1

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

CINCINNATI SPECIALTY 

UNDERWRITERS INSURANCE 

COMPANY,

Plaintiff,

v.

AJAX CONSTRUCTION, INC., JASON 

SCHERENCEL, and GRAND TIMBER 

LOFTS CONDOMINIUM ASSOCIATION

Defendants.

)

)

)

)

)

)

)

)

)

)

No. _________________

Hon. ________________

Mag. J. ______________

CINCINNATI SPECIALTY UNDERWRITERS INSURANCE COMPANY’S 

COMPLAINT FOR DECLARATORY JUDGMENT

Plaintiff Cincinnati Specialty Underwriters Insurance Company (“CSU”) brings this 

action for declaratory judgment against Ajax Construction, Inc. (“Ajax”), Jason 

Scherencel, and Grand Timber Lofts Condominium Association (“Grand Timber”). In 

support thereof, CSU states as follows: 

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 Cincinnati, Ajax, and Mr.

Scherencel as to whether Ajax and Mr. Scherencel are entitled to coverage under a 

commercial general liability policy that Cincinnati issued to Ajax, in relation to a lawsuit 

filed against them by Grand Timber. 

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 1 of 17 PageID #:1
2

PARTIES, JURISDICTION AND VENUE

3. 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, Cincinnati 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.

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 of $489,415 in damages, plus 

prejudgment interest, attorney’s fees, and costs. The exposure to Cincinnati, including 

the cost of defending Ajax and Mr. Scherencel and the damages sought from Ajax and 

Mr. Scherencel, exceeds $75,000.00.

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 2 of 17 PageID #:2
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 breach of contract lawsuit 

filed by Grand Timber against Ajax and Jason Scherencel. 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 Grand Timber 

Complaint, including exhibits thereto, is attached as Exhibit 1.)

13. The Grand Timber Complaint 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”). (Exhibit 1, ¶¶ 5-9.) The Contract is 

attached as Exhibit A to the Grand Timber Complaint.

14. The Grand Timber Complaint alleges that Ajax prepared and executed an 

express written warranty for its work at the Property (the “Warranty”). (Exhibit 1, ¶¶ 10-

13.) The Warranty is attached as Exhibit B to the Grand Timber Complaint.

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 3 of 17 PageID #:3
4

15. The Grand Timber Complaint alleges that Grand Timber paid Ajax $407,100 

to perform the work set forth in the Contract. (Exhibit 1, ¶¶ 8, 14.)

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

the Contract in November 2017 and represented that its work pursuant to the Contract 

would be substantially completed by November 20, 2017. (Exhibit 1, ¶¶ 15-16.)

17. The Grand Timber Complaint alleges that Ajax and Jason Scherencel failed 

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

in the Warranty. (Exhibit 1, Count 1 ¶¶17-18; Count 2 ¶¶28-30; Count 6 ¶¶17-18; Count 

7 ¶¶28-30.) 

18. The Grand Timber Complaint alleges that Grand Timber sent 

correspondence to Ajax and Mr. Scherencel on August 10, 2018, October 20, 2018, and 

March 21, 2019, and otherwise contacted Ajax and Mr. Scherencel, demanding that they 

repair and complete the work identified in the Contract. (Exhibit 1, Count 1 ¶¶ 19-23; 

Count 6 ¶¶ 19-23.)

19. The Grand Timber Complaint alleges that Ajax and Mr. Scherencel “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,” and “refused to repair and/or replace the defective materials and labor it 

provided at the Property.” (Exhibit 1 ¶ 23, Count 2 ¶¶24-30; Count 7 ¶¶24-30.) 

20. The Grand Timber Complaint alleges that Ajax and Mr. Scherencel had no 

intention to ever honor their express, written warranty, in violation of the Illinois Consumer 

Fraud Act. (Exhibit 1, Count 5 ¶¶ 41-48; Count 10 ¶¶ 41-48).

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 4 of 17 PageID #:4
5

21. The Grand Timber Complaint alleges that due to the failure or refusal of 

Ajax and Mr. Scherencel to complete the work as required under the Contract or to 

repair/replace their deficient work under the Warranty, Grand Timber was damaged “in 

an amount not less than $489,415.00.” Every count of the Grand Timber Complaint seeks 

that same amount of $489,415 in damages from Ajax or Mr. Scherencel, plus 

prejudgment interest, attorney’s fees, and costs.

