1

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

CINCINNATI SPECIALTY )

UNDERWRITERS INSURANCE )

COMPANY, )

)

Plaintiff, ) Case No. 1:20-cv-03176

)

v. ) Judge Edmond E. Chang 

)

AJAX CONSTRUCTION, INC., ) Magistrate Judge Maria Valdez

JASON SCHERENCEL, AND )

GRAND TIMBER LOFTS )

CONDOMINIUM ASSOCIATION )

)

Defendants. )

THE CINCINNATI SPECIALTY UNDERWRITERS INSURANCE COMPANY’S 

SECOND AMENDED COMPLAINT FOR DECLARATORY JUDGMENT

Plaintiff The Cincinnati Specialty Underwriters Insurance Company (“CSU”) states 

as follows for its Second Amended Complaint for Declaratory Judgment against Ajax 

Construction, Inc. (“Ajax”) and Grand Timber Lofts Condominium Association (“Grand 

Timber”): 

1. This is a declaratory judgment action brought pursuant to 28 U.S.C § 2201 

and 28 U.S.C. § 1332 to determine the rights and obligations of the parties under a 

commercial general liability insurance policy. 

2. This action will resolve a dispute among CSU, Grand Timber, and Ajax as 

to whether Ajax is entitled to coverage under a commercial general liability policy that 

CSU issued to Ajax, in relation to a lawsuit filed against it by Grand Timber. 

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 1 of 17 PageID #:764
2

PARTIES, JURISDICTION AND VENUE

3. The Cincinnati Specialty Underwriters Insurance Company is a corporation 

organized under the laws of Delaware with its principal place of business in Ohio. For the 

purposes of 28 U.S.C. § 1332, CSU is a citizen of Delaware and Ohio.

4. Ajax Construction, Inc. is a corporation organized under the laws of Illinois 

with its principal place of business in Illinois. For the purposes of 28 U.S.C. § 1332, Ajax 

Construction, Inc. is a citizen of Illinois. 

5. Jason Scherencel is a resident and citizen of Illinois. For the purposes of 28 

U.S.C. § 1332, Jason Scherencel is a citizen of Illinois. Mr. Scherencel was previously 

dismissed from this case without prejudice.

6. Grand Timber Lofts Condominium Association is a not-for-profit corporation 

organized under the laws of Illinois with its principal place of business at 500 N. Damen 

Avenue in Chicago, Illinois. For the purposes of 28 U.S.C. § 1332, Grand Timber Lofts 

Condominium Association is a citizen of Illinois. 

7. According to filings on the Illinois Secretary of State website, Ajax was 

involuntarily dissolved on August 10, 2018. Jason Scherencel was the President of Ajax.

8. Grand Timber filed a lawsuit against Ajax and “Jason Scherencel, 

individually and D/B/A Ajax Construction” seeking damages with respect to construction 

work at the Grand Timber property at 500 N. Damen, Chicago, Illinois (the “Property”). 

9. The Grand Timber lawsuit seeks damages in excess of $75,000, plus 

prejudgment interest, attorney’s fees, and costs. The exposure to CSU, including the cost 

of defending Ajax and the damages sought from Ajax, exceeds $75,000.00.

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 2 of 17 PageID #:765
3

10. Jurisdiction for this matter is secure under 28 U.S.C. § 1332. The parties 

are of diverse citizenship and the amount in controversy exceeds the jurisdictional 

minimum. 

11. Venue is appropriate under 28 U.S.C. § 1391(b)(2). The insurance policy 

at issue was issued to Ajax in Illinois, the underlying dispute relates to contracts for work 

to be done in Chicago, Illinois, and the underlying lawsuit filed by Grand Timber is pending 

in the Circuit Court of Cook County, Illinois. 

