Case: 1:15-cv-11097 Document #: 1 Filed: 12/10/15 Page 1 of 7 PageID #:1

1004.25401

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS
ACE AMERICAN INSURANCE COMPANY and )
BRAND ENERGY SERVICES, LLC,
)
Plaintiffs,
)
)
v.
)
)
F.H. PASCHEN, S.N. NIELSEN, INC.,
)
F.H. PASCHEN, S.N. NIELSEN & ASSOC.,
)
LLC, ANTHONY REYES and RYAN
)
PRENDERGAST,
)
Defendants.
)

NO: 1:15-cv-11097

COMPLAINT
Plaintiffs, ACE AMERICAN INSURANCE COMPANY and BRAND ENERGY
SERVICES, LLC, by and through their attorneys, WALKER WILCOX MATOUSEK LLP and
TRIBLER ORPETT & MEYER, P.C., respectively, state for their Complaint against defendants
F.H. PASCHEN, S.N. NIELSEN, INC., F.H. PASCHEN, S.N. NIELSEN & ASSOC., LLC,
ANTHONY REYES and RYAN PRENDERGAST:
THE PARTIES AND VENUE
1.

Plaintiff ACE American Insurance Company (ACE) is a Pennsylvania

corporation with its principal place of business in Philadelphia, Pennsylvania.

2.

Plaintiff Brand Energy Services, LLC (Brand) is a Delaware limited liability

company. The sole member of Brand is Brand Services, LLC, another Delaware limited liability
company. Brand Services, LLC is 100% owned by Brand Energy & Infrastructure Services, Inc.,
a Delaware corporation with its principal place of business in Kennesaw, Georgia.
3.

Defendant F.H. Paschen, S.N. Nielsen, Inc. is an Illinois corporation with its

principal place of business in Chicago, Illinois. Defendant F.H. Paschen, S.N. Nielsen & Assoc.,
LLC is a limited liability company and, upon information and belief, all of its members are citizens

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of the State of Illinois. F.H. Paschen, S.N. Nielsen, Inc. and F.H. Paschen, S.N. Nielsen and Assoc.,
LLC are collectively referred to in this complaint as Paschen.
4.

Defendant Anthony Reyes (Reyes) is a citizen of the State of Illinois.

5.

Defendant Ryan Prendergast (Prendergast) is a citizen of the State of Indiana.

6.

Reyes and Prendergast are nominal but necessary parties to this action and will be

dismissed if they agree to be bound by any settlement or judgment reached herein.

JURISDICTION AND VENUE
7.

The Court has jurisdiction pursuant to 28 U.S.C., Sec. 1332, in that the plaintiffs

and defendants are citizens of different states. This case arises from Paschens claim for a defense
and indemnification under a policy of insurance issued by ACE to Brand with respect to
consolidated lawsuits filed against Paschen by Reyes and Prendergast, in the Circuit Court of Cook
County, Illinois, for personal injuries alleged suffered by Reyes and Prendergast in a construction
site accident. Prendergast and Reyes are seeking damages in excess of $1 million in their lawsuits
against Paschen. Therefore, the matter in controversy in this matter exceeds the sum of $75,000,
exclusive of interest and costs.
8.

Venue is proper in the Northern District of Illinois pursuant to 28 U.S.C., Sec.

1391(a), in that the Prendergast and Reyes reside in this district, Paschen has its principal place of
business in this district and the Underlying Lawsuit is pending in the Circuit Court of Cook County,
Illinois, which is in this district as well.
FACTS
9.

Paschen was the general contractor for a certain construction project at Marshall

High School, located at 3250 W. Adams in Chicago, Illinois (the Project).

10.

Paschen hired Hyde Park Environmental Services, Inc., an Illinois corporation

(Hyde Park) to serve as an abatement subcontractor on the Project.

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11.

Hyde Park, in turn, hired Brand to provide and erect scaffolding for Hyde Parks

use on the Project.

12.

A written contract between Brand and Hyde Park related to the Project was

executed on August 15, 2008 (the Contract).

13.

The Contract stated that Brand would provide the following insurance for the

project:
Brand Scaffolding, Inc. will provide insurance coverage per the
following limits and exclusions.
Workers compensation insurance in accordance with applicable state and
federal laws, and Employers Liability insurance with a limit of liability
of $1,000,000.00.
Commercial General Liability Insurance on an occurrence basis with a
combined Bodily Injury and Property Damage limit of $1,000,000.00 per
occurrence and $2,000,000.00 per project aggregate.
Comprehensive Automobile Liability Insurance covering use of all
owned vehicles with Bodily Injury and Property Damage limits of
$1,000,000.00 Combined Single Limit.
Umbrella/Excess Liability policy in the amount of $5,000,000.00 per
occurrence and aggregate.
The certificate will remain in effect for the duration of our contracted
scope of work only.
(A copy of the Contract is attached hereto as Exhibit A.)
14.

The Contract, as executed, did not require Brand to name either Hyde Park or

Paschen as additional insureds on its insurance coverage.

15.

After the terms of the Contract had been agreed to and the Contract had been

executed, Hyde Park informed Brand on August 18, 2008, that Brand was required to name both
Hyde Park and Paschen as additional insureds on its general liability policy and, if Brand failed to
do so, it would not allowed to work on the Project.
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16.

Because of this threat and coercion, Brand agreed to have Paschen and Hyde Park

named as additional insureds on its general liability policy issued by ACE, even though it was not
required to do so by the Contract and despite the fact that Brand did not receive any additional
money or other consideration for doing so.
17.

Reyes and Prendergast were employees of Brand and erected scaffolding on the

Project.
18.