22. In each paragraph alleging damages, the Grand Timber Complaint 

specifically cites Exhibit F to the Grand Timber Complaint. That document is a May 2, 

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

$489,415.00 to perform/repair the work that Ajax had been hired to do. (Exhibit 1, Count 

1 ¶ 24; Count 2 ¶ 31; Count 3 ¶ 30; Count 4 ¶40; Count 5 ¶ 49; Count 6 ¶ 24; Count 7 ¶ 

31; Count 8 ¶ 30; Count 9 ¶40; Count 10 ¶ 49) (attaching and citing the May 2, 2019 

proposal from Lupo Masonry, Exhibit F to the Grand Timber Complaint.)

23. The damages alleged in the Grand Timber Complaint ($489,415.00) match 

exactly the cost proposal sent by Lupo Masonry in May 2019 to repair and complete the 

work that Ajax should have done. (Exhibit F to the Grand Timber Complaint.)

24. Counts 1-5 of the Grand Timber Complaint are 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. (Exhibit A 

pp. 4-10). Counts 6-10 of the Grand Timber Complaint assert the same claims against 

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

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 5 of 17 PageID #:5
6

B. CSU’s Coverage Dispute with Ajax 

25. 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). 

26. 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).

27. 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).

28. On October 3, 2019, CSU sent a letter to Ajax 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 3, 2019 letter is attached as Exhibit 5). CSU received no response to this letter. 

29. 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 

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 6 of 17 PageID #:6
7

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. Again CSU received no response to its letter.

30. 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 by

December 31, 2019. (A copy of the December 17, 2019 letter is attached as Exhibit 7).

31. 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 2020 emails is attached as Exhibit 8).

32. On February 12, 2020, counsel for Ajax requested CSU to reconsider its 

coverage position and told CSU that Ajax no longer was interested in a tolling agreement. 

Until February 12, 2020, CSU had never received any 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

33. 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.) CSU did not insure Ajax at any time after June 15, 2018.

34. Mr. Scherencel is not specifically named as an insured under the Policy. As 

President of Ajax, he would qualify as an “insured” only with respect to his duties in that 

role. (Form CG 00 01 04 13, Exhibit 9 at CSU00027).

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

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 7 of 17 PageID #:7
8

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 

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, Exhibit 9 at CSU00018).

36. 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, Exhibit 9 at CSU00033).

37. 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, Exhibit 9 at CSU00032).

38. The Policy contains a number of exclusions, including the following:

This insurance does not apply to: 

* * *

j. Damage to Property

* * *

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

subcontractors working directly or indirectly on your behalf 

are performing operations, if the “property damage” arises 

out of those operations; or 

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

repaired or replaced because “your work” was incorrectly 

performed on it.

* * *

k. Damage to Your Product

“Property damage” to “your product” arising out of it or any part of it.

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 8 of 17 PageID #:8
9

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”.

* * *

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

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

perform a contract or agreement in accordance with its terms.

* * *

n. Recall of Products, Work or Impaired Property

Damages claimed for any loss, cost or expense incurred by you or 

others for the loss of use, withdrawal, recall, inspection, repair, 

replacement, adjustment, removal or disposal of:

(1) "Your product";

(2) "Your work"; or

(3) "Impaired property";

if such product, work or property is withdrawn or recalled from the 

market or from use by any person or organization because of a 

known or suspected defect, deficiency, inadequacy or dangerous 

condition in it.

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

39. The Policy contains the Exterior Insulation and Finish Systems (“EIFS”) and 

Direct-Applied Exterior Finish Systems (“DEFS”) Exclusion which states, in relevant part:

a. This insurance does not apply to ... “property damage” ...that arises out of, 

is caused by, or is attributable to, whether in whole or in part, any of the 

following:

(1) The design, manufacture, sale, service, handling, construction, 

fabrication, preparation, installation, application, maintenance, 

disposal or repair, including remodeling, service, correction, or 

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 9 of 17 PageID #:9
10

replacement, of a “wall finish system”, or any part thereof, including 

any method or procedure used to correct problems with installed or 

partially installed “wall finish systems”; or

(2) Any work or operations conducted by or on behalf of any insured on 

or to a “wall finish system”, or any component thereof, or any 

component of a structure to which a “wall finish system” attaches that 

results, directly or indirectly, in the intrusion of water or moisture ... 

regardless of whether any other cause, event, material, or product 

contributed concurrently or in any sequence to such injury or 

damage.

(Form CSGA 343 03 08, Exhibit 9 at CSU00061).

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

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, Exhibit 9 at CSU00040).

COUNT I

AJAX IS NOT ENTITLED TO COVERAGE FOR THE 

GRAND TIMBER LAWSUIT BECAUSE THE REQUIREMENTS 

OF THE INSURING AGREEMENT HAVE NOT BEEN MET

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

42. The Grand Timber Complaint alleges that Ajax is liable for the costs of 

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

43. The costs that were (or may in the future be) incurred by Grand Timber to 

hire replacement contractors are purely economic damages and do not qualify as 

“property damage” under the Policy. CSU does not owe coverage for any alleged loss or 

“damage” that does not qualify as “property damage” under the Policy.

