95410-1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

LEE ARTERS T/A GREENDALE BUILDERS : CIVIL ACTION – LAW

:

Plaintiff(s), :

v. : NO. 02-CV-4388

:

ZURICH AMERICAN INSURANCE CO. t/a, :

ZURICH NORTH AMERICA as successor in :

Interest to ASSURANCE CO. OF AMERICA : JURY OF TWELVE (12)

: DEMANDED

and :

:

ASSURANCE CO. OF AMERICA :

:

Defendant(s). :

ANSWER WITH AFFIRMATIVE DEFENSES TO PLAINTIFF’S COMPLAINT

Defendant, Assurance Company of America, (hereinafter sometimes also referred to as

“Assurance”) incorrectly named in the Complaint as Assurance Co. of America, hereby responds 

to the correspondingly numbered Paragraphs of Plaintiff’s Complaint as follows:

Zurich American Insurance Co. t/a Zurich North America (hereinafter sometimes also

referred to as “Zurich”)is not the successor in Interest to Assurance Company of America and is 

not a proper party to this matter. Its dismissal by stipulation will be requested during the

pendency of this litigation. 

1. Admitted based on information and belief. 

2. Admitted based on information and belief. 

3. Denied as stated. It is admitted only that Zurich American Insurance Company is 

a New York corporation with a main administrative office or principle place of business located 

at 1400 American Lane, Schaumburg, IL 60196. It is denied that Zurich American Insurance

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Company is a proper party to this action. If and to the extent the Court might consider Zurich 

American Insurance Group t/a Zurich North America to be a proper party defendant, this answer 

should be deemed filed on behalf of said entity as well as on behalf of Assurance Company of

America, which is the only appropriate defendant. 

4. Denied. Assurance Company of America issued the policy in question and is the 

only proper party defendant. The remaining averments of Paragraph 4 are denied. If and to the 

extent the Court might consider Zurich American Insurance Group t/a Zurich North America to 

be a proper party defendant, this answer should be deemed filed on behalf of said entity as well 

as on behalf of Assurance Company of America. Zurich American Insurance Company is not

the successor in interest to Assurance. 

5. Denied as stated. Assurance Company of America is a New York corporation

engaged in the insurance business with a main administrative office or principle place of

business located at 1400 American Lane, Schaumburg, IL 60196. 

6. Denied as stated. Assurance Company of America is a subsidiary of Zurich

American Insurance Company. 

7. Admitted. 

Jurisdiction and Venue

7. [sic] Denied. It is denied that the amount in controversy exceeds $75,000.00

exclusive of interest and costs. 

8. Admitted. 

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Factual Background

9. Denied as stated. It is admitted only that Assurance Company of America issued 

Policy No. SCP34746363 to Greendale Builders and Lee Arters with an effective date

commencing 12:01 a.m. on January 19, 1999 and expiring at 12:01 a.m. on January 19, 2000. 

10. Admitted. 

11. Denied as stated. To the contrary, Section I (a) is not fully quoted in Paragraph 

11. The policy, being in writing, speaks for itself. 

12. Denied. The policy language is not accurately quoted, and, being in writing,

speaks for itself. 

13. Denied. The defendant does admit that the portions of the policy quoted are

accurate. However, the entire portion of the policy is not quoted. 

14. Denied. The defendant does admit that the portions of the policy quoted are

accurate. However, the entire portion of the policy is not quoted. 

The Underlying Complaint

15-21. Denied. Assurance lacks sufficient knowledge or information upon which to form 

a belief as to the truth of the averments set forth in Paragraphs 15 through 21. 

22. Denied as stated. It is admitted only that notice of the claim was provided. 

23. Denied. Assurance Company of America is the proper defendant. By way of

further response, Zurich is not a proper party to this litigation. 

24. Denied. By way of further response, Zurich is not a proper party to this litigation. 

25. Admitted based on information and belief. 

26. Denied. By way of further response, the Complaint, being in writing, speaks for 

itself. 

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27. Denied as stated. By way of further response, the Underlying Complaint, being in 

writing, speak for itself. See (e.g.) the Underlying Complaint at Paragraphs 24(f) and 24(g).