BACKGROUND

A. Underlying Suit

12. This insurance coverage dispute arises out of a lawsuit filed by Grand 

Timber against Ajax. The underlying suit is captioned as The Grand Timber Lofts 

Condominium Association v. Ajax Construction, Inc., and Jason Scherencel, individually 

and d/b/a Ajax Construction, case 2019 L 008527 (Circuit Court of Cook County) (“the 

Grand Timber Lawsuit”). (A copy of the original Grand Timber Complaint, including 

exhibits thereto, is attached as Exhibit 1.) On or around August 20, 2020, Grand Timber 

filed an amended complaint in the Grand Timber Lawsuit. (A copy of the Amended Grand 

Timber Complaint, including exhibits thereto, is attached as Exhibit 10.) On or around 

January 6, 2021, Grand Timber filed a document entitled “Count 3 of Plaintiff’s Amended 

Complaint at Law” in the Grand Timber Lawsuit. (A copy of Count 3 of Plaintiff’s Amended 

Complaint at Law is attached as Exhibit 11.) Count 3 of Plaintiff’s Amended Complaint 

at Law in the Grand Timber Lawsuit realleges paragraphs 1-17 of Grand Timber’s 

Amended Complaint including, by reference, exhibits A-F of the Amended Complaint.

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 3 of 17 PageID #:766
4

13. Grand Timber alleges that Ajax and Grand Timber contracted in August 

2017 for Ajax to perform “exterior wall renovations” at the Property, as itemized in the 

Written Proposal (the “Contract”). (Exh. 1, ¶¶ 5-9; Exh. 10, ¶¶ 5 – 10; Exh. 11, ¶ 38.) The 

Contract is attached as Exhibit A to the Grand Timber Complaint and Amended Grand 

Timber Complaint, and is incorporated by reference in ¶ 38 of Count 3 of Plaintiff’s 

Amended Complaint at Law.

14. Grand Timber alleges that Ajax prepared and executed an express written 

warranty for its work at the Property (the “Warranty”). (Exh. 1, ¶¶ 10-13; Exh. 10, ¶¶ 11-

14; Ex. 11, ¶ 38.) The Warranty is attached as Exhibit B to the Grand Timber Complaint

and Amended Grand Timber Complaint, and is incorporated by reference in Count 3 of 

Plaintiff’s Amended Complaint at Law.

15. Grand Timber alleges that it paid Ajax $407,100 to perform the work set 

forth in the Contract. (Exh. 1, ¶ 8, 14; Exh. 10, ¶15; Exh. 11, ¶ 38.)

16. Grand Timber alleges that Ajax began the work set forth in the Contract in 

November 2017 and represented that the work itemized in the Contract would be 

substantially completed by November 20, 2017. (Exh. 1, ¶¶ 15-16; Exh. 10, ¶¶16-17; Exh. 

11, ¶ 38.)

17. Grand Timber alleges that Ajax breached the Contract by failing to perform 

and complete the work as itemized in the Contract, or to honor its contractual obligations 

under the Warranty. (Exh. 1, ¶¶17-18; Exh. 10, ¶¶18-19, 34). In its new Count 3, Grand 

Timber alleges that Ajax failed to substantially complete that work. (Exh. 11, ¶ 41.) 

18. Grand Timber alleges that it sent correspondence to Ajax on August 10, 

2018, October 20, 2018, and March 21, 2019, and otherwise contacted Ajax, demanding 

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 4 of 17 PageID #:767
5

that Ajax repair and complete the work identified in the Contract. (Exh. 1, ¶¶19-22; Exh. 

10, ¶¶20-23; Exh. 11, ¶¶ 42-44.). Copies of the August 10, 2018, October 20, 2018, and 

March 21, 2019 letters are attached to the Grand Timber Complaint and Amended Grand 

Timber Complaint as Exhibits C, D, and E, and are incorporated by reference in ¶ 38 of

Count 3 of Grand Timber’s Amended Complaint.

19. Grand Timber alleges that Ajax “ignored [Grand Timber’s] communications 

regarding the deficient and incomplete work at the Property,” “ignored [Grand Timber’s] 

demands for it to honor the promises contained in the Warranty,” “refused to repair and/or 

replace the defective materials and labor it provided at the Property.” (Exh. 1, ¶¶23, 28; 

Exh. 10, ¶¶24, 32.) Grand Timber also alleges that Ajax “ignored [Grand Timber’s] 

communications regarding the deficient and incomplete work at the Property. (Exh. 1, 

¶¶23, 28; Exh. 10, ¶¶24, 32; Exh. 11, ¶ 46.) 