On August 21, 2008, Reyes and Prendergast were injured when a scaffold they were

erecting on the Project collapsed.

19.

Reyes and Prendergast individually filed personal injury lawsuits against Paschen

in the Circuit Court of Cook County, under court numbers 10 L 2661 and 10 L 2630, which were
later consolidated into a single action (the Underlying Lawsuit.). The Underlying Lawsuit
alleges that Paschens negligence caused the alleged injuries and damages. (Copies of the two
complaints are attached hereto as Exhibit B and Exhibit C.)
20.

Paschen tendered its defense in the Underlying Lawsuit to ACE by letter dated

March 17, 2010.

21.

Paschens tender of defense letter stated:

Pursuant to the terms of the subcontract agreement between [Hyde Park] and
[Brand], [Brand] has agreed to name [Paschen] as an additional insured under their
General Liability Policy. We hereby place [ACE] on notice as the General Liability
Insurance Carrier for [Brand] under Policy dated 9/30/2007 to 9/30/2008.
(A copy of this letter is attached as Exhibit D.)
22.

ACE accepted Paschens tender of its defense in the Underlying Lawsuit under a

strict reservation of rights. ACE specifically reserved its rights on the question of whether there
was consideration for Brand to name Paschen as an additional insured on the Policy.

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23.

ACE and Essex Insurance Company, Hyde Parks insurer, have been sharing the

cost of defending Paschen on a 50/50 basis. Due to the $1 million deductible on the Policy, these
costs have actually been paid by Brand and Brand has a continuing obligation to pay them, until it
has paid $1 million.
24.

ACE issued a general liability policy (number HDO G23735295) to named insured

Brand Energy & Infrastructure Services, Inc. (parent company of Brand), with a policy period of
September 30, 2007 to September 30, 2008 (the Policy). (A copy of the Policy is attached hereto
as Exhibit E.)
25.

The Policy is subject to a $1 million deductible for which Brand is responsible.

26.

The Policy contains the following blanket Additional Insured endorsement for

Owners, Lessees or Contractors which is endorsement number 34:

ADDITIONAL INSURED OWNERS, LESSEES OR
CONTRACTORS SCHEDULED PERSON OR
ORGANIZATION
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
SCHEDULE
Name Of Additional Insured Person(s) Or Organization(s):
Any person or organization the insured is required by contract to provide
said coverage
A.

Section II Who Is An Insured is amended to include as an additional

insured the person(s) or organization(s) shown in the Schedule, but only
with respect to liability for bodily injury, property damage or
personal and advertising injury caused, in whole or in part by:
1.

Your acts or omissions; or

2.

The acts or omissions of those acting on your behalf;

in the performance of your ongoing operations for the additional insured(s)

at the location(s) designated above.
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B.

With respect to the insurance afforded to these additional insureds, the

following additional exclusions apply:
This insurance does not apply to bodily injury or property damage
occurring after:
1.

All work, including materials, parts or equipment furnished in

connection with such work, on the project (other than service,
maintenance or repairs) to be performed by or on behalf of the
additional insured(s) at the location of the covered operations has
been completed; or

2.

That portion of your work out of which the injury or damage

arises has been put to its intended use by any person or
organization other than another contractor or subcontractor
engaged in performing operations for a principal as a part of the
same project.

The insurance afforded by this policy for the benefit of the additional
insured(s) shown above shall be primary, but only with respect to any claims,
loss or liability arising out of the operations of the named insured and any
insurance maintained by the additional insured(s) shall be non-contributory
(See Exhibit E, Endorsement #34.)
COUNT I Declaratory Judgment Pursuant to 28 U.S.C. 2201
27.

Plaintiffs incorporate the allegations in paragraphs 1-26 as the allegations of

paragraph 27, as though fully set forth herein.

28.

For Paschen to qualify as an additional insured under the Policy, there must be a

contract that required Brand to name Paschen as an additional insured on its insurance coverage.
29.

The Contract, as executed, between Hyde Park and Brand did not require Brand to

name Paschen as an additional insured on the Policy.

30.

Brand received no consideration for naming Paschen as an additional insured under

the Policy after the Contract had already been executed. Specifically, Brand was not paid any
additional money and did not receive any additional benefit for naming Paschen as additional
insureds under the Policy.
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31.

Neither Paschen nor Hyde Park incurred any detriment in exchange for Brand

naming Paschen as an additional insured on its insurance coverage.

32.

There is no valid contract between Brand and Hyde Park and/or Brand and Paschen

that required Brand to name Paschen as an additional insured on the Policy.

33.

Paschen does not qualify as an additional insured under the Policy.

Wherefore, the plaintiffs, ACE and Brand, seek a declaration from this Court that Paschen
is not an additional insured under the Policy and that ACE and Brand have no duty to defend or
indemnify Paschen with respect to the Underlying Lawsuit.
Dated: December 10, 2015.

ACE AMERICAN INSURANCE COMPANY

s/Christopher A. Wadley (with consent)

Christopher A. Wadley, ARDC #6278651
Walker Wilcox Matousek LLP
One N. Franklin St., Ste. 3200
Chicago, IL 60606
(312) 244-6717
(312) 244-6800 (fax)
Email: cwadley@wwmlawyers.com
-andBRAND ENERGY SERVICES, LLC

s/Michael J. Meyer
Michael J. Meyer, Esq. ARDC #6193712
David E. Schroeder, Esq. ARDC #6187835
TRIBLER ORPETT & MEYER, P.C.
225 W. Washington Street, Suite 1300
Chicago, Illinois 60606
(312) 201-6400
(312) 201-6401 (fax)
Email: mjmeyer@tribler.com.
deschroeder@tribler.com