Three commercial policyholders are suing their insurance company after it ceased defending them in an ongoing premises liability dispute over allegedly defective glass balcony panels that fell from a Fifth Ave. Manhattan building and injured pedestrians below.

FS Project Management LLC, Firstservice Residential New York Inc. and another company that together manage the 325 Fifth Ave. condo building filed the lawsuit against Evanston Insurance Co. in a New York federal court Aug. 21. The companies allege Evanston violated its contractual obligations by suddenly refusing to cover the policyholders for legal fees in the premises liability dispute.

The plaintiffs are facing an underlying $12.5 million lawsuit over the glass panels, which detached from some of the high-rise balconies on multiple occasions. That lawsuit was filed in a New York state court in 2012 by the building’s board of managers. It names several companies involved with the building’s construction and the sale of its condo. The board added FS Project Management LLC and Firstservice Residential in 2015 for their role as property and project managers, court documents show, according to Law 360.

Evanston notified the companies on June 10 that it would stop covering legal fees for the suit by Aug. 10. Among other things, the insurance company accuses the plaintiffs of failing to disclose certain building defects, including the glass panels that were installed on the balconies of the building.

According to Law 360, Evanston maintains that all of the covered claims against the plaintiff companies have been dismissed already, leaving only claims involving allegedly intentional breaches of contract rather than negligent conduct. The insurer says it covered the plaintiffs in the underlying suit for negligence, errors, and similar wrongful acts but not for intentional actions.

Evanston’s letter says that FS Project Management was tasked to investigate the design and construction of the balconies, but that it “actively and fraudulently” worked to conceal the defects.

FS Project Management and Firstservice Residential are asking the court for a declaration that their Evanston insurance policy protects them in the underlying lawsuit. The plaintiffs also want the insurer to be required to cover any legal fees it incurs after Aug. 10 in addition to legal costs associated with the new lawsuit the plaintiff companies filed against Evanston.

“[Evanston] has no legal or contractual basis upon which to disclaim coverage and withdrawal from the defense of FSR and FSPM in the litigation,” the complaint contends, according to Law 360. “The policy specifically provides coverage for the litigation, defendant agreed and did not reserve the right to disclaim coverage.”

Lawyers in Beasley Allen’s Fraud Section handle a variety of cases related to insurance coverage. Lawyers in this Section are currently investigating cases involving fraudulent accounting practices by life insurance companies concerning premium increases, as well as property insurance fraud. In these cases, insurance companies nationwide are unjustly depreciating labor costs on adjusted property claims. For more information about these or other cases involving insurance, contact Rachel Boyd or Paul Evans.

In addition, Beasley Allen has successfully handled a number of premises liability cases and we are prepared to investigate any cases where severe injury or death results. For more information or to discuss this type of claim, contact Mike Crow or Ben Locklar in our Personal Injury Section.

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