20. Grand Timber alleges that due to the failure or refusal of Ajax to complete 

the work or to repair/replace its deficient work, Grand Timber was damaged. (Exh. 1, ¶24, 

31, 30, 40, 49, 24, 31, 30, 40, 49 [sic]; Exh. 10, ¶¶35-36; Exh. 11, ¶ 47.) 

21. In each paragraph alleging damages, Grand Timber specifically cites 

Exhibit F to the Grand Timber Complaint and Amended Complaint. That document is a 

May 2, 2019 proposal from Lupo Masonry Restoration, Inc. (“Lupo Masonry”), quoting 

$489,415.00 to perform and/or repair the work that Ajax had been hired to do. (Exh. 1, 

¶24, 31, 30, 40, 49, 24, 31, 30, 40, 49 [sic]; Exh. 10, ¶¶25, 35; Exh. 11, ¶ 47.)

22. Counts 1-5 of the original Grand Timber Complaint were asserted against 

Ajax, seeking damages under theories of breach of contract, breach of express warranty, 

breach of implied warranty, Magnuson Moss violations, and consumer fraud. (Exh. 1 pp. 

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 5 of 17 PageID #:768
6

4-10). Counts 6-10 of the original Grand Timber Complaint asserted the same claims 

against Jason Scherencel “individually and d/b/a Ajax Construction.” (Exh. 1, pp. 10-16.)

23. The Amended Grand Timber Complaint alleges two counts, both against 

Ajax, which Grand Timber titles “Breach of Contract” and “Breach of Express Warranty.”

(Exh. 10, pp. 3, 5.) Grand Timber’s most recent filing purports to add a Count 3 to the 

Amended Grand Timber Complaint against Ajax, titled “Negligence.” (Exh. 11, p. 3.)

B. CSU’s Coverage Dispute with Ajax 

24. On March 21, 2019, counsel for Grand Timber sent a “Notice of Claim” to 

the insurance agent for Ajax, stating that it intended to pursue a claim against Ajax for 

failing to complete the work it had contracted to do. Grand Timber’s March 21, 2019 letter 

states: “In the plainest terms, Ajax failed to provide the services for which it was paid. 

Ajax’s work was substandard, did not meet minimum requirements for construction, and 

failed to perform the services in a workmanlike manner.” (A true and correct copy of that 

March 21, 2019 letter is attached as Exhibit 2.) 

25. On April 23 and April 30, 2019, CSU sent correspondence to Ajax advising 

that CSU was investigating Grand Timber’s claim under reservation of rights, and 

identifying certain policy exclusions that could bar coverage for that claim. (True and 

correct copies of the April 23 and April 30, 2019 letters to Ajax are attached together as 

Exhibit 3.)

26. On or around September 11, 2019, CSU received notice that Grand Timber 

had filed a lawsuit against Ajax. (A true and correct copy of the September 11, 2019 

email from Grand Timber’s counsel is attached as Exhibit 4.)

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 6 of 17 PageID #:769
7

27. On October 11, 2019, CSU sent a letter to Ajax and Mr. Scherencel 

explaining why the policy issued by CSU provided no coverage for the Grand Timber 

Lawsuit. The letter gave Ajax until October 18, 2019 to withdraw any claim for coverage 

or provide an explanation of why they disagreed with CSU’s coverage conclusion. (A true 

and correct copy of the October 11, 2019 letter is attached as Exhibit 5.) CSU received 

no response to this letter on or before October 18, 2019. 

28. CSU sent follow up correspondence to Ajax on November 12, 2019. (A copy 

of the November 12, 2019 letter is attached as Exhibit 6.) The letter reiterated CSU’s 

denial of coverage for the Grand Timber lawsuit and again requested that Ajax withdraw 

its claim for coverage or provide an explanation of why it disagreed with CSU’s coverage 

conclusion. CSU requested a response from Ajax by November 26, 2019 but received no 

response to its letter by that date.