28. Denied as a conclusion of law to which no response is required. By way of

further response, defendant has no knowledge of what Gorman believed.

29. Denied as a conclusion of law to which no response is required. 

30. Denied. By way of further response, defendant lacks sufficient knowledge or

information upon which to form a belief as to the truth of the averments of Paragraph 30. 

The Rejection of Coverage

31. Denied. 

32. Admitted. 

33. Admitted only that notice was provided to Assurance. 

34. Denied. The applicable policy issued by Assurance, being in writing, speaks for 

itself. By way of further response, Zurich is not a proper party to this litigation. 

35. Admitted only that Assurance caused such a letter to issue, and the letter, being in 

writing, speaks for itself. 

36. Denied. The letter, being in writing, speaks for itself. 

37. Denied as stated. It is admitted only that Greendale requested reconsideration and 

that said letter, being in writing, speaks for itself. 

38. Denied as to Assurance. By way of further response, Zurich is not a proper party 

to this litigation. Assurance did reconsider but did not change its decision. 

39. Denied. By way of further response, Zurich is not a proper party to this litigation. 

40. Denied. By way of further response, Zurich is not a proper party to this litigation. 

41. Denied. By way of further response, Zurich is not a proper party to this litigation.

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COUNT I – Declaratory Judgment

42. The averments set forth in Paragraphs 1 through 41 above are hereby incorporated 

by reference as though fully set forth herein. 

43-44. Denied. The averments set forth in Paragraphs 43 and 44 are denied as

conclusions of law to which no response is required. 

45. Denied. By way of further response, Assurance Company of America

respectfully requests that the relief requested by plaintiff be denied. 

WHEREFORE, Assurance Company of America demands that Plaintiff’s Complaint be

dismissed, that it be awarded costs of defense including reasonable attorneys fees and that it have 

such other and further relief as may be deemed just and appropriate under the circumstances. 

COUNT II – Breach of Contract

46. The averments set forth in Paragraphs 1 through 45 above are hereby incorporated 

by reference as though fully set forth herein. 

47. Denied. By way of further response, Zurich is not a proper party to this litigation. 

WHEREFORE, Assurance Company of America demands that Plaintiff’s Complaint be

dismissed, that it be awarded costs of defenses including reasonable attorneys fees and that it

may have such other and further relief as may be deemed just and appropriate under the

circumstances. 

COUNT III – Breach of the Covenants of Good Faith and Fair Dealings

48. The averments set forth in Paragraphs 1 through 47 above are hereby incorporated 

by reference as though fully set forth herein. 

49. Denied. The averments set forth in Paragraph 49 are denied as conclusions of law 

to which no response is required. 

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50. Denied. By way of further response, Zurich is not a proper party to this litigation. 

WHEREFORE, Assurance Company of America demands that Plaintiff’s Complaint be

dismissed, that it be awarded costs of defenses including reasonable attorneys fees and that it

may have such other and further relief as may be deemed just and appropriate under the

circumstances. 

COUNT IV – Unjust Enrichment

51. The averments set forth in Paragraphs 1 through 50 above are hereby incorporated 

by reference as though fully set forth herein. 

52. Admitted that premiums were paid. Defendant has no independent knowledge

about his beliefs or thoughts. By way of further response, Zurich is not a proper party to this

litigation. 

53. Denied. By way of further response, Zurich is not a proper party to this litigation. 

WHEREFORE, Assurance Company of America demands that Plaintiff’s Complaint be

dismissed, that it be awarded costs of defense including reasonable attorneys fees and that it have 

such other and further relief as may be deemed just and appropriate under the circumstances. 

COUNT V – Bad Faith Denial of Insurance Coverage

54. The averments set forth in Paragraphs 1 through 53 above are hereby incorporated 

by reference as though fully set forth herein. 

55. Denied. To the contrary, Assurance Company of America has acted properly,

prudently and in good faith. By way of further response, Zurich is not a proper party to this

litigation. 

56. Denied. The averments set forth in Paragraph 56 are denied as conclusions of law 

to which no response is required. 

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57. Denied. By way of further response, Zurich is not a proper party to this litigation. 

