Beruflich Dokumente
Kultur Dokumente
Fru\En
AUG g
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIYISION
HENNESSY INDUSTzuES, INC., for itself and as successor-in-interest to Ammco Tools, Inc., a Delaware corporation,
20t3
*ffi8,#IB[*,
Plaintiff,
v.
COMPLAINT
Plaintife Hennessy Industries, lnc., for itself and as successor-in-interest to Ammco
Tools, Inc., (collectively ooHennessy") by its attorneys, and for its Complaint against Defendant National Union Fire Insurance Company of Pittsburgh, Pa. ('National Union") states as follows:
NATURE OF ACTION
l.
2l5ILCS
5/155.
National Union, itself and through its agent Resolute Management, Inc. ("Resolute"), has
unreasonably and vexatiously refused
expert
witness fees, and other defense expenses in connection with underlying lawsuits against
Hennessy alleging bodily injury from asbestos exposure.
2.
In 2008, National Union and Hennessy entered into a confidential Cost Sharing
Agreement ("CSA") further defining the parties' rights and obligations under policies of
insurance issued and/or sold by National Union to Hennessy. The CSA is governed by Illinois
law and contains an arbitration provision providing for certain disputes between Hennessy and
MEI
16349725v.1
National Union to be submitted to binding arbitration governed by the Federal Arbitration Act, 9
U.S.C. Sec. 1.
3.
Pursuant to the procedure outlined in the CSA, Hennessy sent a letter to National
5i155.
See, e.g.,Amerisure
I11.
App. 3d
PARTIES
4.
Hennessy
business in
the successor-in-interest to policies of insurance issued in Illinois to Ammco Tools, Inc., which
had its headquarters in Illinois.
5.
companies
in New York, New York. National Union is a member of the AIG Group of
Illinois.
6.
$75,000.
because there is complete diversity between the parties and the amount
in controversy exceeds
7.
it
transacts
-2MEl
16349725v.1
business in the State, is licensed by the Illinois Insurance Department, and issued contracts to
provide insurance to Hennessy, which, at the time of issuance, had its principal place of business in Illinois.
8.
9.
country.
of
to
asbestos
in various jurisdictions
10.
shoe arcing machines and brake drum lathes manufactured by Ammco, Hennessy's predecessor
in interest. None of the machines themselves contain asbestos. The use of the brake shoe arcing
machine in conjunction with brake shoes, an unknown percentage of which may have contained
asbestos, is alleged to have caused
injury.
insurance
11.
1984
No.GLA
l,
the
aggregate; and (2) Policy No. GLA 117-09-68, covering the policy period of August 1, 1985 to
August 1, 1986, with limits of liability of $1 million each occurrence and in the aggregate
("National Union Policies").
12.
-JMEI
16349725v.1
13.
In April 2008, Hennessy and its primary insurers, National Union and Zurich
in
interest
to Zuich Insurance
Company, U.S.
Branch, entered into the CSA, defining inter alia the rights and obligations of the parties under
the National Union Policies in connection with the underlying asbestos claims.
14. 15.
The CSA contains an arbitration provision, which by its terms and pursuant to law
ILCS 51155.
In April 2011, National Union and other AIG insurance companies entered into a
transaction with National lndemnity Company ("NICO") whereby, according to filings with the Securities and Exchange Commission, AIG paid NICO $1.65 billion for a reinsurance policy to cover "the bulk of AIG's net domestic asbestos liabilities," valued at $3.5 billion.
16. 17.
Management, Inc (ooResolute"). Both NICO and Resolute are direct or indirect wholly-owned subsidiaries of Berkshire Hathaway.
18.
Since
administrator of National Union's obligations under the CSA and the National Union Policies
and all communications regarding Hennessy's claims have been with employees of Resolute.
19.
Berkshire Hathaway profits by investing the money paid by AIG to assume the
obligations.
owes to
-4MEI
16349725v.1
20.
Our insurance operations continued their delivery of costless capital that funds a myriad of other opportunities. This business produces "float" - money thqt doesn't belong to tts, but that we get to invest for Berkshire's benefit. And if we pay out less in losses and expenses than we receive in premiums, we additionally earn an underwriting profit, meaning thot float costs us less than nothing.
(Emphasis added).
21. 22.
Included in the "costless capital" or oofloat" that Buffet refers to is more than $2.5
million National Union owes under the CSA. Before Resolute assumed claims-handling responsibility for National Union's
liabilities, National Union generally (although not entirely) complied with the CSA. Since April
2011, Resolute has caused National Union repeatedly to breach its obligations under the CSA,
the National Union Policies and
Illinois law.
23.
The breaches include, inter alia,National Union's failure to pay its share of
National Union's wrongful and arbitrary failure to pay a significant portion of the fees of
Hennessy's defense counsel, all of who are insurer "panel counsel" selected and approved by
Z'xrch and National Union; and National Union's failure to cooperate with Hennessy by
providing usual and customary claims communications, including timely notices of withdrawal
from cases or denials ofcoverage, loss runs, and defense cost detail.
24.
Hennessy has sent National Union various notices demanding payment as well as
a demand for arbitration identifring National Union's breaches and the damages flowing from
those breaches.
-5MEI
16349725v.1
25. 26.
if the
same were
fully
(1) In any action by or against a company wherein there is in issue the liability of the company on a policy or policies of insurance or the amount of loss payable thereunder, or for an unreasonable delay in settling a claim, and it appears to the court that such action or delay is vexatious and unreasonable, the court may allow as part of the taxable costs in the action reasonable attorney fees, other costs, plus an amount not to exceed any one of the following amounts:
60Yo of the amount which the court or jury finds such party is entitled to recover against the company, exclusive of costs;
(a)
(b)
(c)
$6o,ooo;
the excess of the amount which the court or jury finds such party is entitled to recover, exclusive of costs, over the amount, if any, which the company offered to pay in settlement of the claim prior to the action.
of the circumstances
determines whether
Viewing the totality of the circumstances, National Union's conduct, through the
actions of its agent, Resolute, was, and continues to be, vexatious and umeasonable.
National Union's unreasonable conduct is evidenced by, among other things, its
and Resolute's flagrant and entirely unjustified refusal to honor its obligations under the National
30.
Rather than pay as required under the CSA, National Union Policies and
applicable Illinois law, National Union has forced Hennessy to pay settlements and defense costs
-6MEI
16349725v.1
31. 32.
when
escape a penalty
WHEREF'ORE, the plaintiff, Hennessy, respectfully requests that this Court enter
judgment in its favor and against National Union; award
penalties pursuant to
unreasonable conduct;
jury on all issues so triable. HENNESSY INDUSTRIES, [NC., for itself and as successor-in-interest to Ammco Tools,
Inc.
-7 MEI
16349725v.1
Angela R. Elbert (#6236964) aelbert@ngelaw.com Jason A. Frye (#6292848) jfrye@ngelaw.com NEAL, GERBER & EISENBERG, IIP Two North LaSalle Street, Suite 1700 Chicago, IL 60602 (312)26e-8000
-AndGita F. Rothschild (Pro Hac Vice pending) Brian J. Osias (Pro Hac Vice pending)
(e73) 63e-7e69
-8MEI
16349725v.1
NOTIFICATION AS TO AFFILIATES
Pursuant to Local Rule 3.2 and Rule 7.1 of the Federal Rules of
Hennessy Industries,