29. CSU sent a third letter to Ajax on December 17, 2019 after Ajax had finally 

been served with the Grand Timber Complaint. CSU asked for Ajax to respond to CSU’s 

coverage letter by December 31, 2019. (A copy of the December 17, 2019 letter is 

attached as Exhibit 7.)

30. On January 3, 2020, counsel for Ajax asked CSU for an additional 30 days 

to respond to CSU’s coverage position. On January 31, 2020, counsel for Ajax offered 

to enter into a tolling agreement with CSU so that it would have time to review the 

coverage issues. (A copy of those January 3 and 31, 2020 emails is attached as Exhibit 

8.)

31. On February 12, 2020, counsel for Ajax told CSU that Ajax disagreed with 

CSU’s coverage position and told CSU that Ajax found it unnecessary to sign a tolling 

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 7 of 17 PageID #:770
8

agreement. Until February 12, 2020, CSU had never received any substantive response 

to its coverage position and did not know whether Ajax would agree that the CSU policy 

provided no coverage for Grand Timber’s claims. 

C. The CSU Policy Issued to Ajax

32. CSU issued Policy No. CSU0100097 to Ajax with effective dates of June 

15, 2017 through June 15, 2018 (the “Policy”). (A copy of the Policy is attached as Exhibit 

9.)

33. The Policy was not renewed after it expired on June 15, 2018 and CSU did

not insure Ajax at any time after June 15, 2018.

COUNT I

AJAX IS NOT ENTITLED TO COVERAGE FOR THE 

GRAND TIMBER LAWSUIT FOR DAMAGES INCURRED TO 

HIRE A NEW OR DIFFERENT CONTRACTOR

34. CSU incorporates and re-alleges paragraphs 1-33 as if fully set forth herein.

35. Grand Timber alleges that Ajax is liable to Grand Timber for the costs of 

paying another contractor to perform or repair the work that Ajax failed to complete. In 

making that claim, Grand Timber specifically relies on the proposal from Lupo Masonry 

to perform, finish or repair the work that Ajax had been hired to do. (Exh. 1, ¶24, 31, 30, 

40, 49, 24, 31, 30, 40, 49 [sic]; Exh. 10, ¶¶25, 35; Exh. 11, ¶ 47.)

36. The Policy contains, in relevant part, the following provisions:

COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY

 1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated 

to pay as damages because of ... “property damage” to which this 

insurance applies. We will have the right and duty to defend the 

insured against any “suit” seeking those damages. However, we will 

have no duty to defend the insured against any “suit” seeking 

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 8 of 17 PageID #:771
9

damages for ... “property damage” to which this insurance does not 

apply. . . .

b. This insurance applies to ... “property damage” only if:

(1) The ... “property damage” is caused by an “occurrence” ...; 

(2) The ... “property damage” occurs during the policy period ...

(Form CG 00 01 04 13, Exh. 9 at CSU00018.)

37. In relevant part, the Policy defines “property damage” to mean “physical 

injury to tangible property” or “loss of use of tangible property that is not physically 

injured.” (Form CG 00 01 04 13, Exh. 9 at CSU00033.)

38. Costs incurred to pay a new or different contractor for work that was not 

completed or was completed incorrectly are not “property damage” caused by an 

“occurrence” as defined by the Policy. 

39. CSU does not owe coverage (defense or indemnity) to Ajax for any 

damages alleged that do not qualify as covered “property damage” under the Policy.

COUNT II

AJAX IS NOT ENTITLED TO COVERAGE FOR THE 

GRAND TIMBER LAWSUIT FOR “PROPERTY DAMAGE” THAT 

OCCURRED AFTER THE POLICY EXPIRED

40. CSU incorporates and re-alleges paragraphs 1-39 as if fully set forth herein.

41. Grand Timber alleges that Ajax was to complete its work by November 20, 

2017. (Exh. 1, ¶15; Exh. 10, ¶16; Exh. 11, ¶ 38.)

