in the underlying case as it is

iii bteach ofcontract and ordering'the Defendants to specifically provide a defense to MainS'tteet under, the teim of the insurance contract that ACE entered into;

B. Awarding costs, and d i s ~ U : r s e m e n t s for this action and the defense of theundetlying action, as well as indemnification for and settlements, verdicts or judgments in the '\tnderlying action brought a:gamst Main Street by LOri Ann Palumbo;

C. Awarding actual damages;Awarding attomey's fees and costS; and

-,

E. Granting such other further and different relief as the couit deems just and,equitable.

. AS AND J!OR A J!OURTH COUNT FOR UNJUST _ E N R l C ~ N T 29. Plaintifthereby repeats, reiterates and re-alleges each and every one of the foregoingallegations contained in paragraphs' 1 through 28 as i f se t forth verbatim here.


7/19


30. That, the actions of the Defendants resulted in a detriment to Plaintiff after reasonablereliance and payment ofpremium which should result in an estoppel of Defendant's actions to

deny coverage, as Plaintiffs expectations of coverage were reasonable under the circumstances.31. In the alternative, Defendants should refund the premium should that court find that nomeeting of the minds took place or otherwise that contract of insurance should be rescinded.

WHEREFORE, Defendants seek a judgment with costs against Defendants as follows:A .. Declaring that ACE owes Main Street a defense in the underlying case as it is

in breach of contract and ordering the Defendants to specifically provide a defense to MainStreet under the term of the insurance contract that ACE entered into;

B. Awarding costs, and disbursements for this action and the defense of theunderlying action, as well as indemnification for and settlements, verdicts or judgments in the

. un


8/19


33. Upon information and belief, the defendants are liable for harming the businessinterests of Main Street by fraudulent claims handling to their benefit hy means ofbehavior that the court should construe as a constructive fraud,. in that ACE purportedto faithfully honor his duty to Main Street under the contract, to both defend andindemnifY in exchange for the payment of premium, but which was violated by themaking of deceptive material misrepresentations and or omissiQDS of past or existingfacts or remaining silent when a duty to speak existed, compounded by inducingdetrimental reliance thereon by Main Street, proximately causing injury to the Plaintiffas coverage was wrongly denied and a defense of litigation withdrawn. In essence,ACE has acted as if the contractual promises it made were never intended to be kept.

WHEREFORE, Plaintiffs seek a judgment with costs against Defendants asfollows:

A Declaring that ACE owes Main Street a defense in the underlying case as it isin b ~ e a c h of contract and ordering the Defendants to specifically provide adefense to Main street under the tenn of the insurance contract that ACE ..entered into;

B. A w ~ i n g costs, and disbursements for this action and the defense of theundedying action, as well as indemnification for and settlements, verdicts orjudgments in the underlying a c t ~ o n brought against Main Street by Lori AnnPalumbo;

C. Awarding actual damages;. t. .D: Awarding a t t o m e y ; ~ f e e ~ and costs; and

: .

. E. ~ t i n g such other further and d i f f e r ~ n t relief as the court deems just and

8


9/19


., ' .'

equitable.

AS AND FOR A SIXTH COUNT AGAINST ACE FOR BREACH OFFIDUCIARYDUTY

34. Plaintiffs hereby repeats, reiterates and re-alleges each and every one of theforegoing allegations contained in paragraphs 1 through 33 as if set forth verbatimherein.

35. Upon information and belief: ACE breached its fiduciary obligations to MainStreet as it had a duty to defend and indemnify and was intimately involved in thedefense ofthe underlying suit mentioned supra.

36. As a result of the foregoing, Plaintiff has been damaged in an amount to bedetermined which. Plaintiffs are entitled to and demand compensatory damages, punitivedamages and attorneys' fees.

