Despite Back-and-Forth, Insurance Company Should Defend Property Managers in Defective Glass Suit

A judge ruled that Evanston Insurance Co. should defend property managers in a suit that alleged defective glass panels fell and shattered at a condominium complex in Manhattan.

According to court documents filed on July 8 in the District Court Southern District of New York, U.S. Magistrate Judge James Cott recommended that Evanston should defend FS Project Management (FSPM) and Firstservice Residential New York Inc (FSR), but denied “summary judgment on the issues of waiver and the duty to indemnify.”

In August of 2020, Evanston was accused by three insureds, including FSPM and FSR, of rejecting a previous agreement to defend them in a case. According to documents, in 2015, the insureds “gave Evanston timely notice of the litigation. On August 3, 2015, Evanston agreed Plaintiffs’ claim was covered promising in writing to ‘… continue to represent [FSPM and FSR’s] interest in the Claim.’… On May 30, 2019, the Defendant re-confirmed that the claim was covered and continued the defense of Plaintiffs… Unexpectedly, on June 10, 2020, Evanston disclaimed coverage and threatened to stop paying for the defense of FSPM and FSR by August 10, 2020.”

In 2015, the Board of Managers of 325 Fifth Avenue Condominium in Manhattan filed suit against FSR and FSPM in which it “asserted nine causes of action against Plaintiffs for fraud, breach of fiduciary duty, constructive fraud, aiding and abetting, civil conspiracy, and breach of contract.”

According to documents, “The Board alleged that between 2007 and 2009, the Condominium sponsor retained FS Project Management to determine the cause of defects in the glass panels installed at the balcony rails that resulted in their falling and shattering…. The Board also alleged that FSR concealed construction and design defects and failed to properly bill tenants, pay contractors, order supplies, and advise the Board about maintenance of common areas in the Condominium.”

Cott ruled “[i]t is premature for the Court to determine whether or not [Evanston] has a duty to indemnify [them] because the issue of indemnification necessarily depends on facts that will be decided in the underlying state action.”

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