42. Grand Timber further alleges that it sent correspondence to Ajax on August 

10, 2018, October 20, 2018, and March 21, 2019, and otherwise contacted Ajax, 

demanding that it complete the work identified in the Contract. (Exh. 1, ¶¶19-22; Exh. 10, 

¶¶20-23; Exh. 11, ¶¶ 42-44.) Copies of the August 10, 2018, October 20, 2018, and March 

21, 2019 letters are attached to the Grand Timber Complaint and Amended Grand Timber 

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 9 of 17 PageID #:772
10

Complaint as Exhibits C, D, and E, and incorporated by reference into Count 3 of Plaintiff’s 

Amended Complaint at Law.

43. The Policy provides coverage for “property damage” only if it occurred 

during the Policy period. (Form CG 00 01 04 13, Exh. 9 at CSU00018.) The Policy expired 

on June 15, 2018. (Exh. 9 at CSU00001.)

44. The Grand Timber Complaint, including its attachments, does not allege 

that any “property damage” took place on or before June 15, 2018. 

45. CSU owes no coverage for any “property damage” which occurred after the 

Policy expired.

COUNT III

AJAX IS NOT ENTITLED TO COVERAGE FOR ANY

“PROPERTY DAMAGE” NOT CAUSED BY AN “OCCURRENCE”

46. CSU incorporates and re-alleges paragraphs 1-45 as if fully set forth herein.

47. The Policy provides coverage for “property damage” only if it was caused 

by an “occurrence”. (Form CG 00 01 04 13, Exh. 9 at CSU00032.)

48. The Policy defines “occurrence” to mean “an accident, including continuous 

or repeated exposure to substantially the same general harmful conditions.” (Form CG 

00 01 04 13, Exh. 9 at CSU00032.)

49. Grand Timber alleges that Ajax “ignored [Grand Timber’s] communications 

regarding the deficient and incomplete work at the Property.” (Exh. 1, ¶¶23, 28, 30; Exh. 

10, ¶24, 34; Exh. 11, ¶ 46.) Grand Timber also alleges that Ajax “ignored [Grand Timber’s] 

demands for it to honor the promises contained in the Warranty,” and “refused to repair 

and/or replace the defective materials and labor it provided at the Property.” (Exh. 1, ¶¶23, 

28, 30; Exh. 10, ¶24, 34.)

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 10 of 17 PageID #:773
11

50. To the extent there was any “property damage” at all, Grand Timber has not 

alleged “property damage” caused by an “occurrence” (a) because any such alleged 

property damage was caused by Ajax’s alleged deliberate refusal to complete the work, 

rather than by an “accident”, even if the damage was to collateral property and (b) to the 

extent any alleged “property damage” consisted of damage to Ajax’s own “work” or 

“products.”

51. CSU owes no coverage for “property damage” that was not caused by an 

“occurrence.”

COUNT IV

AJAX IS NOT ENTITLED TO COVERAGE FOR ANY

“PROPERTY DAMAGE” ARISING DIRECTLY OR INDIRECTLY 

FROM A BREACH OF EXPRESS OR IMPLIED CONTRACT

52. CSU incorporates and re-alleges paragraphs 1-51 as if fully set forth herein.

53. The Policy contains a Breach of Contract exclusion which states:

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

CONTRACTORS – CHANGES TO COMMERCIAL GENERAL LIABILITY COVERAGE PART

This endorsement modifies insurance provided under the following:

COMMERCIAL GENERAL LIABILITY COVERAGE PART

EXCLUSION – BREACH OF CONTRACT

This insurance does not apply to any claim for "bodily injury" or "property damage" 

arising directly or indirectly from breach of express or implied contract, including 

breach of an implied in law or implied in fact contract. This exclusion does not apply 

to liability for damages that an insured would have in the absence of the contract.

(Form CSGA 402 05 16, Exh. 9 at CSU00040.)

54. Grand Timber alleges that Ajax and Grand Timber entered into the Contract 

under which Ajax agreed to perform exterior wall renovations at Grand Timber’s property. 

