Facts

Zenith Insurance Co. sued Michael Ehrenfeld Co., Liberty Mutual Fire Insurance Co., and FFC Inc., involving a contractual dispute. FFC filed a cross-complaint against Ehrenfeld.

PLAINTIFF'S CONTENTIONS:
Plaintiff issued a workers' compensation and employers' liability insurance policy to Falcon Framing Co. Inc. 2011 through Ehrenfeld Agency. The policy was effective from Oct. 1, 2011 to Oct. 1, 2012 and designated Falcon as the sole insured. Defendant FFC was later incorporated and Falcon was thereafter dissolved. Ehrenfeld allegedly knew about this, but failed to disclose the facts to plaintiff. Plaintiff did not issue an insurance policy to FFC nor authorize Ehrenfeld to add FCC to the policy. Nevertheless, Ehrenfeld went ahead and issued certificates of insurance to FFC, purportedly on behalf of plaintiff.

Falcon Framing Co., Inc. was also insured by Liberty Mutual under a Wrap workers compensation insurance policy for its work on a Shea Homes project. FFC took over the work on this project from Falcon. At all times, the policy premiums for the Wrap policy were paid in full. In August 2012, FFC's employee fell from a balcony of a Shea Homes condominium under development and sustained catastrophic injuries. Liberty Mutual denied coverage under the Wrap policy because Falcon had never advised Liberty that it had reformed under the name FFC, Inc. and the policy only listed Falcon as a named insured. FFC then demanded plaintiff to provide workers' compensation coverage to the injured employee.

Plaintiff accepted the tender of coverage under a reservation of rights and filed this instant lawsuit against defendants, alleging breach of contract, negligence, equitable contribution, and declaratory relief. Defendants allegedly imposed increased potential coverage obligations on plaintiff without authority.

DEFENDANTS' CONTENTIONS:
Defendants denied the allegations and asserted various affirmative defenses. Ehrenfeld had no duty to inform Liberty of the name change. Falcon/FFC never advised Liberty of the name change, and never took steps to make sure FFC was covered under the Wrap policy even though they continued to pay the insurance premiums. This case primarily involves a dispute between Zenith and Liberty over whose worker's compensation policy was to cover the injuries in question. Ehrenfeld's actions had no impact on Zenith's obligations to insure Falcon for jobs that did not fall under Wrap coverage. Since Liberty denied coverage, the Zenith policy had to step in. Ehrenfeld's actions had no impact on Falcon/FFC's obligation to notify Liberty of its name change. Ehrenfeld's actions had no effect whatsoever on Liberty's decision to deny coverage to FFC.

DEFENDANT/CROSS-PLAINTIFF'S

Result

Ehrenfeld and Zenith reached a $875,000 settlement.

Other Information

FILING DATE: April 10, 2013.