The denial of coverage by Assurance Company of America was proper and was made in good 

faith. 

WHEREFORE, defendant Assurance Company of America demands that Plaintiff’s 

Complaint be dismissed, that it be awarded costs of defense including reasonable attorneys fees 

and that it have such other and further relief as may be deemed just and appropriate under the 

circumstances. 

FIRST AFFIRMATIVE DEFENSE

Assurance Company of America acted reasonably, fairly and in good faith in connection 

with the investigation of the Gorman claim. 

SECOND AFFIRMATIVE DEFENSE

Assurance Company of America acted reasonably, fairly and in good faith in connection 

with its evaluation of coverage and reconsideration of its denial of coverage concerning the

Gorman claim. 

THIRD AFFIRMATIVE DEFENSE

Assurance Company of America did not act in bad faith, unfairly, or in a reckless or

wanton fashion in denying coverage for the Gorman claim. 

FOURTH AFFIRMATIVE DEFENSE

Assurance Company of America’s denial of coverage was not frivolous or unfounded in 

connection with the Gorman claim.

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FIFTH AFFIRMATIVE DEFENSE

Assurance Company of America displayed no dishonest or improper purpose or motive

of self interest or ill will in connection with its evaluation of and denial of coverage for the

Gorman claim. 

SIXTH AFFIRMATIVE DEFENSE

Mere negligence or bad judgment, the existence of which are denied on the part of

Assurance Company of America, do not constitute bad faith. 

SEVENTH AFFIRMATIVE DEFENSE

Assurance Company of America acted properly, in good faith and dealt fairly with its

insured in connection with the investigation of the Gorman claim and with respect to its

evaluation of coverage in relationship to that claim. 

EIGHTH AFFIRMATIVE DEFENSE

At no time did Assurance Company of America act recklessly, wantonly, with ill will or 

with improper purpose in connection with the investigation of the Gorman claim and the

evaluation of coverage in relationship to that claim. 

NINTH AFFIRMATIVE DEFENSE

At no time did Assurance Company of America act with a conscious disregard for, or

with indifference to, the rights of its insured in connection with the Gorman claim. 

TENTH AFFIRMATIVE DEFENSE

Assurance Company of America had a reasonable basis upon which to reach its position 

in connection with the lack of coverage for the Gorman claim, see (e.g.) the Underlying

Complaint at Paragraphs 24(f) and 24(g). 

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ELEVENTH AFFIRMATIVE DEFENSE

Assurance Company of America’s decision to investigate the underlying claim and its

subsequent decision to deny coverage for the Gorman claim does not constitute bad faith. 

TWELFTH AFFIRMATIVE DEFENSE

Plaintiff is not entitled to have a jury decide the claims set forth in the complaint. 

THIRTEENTH AFFIRMATIVE DEFENSE

Plaintiff has failed to prove bad faith by clear and convincing evidence. 

FOURTEENTH AFFIRMATIVE DEFENSE

Plaintiff has failed to set forth a cause of action against Assurance Company of America 

upon which relief can be granted. 

FIFTEENTH AFFIRMATIVE DEFENSE

Plaintiff has not established an entitlement to punitive, treble or exemplary damages. 

SIXTEENTH AFFIRMATIVE DEFENSE

Assurance Company of America breached no contractual duties owed to plaintiff. 

SEVENTEENTH AFFIRMATIVE DEFENSE

Assurance Company of America has not been unjustly enriched. 

EIGHTEENTH AFFIRMATIVE DEFENSE

Assurance Company of America is the proper party defendant. Zurich American

Insurance Company t/a Zurich North American is not a proper party. 

WHEREFORE, defendant Assurance Company of America demands that Plaintiff’s 

Complaint be dismissed, that it be awarded costs of defense including reasonable attorneys fees 

and that it have such other and further relief as may be deemed just and appropriate under the

circumstances. 

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HECKER BROWN SHERRY AND JOHNSON LLP

By: 

Carl H. Delacato, Jr., Esquire

Attorney I.D. No. 32145

Frederick E. Blakelock, Esquire

Attorney I.D. No. 65938

Attorneys for Defendant,

Assurance Company of America

Dated: September 25, 2002

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