(Exh. 1, ¶¶5-9; Exh. 10, ¶¶5-10, 14, 18; Exh. 11, ¶ 38.)

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 11 of 17 PageID #:774
12

55. Grand Timber alleges that Ajax breached the Contract by failing or refusing 

to complete the work it agreed to do, causing damage to Grand Timber. (Exh. 1, ¶¶17-

18; Exh. 10, ¶¶ 18, 25-26.) Count 3 of Grand Timber’s Amended Complaint characterizes 

that same conduct as “negligent.” (Exh. 11).

56. Grand Timber alleges that Ajax prepared and signed an express written 

warranty for its work at the Property. (Exh. 1, ¶¶10-12; Exh. 10, ¶¶11-13; Exh. 11, ¶ 38.)

57. Grand Timber alleges that Ajax breached the Warranty by failing to comply 

with its terms, causing damage to Grand Timber. (Exh. 1, ¶¶30-31; Exh. 10, ¶¶35-36.)

58. Both the Contract and the Warranty are “express or implied contracts” within 

the meaning of the Breach of Contract exclusion. 

59. CSU owes no coverage for Grand Timber’s claims against Ajax due to the

Breach of Contract exclusion, which precludes coverage for all “claims for ‘bodily injury’ 

or ‘property damage’” that arises directly or indirectly from Ajax’s breach of express or 

implied contract.

COUNT V

AJAX IS NOT ENTITLED TO COVERAGE FOR ANY “PROPERTY DAMAGE”

ARISING FROM ITS INCOMPLETE OR INCORRECT WORK

60. CSU incorporates and re-alleges paragraphs 1-59 as if fully set forth herein.

61. Exclusion j(5) of the Policy states that coverage does not apply to: 

j. Damage to Property

“Property damage” to:

* * *

(5) That particular part of real property on which you or any 

contractors or subcontractors working directly or indirectly on 

your behalf are performing operations, if the “property 

damage” arises out of those operations...

(Form CG 00 01 04 13, Exh. 9 at CSU00022.)

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 12 of 17 PageID #:775
13

62. Exclusion j(6) of the Policy states that coverage does not apply to: 

j. Damage to Property

“Property damage” to:

* * *

(6) That particular part of any property that must be restored, 

repaired or replaced because “your work” was incorrectly 

performed on it.

(Form CG 00 01 04 13, Exh. 9 at CSU00022.)

63. The Policy defines “your work” to mean:

(1) Work or operations performed by you or on your behalf; and

(2) Materials, parts or equipment furnished in connection with such work 

or operations.

“Your work” also is defined to include:

(1) Warranties or representations made at any time with respect to the 

fitness, quality, durability, performance or use of "your work"; and

(2) The providing of or failure to provide warnings or instructions.

(Form CG 00 01 04 13, Exh. 9 at CSU00034.)

64. Grand Timber claimed that, as of August 10, 2018, the work of Ajax at the 

Property was deficient and remained incomplete. (See, Exh. 1, Exh. C; Exh. 10, Exh. C; 

Exh. 11, Exh. C.) Count 3, filed in January 2021, alleges that the work remains incomplete

“as of this filing.” (Exh. 11, ¶ 41). 

64. To the extent Grand Timber alleges “property damage” at all, any such 

“property damage” arose from Ajax’s deficient or unfinished work.

65. Grand Timber seeks damages from Ajax for the cost of restoring, repairing 

or replacing the work that Ajax failed to do or failed to do correctly. 

66. CSU owes no coverage for any claim for “property damage” that comes 

within Exclusions j(5) or j(6). 

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 13 of 17 PageID #:776
14

COUNT VI

AJAX IS NOT ENTITLED TO COVERAGE FOR

ANY “PROPERTY DAMAGE” TO ITS COMPLETED WORK

67. CSU incorporates and re-alleges paragraphs 1-66 as if fully set forth herein.

68. Exclusion l in the Policy states in relevant part that coverage does not apply 

to: 

l. Damage to Your Work

“Property damage” to “your work” arising out of it or any part of it and 

included in the “products-completed operations hazard”.

(Form CG 00 01 04 13, Exh. 9 at CSU00022.)