WHEREFORE, Plaintiffs seek a judgment with costs against Defendants asfollows:

A. Declaritig .that ACE owes Main Street a defense in the underlying case as'it ,is in breach of contract and ordering the Defendants to specificaiiy provide adefense to Main Street under the term of the insurance contract that ACE entered.into;B. Awarding costs, and disbursements for this action and the defense of theunderlyiIig action, as well. as indemnification for and settlements, verdicts otju4giIieiits in the underlying action brought against Main Street by Lori Ann, P a l ~ ; . C. Awarding actual damages and interest;D.' .Compensatory Da.mages; .

9

.


10/19


E. Treble Damages where appropriate;F. Punitive Damages;

G. Awarding costs, and disbursements for this action;H. Attorneys' fees and Costs; and1. Any and all such other, further and different relief which

this Court finds just and p r ~ p e r under the circumstancesincluding discovery which plaintiffs earnestly seek.

AS AND FOR A SEVENTH COUNT OF COMNION LA W FRAUD

37. Plaintiffs hereby repeats, reiterates and re-alleges each and everyone of theforegoing allegations contained in paragraphs 1 through 36 as if set forth verbatimherein.

38. Using fraudulent andlor material misrepresentation and nondisclosure, Defendantsinduced the Plaintiff to enter into a contract of insurance for errors and omissions on a claims. ..,made basis which it knew would be handled in such a way as to deny coverage as a final result.39: Defendants, "then- predecessors andlor assignors acted at all times relevant "knowingly", with,

. ' fraudulent mtent, andlor knowingly obtaincXl the fCuits o f t h ~ b ud, 4 6 ~ . ' . The m i S r e p r e ~ e r i t a t i o n s mRde 'by Defendants, t h ~ i r predecessors andlor assignors.substantially contributed to 'Defendants' decision to enter into the insurance contract

. . .41. p1aiJitiffs justifiably relied upon these misrepresentations.42. i?iaintiffs' sUffered damages as a result of the fraud.

WHEREFORE, Plaintiffs seek a judgment with c o ~ against Defendantsas follows:

"I

A." Declaring that ACE' owes Main Street a defenSe mthe underlying case as 'it is in 'breach of contract and ordering the Defendants to specifically provide a

10


11/19


12/19


concealment, suppression and omissions ofmaferial facts in connection with the claims handlingof the insurance contract.

45. Main Street relied upon promises made by ACE that in exchange for premiums paid ACEwould honor its obligations as an insurance company and both defend and indemnify Plaintiffshould it be sued for covered events on a claims made basis.46. Defendants, and their predecessor andlor assignor intended for Plaintiff to rely on theaforementioned acts including the unconscionable commercial practices, deception, fraud, falsepretense, false promise and misrepresentation, and Defendants did rely on the same.47. The foregoing acts by Defendants, its predecessor and/ot assignor constitute violations ofNew Jersey's Consumer Fraud Act, N.J.S.A. 56:88-2, et seq. as a result of which Plaintiffssuffered ascertainable loss.

WHEREFORE, Plaintiffs seek a judgment with, costs against Defendants 8:Sfollows:

A Declaring that ACE owes Main Street a defense in the underlying case as.it is in breach of c o n ~ t and ordering the Defendants to Specifically providedefeils'e to Main Street under the term of the insurance contract that ACE entered''info',B. Awarding costs, 'and disbursements for action and, the defense of tileunderlying' action, as well as indemnification fo r and settlements, veidicts orjudgments in the underlying action brought against Main Street by Lori AnnPalumbo;C. Awarding actual damages and interest; "D. Compensatory Damages;

12


13/19


E. Treble Damages where appropriate;F. Punitive Damages;G. Awarding costs, and disbursements for this action;H. Attorneys' fees and Costs; andI. Any and all such other, further and different rel ief whichthis Court finds just and proper under the 'circumstancesincluding discovery which plaintiffs earnestly seek.

AS AND FOR A NINTH COUNT OF COMMON LAW UNCONSCIONABILITY

48. Plaintiffs hereby repeats, reiterates and re..alleges each and every one of theforegoing allegations contained in paragraphs 1 through 47 as if set forth verbatimherein.

