A major real estate management company had been managing a condominium building for many years. The condo board and the property management company employed a superintendent. After some time, the board grew frustrated with the super and fired him. The super then brought an employment claim against the board and the property management company, alleging discrimination.
The Challenge
In the beginning, the insurance company for the board agreed to defend both the board and the property manager together. But at some point, the board decided it was at odds with the property manager and hired a separate law firm. The board ordered the stoppage of payment of legal fees to defend the property manager.
The insurance company went along with the board and withdrew its defense of the property manager. The insurer told the property manager, “Pay the bills yourself; we’re not paying two lawyers.” The insurance company stated its named insured was the board; the property manager was not technically an additional insured under the policy. The insurer insisted it had only been defending the property manager as a courtesy to the named insured.
Now, the property manager was stuck defending a discrimination claim without liability coverage. Meanwhile, the board made claims against the property manager, saying that the termination of the super was the property manager’s fault, and that the board had no obligation to indemnify the property manager.
The Solution
The property management company came to Schwartz, Conroy & Hack. Our team noted that the contract between the board and the property manager included indemnification provisions, which indicated that the property manager was supposed to be indemnified for claims like this.
On behalf of the property manager, we sued the board for indemnification in the underlying proceeding brought by the fired employee. We also sued the insurance company, arguing that the property manager was an additional insured and that the insurer had in bad faith refused to continue covering the costs to defend the property manager from the employment claim.
The Result
Within 90 days of filing both lawsuits, both cases settled. Our client got reimbursed for all legal fees that it should have been paid to continue defending the employment claim, and our client paid nothing toward the settlement. Thus, our client was extricated from two lawsuits and paid nothing based on our advice and representation.
If you are involved in a dispute with your business insurance company, contact Schwartz, Conroy and Hack, PC for assistance. We have the expertise and tenacity to make insurance companies keep the promises they make to you and your business.
