NEWARK, N.J. — American Guarantee & Liability Insurance Co. has asked a federal court to order St. Paul Fire and Marine Insurance Co. to reimburse it for $1,775,000 it paid under excess coverage policies to settle water and mold damage claims against a general contractor. American Guarantee & Liability Insurance Co. v. St. Paul Fire and Marine Insurance Co., No. 05-CV-3341 (DRD) (D. N.J.).

American Guarantee filed the declaratory judgment action against St. Paul on June 28 in the U.S. District Court for the District of New Jersey, complaining that St. Paul paid only $1 million of a $2.775 million settlement by Suffolk Construction Co., despite having issued multiple policies covering Suffolk.

Suffolk was the general contractor for the Windrows at Princeton, a 295-unit condominium and townhouse project in Plainsboro Township, N.J. Construction on the project began in 1998 and was completed in 2000.

The project gave rise to several lawsuits, including one filed on May 28, 2002, by the tenants' association against Suffolk and various subcontractors alleging faulty construction of roofs, Exterior Insulation Finish System (EIFS) siding and windows, which led to water intrusion and mold damage (Windrows at Princeton Forrestal Condominium Association, Inc. v. Suffolk Construction Company, Inc., et al., No. MID-L-5243-02, N.J. Super. Ct., Middlesex Cty.).

Suffolk was a plaintiff and counterclaim defendant in an action filed in June 2001 arising from a foreclosure action against the developers (Suffolk Construction Co., Inc. v. The Windrows at Princeton Corp., et al., No. MID-C-124-01, N.J. Super., Middlesex Cty.). Suffolk was also a named defendant in an action filed on Feb. 19, 2003, by the purchaser after lenders foreclosed on the project, which was consolidated with the two other cases.

American Guarantee said in its complaint that engineering reports by Raths, Raths & Johnson Inc. and by Sutton-Kennerly & Associates Inc. , were produced during the consolidated proceedings and both firms reported widespread construction defects that led to water intrusion and mold.

All claims were mediated before John G. Bickerman of Bickerman Dispute Resolution. Claims against the contractor and subcontractorz were settled for $4,825,000, with Suffolk's share apportioned at $2,775,000. Both Suffolk and St. Paul agreed to the settlement, according to American Guarantee.

St. Paul thereafter maintained that the date of loss was Aug. 31, 2001, and its coverage was capped at $1 million. St. Paul never articulated any basis for its actions and refused to provide copies of all St. Paul policies to American Guarantee, despite American Guarantee's position as an excess insurer, the latter complained.

American Guarantee said it paid the remaining $1,775,000 'as an accommodation to its insured,' but reserved all rights against St. Paul.

The carrier is seeking all funds paid, as well as attorneys' fees and interest.

American Guarantee is represented by Louis A. Bove of Bodell, Bove, Grace & Van Horn in Philadelphia.
 
Related Document: Complaint - MOL-0508-02 (PDF format)
 

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