49. Plaintiff, its predecessor and/or assignor engaged in unconscionable commercialpractices, ,deception, fraud, mIse pretense, mIse promise and/or misrepresentations, or'

,: , a l t ~ t i v e l y , or in addition, engaged in acts of omission, including but not l ~ e d to knowing, '" ': eo11c.ent; suppression omissions ofmaterial filets.

,SO.' Piaintift; its 'predecessor and/or assignor intended for Defendants to rely on the'. : ;..:':, afdi'ementloned acts aitdlot'omissions including the unconscionable commercial ~ t i c ~ s , '

deception, fraud, faIse pretense, false promise and misrepresentation, and Defendailts did rely 'the same.51. The foregoing acts by Plaintiff, its predecessor and/or assignor constitute unconstionable

wm;!REFORE, Plaintiffs seek a judgment with costs against Defendants as f911ows:

13

,"


14/19


15/19


boundaries of the policy. Accordingly, when said Defendants elected to disclaIm theircoverage of Main Street and withdraw their defense on the eve of trial based upon ashallow analysis of whether Main Street had pre-existing knowledge of a claim, theyacted in contravention of the covenant of good faith and fair dealing, and in fact acted inbad faith.

54. Main Street was damaged thereby, and was placed in jeopardy of having tofmance any potential verdict, judgment or settlement out of its own coffers.

55. Although this arises out of a breach of contract, punitive damages are appropriateas the caSe involves a fiduciary relationship. ACE's use of the policy exclusion basedupon pre-existing knowledge to exclude coverage at the eleventh hour was patentlyimproper as there was no bona fide evidence that Main Street was aware of any claim.'Accordingly, punitive damages ,should apply.

, WHEREFORE, P18intiffs seek a judgment with costs against Defendants as follows:A. Declaring that ACE owes Main Street a defense in the underlying case asit is in breach of, contract and ot:dering the Defendants to specifically 'provide adefenSe to. ~ a i t i Street under the teni1 of the insurance contract thai ACE enteredinto;B. Awarding costs, and disbursements for this action and the defense of theunderlYing action, as well as indemnification for and settlements, verdicts orj u d g m e ~ t s in the underlying action br,ought against Main' Street by Lori Ann

..Palumbo;C.' Awarding actu&.l damages 8 . n 4 . i n t e r ~ s t ; . D. . ' COmpensatory Damages;

15


16/19


17/19


f\

pending arbitration proceeding and is not the subject of any other contemplatedaction or arbitration proceeding. I certify that the foregoing statements made byme are true. I am aware that if any of the foregoing statements made by me arewillfully false, I am subject to punishment.

DATED:r:;) .rI... L-{, ZItI/v LAW OFFICES OF ROBERT G. RICCO, ESQ.'Ut:Jf Attorneys for Plaintiff

Robert G. Ricco, Esq.

17


18/19


,. ". til

Certification'ofCompliance with Rule 1 : 3 8 ~ 7 ( c ) Pursuant to Rule 1:38- (c) I hereby certify that this, the first filed pleading of

any party in an action in the Chancery Division, General Equity or in the LawDivision, Special Civil Part is redacted as to personal identifiers, and further certifythat confidential personal identifiers-have been redacted from documents nowsubmitted to the court, and wil l be redacted from all documents submitted in thefuture in accordance with Rule 1:38-7(b).

LAW OFFICES OF ROBERT G. RICCO, ESQ.of Attorneys for Plaintiff, .. '2. '} "L.r_'''----'- - - : : : : - c : : : : : ~ - - - - - -

18


19/19


... .. ".

VERIFICATION, of full age, being duly sworn on his oath according to

law, deposes and says:1) I have read the complaint in this matter and know the contents thereof. The

allegations of the complaint are true to my personal knowledge.2) I certify that the allegations contained in the complaint are true to the best of my

By:are willfully false, I am S U b j e ; 1 ) 1 : ~ : m e n t .

Date:- - ~ ~ - - - - - - - - - - - - - - - - - -

Witnessed By: 2-- - = = - - - ' - ' : ' - ~ - - - - - - : r 2 ~

... " ..

20

main street title & settlement services, llc v. ace american insurance company et al complaint

Documents