69. Grand Timber seeks damages from Ajax for the cost of restoring, repairing 

or replacing the work that Ajax failed to do correctly. 

70. To the extent that Grand Timber alleges damages due to “property damage” 

that arose out of Ajax’s “completed” work (as defined by the Products-Completed 

Operations Hazard), coverage for such damages is excluded by Exclusion l. 

71. CSU owes no coverage for any claim of damages due to “property damage” 

that comes within Exclusion l.

COUNT VII

AJAX IS NOT ENTITLED TO COVERAGE FOR ANY

“PROPERTY DAMAGE” TO “IMPAIRED PROPERTY”

72. CSU incorporates and re-alleges paragraphs 1-71 as if fully set forth herein.

73. Exclusion m in the Policy states that coverage does not apply to: 

m. Damage to Impaired Property or Property Not Physically Injured

"Property damage" to "impaired property" or property that has not 

been physically injured, arising out of:

(1) A defect, deficiency, inadequacy or dangerous condition in 

"your product" or "your work"; or

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 14 of 17 PageID #:777
15

(2) A delay or failure by you or anyone acting on your behalf to 

perform a contract or agreement in accordance with its terms.

* * *

(Form CG 00 01 04 13, Exh. 9 at CSU00022.)

74. The Policy defines “impaired property” to mean tangible property, other than 

"your product" or "your work", that cannot be used or is less useful because:

a. It incorporates "your product" or "your work" that is known or thought 

to be defective, deficient, inadequate or dangerous; or

b. You have failed to fulfill the terms of a contract or agreement;

if such property can be restored to use by the repair, replacement, 

adjustment or removal of "your product" or "your work"; or your fulfilling the 

terms of the contract or agreement.

(Form CG 00 01 04 13, Exh. 9 at CSU00031.)

75. Grand Timber seeks damages from Ajax for the cost of restoring, repairing 

or replacing the work that Ajax failed to do or failed to do correctly. 

76. To the extent that Grand Timber alleges damages due to (a) “property 

damage” (b) to “impaired property” (c) that cannot be used or is less useful because Ajax 

failed to complete the agreed-upon work or to fulfill the terms of the Contract and/or the 

Warranty, coverage for such damages is excluded by Exclusion m. 

77. CSU owes no coverage for any claim for “property damage” that comes 

within Exclusion m.

WHEREFORE, for the foregoing reasons, CSU moves this Honorable Court for an 

order declaring that: 

1. CSU had no obligation to defend Ajax for the original Grand Timber 

Complaint;

2. CSU has no obligation to defend Ajax for the Amended Complaint (including 

Count 3) in the Grand Timber Lawsuit;

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 15 of 17 PageID #:778
16

3. CSU has no obligation to indemnify Ajax for the claims asserted by Grand 

Timber in its lawsuit;

4. Granting CSU such other and further relief that the Court deems just under 

the circumstances

THE CINCINNATI SPECIALTY UNDERWRITERS 

INSURANCE COMPANY

By: /s/ Hope Nightingale_____________

One of its Counsel

Hope Nightingale (#06184864)

Mary Beth Canty (#6298286)

Litchfield Cavo LLP 

303 W. Madison, Suite 300

Chicago, IL 60606

312-781-6614 (Nightingale)

Nightingale@LitchfieldCavo.com

312-781-6629 (Canty)

Canty@LitchfieldCavo.com 

312-781-6630 (Fax)

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 16 of 17 PageID #:779
17

CERTIFICATE OF SERVICE 

I hereby certify that on January 25, 2021, I caused the foregoing THE 

CINCINNATI SPECIALTY UNDERWRITERS INSURANCE COMPANY’S SECOND

AMENDED COMPLAINT FOR DECLARATORY JUDGMENT to be electronically filed 

with the Clerk of the Court using the CM/ECF system. A copy of said document will 

be electronically transmitted to all counsel of record.

/s/ Hope Nightingale_____________________

Case: 1:20-cv-03176 Document #: 50 Filed: 01/25/21 Page 17 of 17 PageID #:780