44. The Grand Timber Complaint does not allege any “property damage” as 

defined by the Policy consisting of (a) physical injury to tangible property or (b) loss of 

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 10 of 17 PageID #:10
11

use of tangible property that was not physically injured, as a result of acts or omissions 

by Ajax.

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

by an “occurrence,” which is defined as an “accident.” (Form CG 00 01 04 13, Exhibit 9

at CSU00032). 

46. The Grand Timber Complaint alleges that Ajax failed to perform its work as 

required under the Contract; refused to respond to repeated demands for completion; and

deliberately decided not to honor the obligations under its own written Warranty. These 

alleged acts or omissions were not an “accident.” Any damages resulting from these 

alleged acts or omissions were not caused by an “occurrence,” and thus are not covered 

by the Policy.

47. The Grand Timber Complaint does not allege any “property damage” 

caused by an “occurrence” during the CSU policy period, while the Policy was still in 

effect. The Policy was no longer in effect after June 15, 20018, and CSU owes no 

coverage for any damage that took place after CSU no longer insured Ajax. 

48. As the Grand Timber Complaint does not meet the requirements of the 

Insuring Agreement under the Policy, CSU does not owe coverage (defense or indemnity) 

to Ajax or Jason Scherencel for the Grand Timber Lawsuit.

COUNT II

AJAX IS NOT ENTITLED TO COVERAGE FOR THE 

GRAND TIMBER LAWSUIT BECAUSE ONE OR MORE OF 

THE POLICY EXCLUSIONS APPLY TO BAR COVERAGE 

49. CSU incorporates and realleges paragraphs 1-48 as if fully set forth herein.

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 11 of 17 PageID #:11
12

50. The following exclusions apply to the extent Grand Timber alleged any 

“property damage” during the policy period which was caused by an “occurrence,” all of 

which CSU denies. 

51. The Grand Timber Complaint alleges that Ajax failed to provide the services 

for which it was paid; failed to perform as required under the Contract; and failed to 

perform under its written Warranty by which it had agreed to repair or replace its defective 

materials and labor provided at the Property.

52. The Policy excludes coverage for any alleged “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.” (Form CSGA 402 05 16, Exhibit 9 at CSU00040).

53. Coverage (defense or indemnity) for the Grand Timber Complaint is 

excluded to the extent that the claims asserted by Grand Timber are based on any breach 

of contract, including but not limited to breach of any express or implied warranty. 

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

j. Damage to Property

* * *

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

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, Exhibit 9 at CSU00022).

55. Coverage (defense or indemnity) for the Grand Timber Complaint is 

excluded to the extent that Exclusion j(5) applies to the claims asserted by Grand Timber. 

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

j. Damage to Property

* * *

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 12 of 17 PageID #:12
13

(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, Exhibit 9 at CSU00022).

57. 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, Exhibit 9 at CSU00034).

58. Coverage (defense or indemnity) for the Grand Timber Complaint is 

excluded to the extent that Exclusion j(6) applies to the claims asserted by Grand Timber. 

59. Exclusion k in the Policy states that coverage does not apply to: 

k. Damage to Your Product

“Property damage” to “your product” arising out of it or any part of it.

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

60. The Policy defines “your product” to mean:

(1) Any goods or products, other than real property, manufactured, sold, 

handled, distributed or disposed of by:

(a) You ... [and]

(2) Containers (other than vehicles), materials, parts or equipment 

furnished in connection with such goods or products.

“Your product” is also defined to include:

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

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

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

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 13 of 17 PageID #:13
14

(Form CG 00 01 04 13, Exhibit 9 at CSU00033-4).

61. Coverage (defense or indemnity) for the Grand Timber Complaint is 

excluded to the extent that Exclusion k applies to the claims asserted by Grand Timber. 

62. Exclusion l in the Policy states 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, Exhibit 9 at CSU00022).

63. Coverage (defense or indemnity) for the Grand Timber Complaint is 

excluded to the extent that Exclusion l applies to the claims asserted by Grand Timber. 

64. 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

(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, Exhibit 9 at CSU00022).

65. 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, Exhibit 9 at CSU00031).

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 14 of 17 PageID #:14
15

66. Coverage (defense or indemnity) for the Grand Timber Complaint is 

excluded to the extent that Exclusion m applies to the claims asserted by Grand Timber. 

67. Exclusion n in the Policy states that coverage does not apply to: 

n. Recall of Products, Work or Impaired Property

Damages claimed for any loss, cost or expense incurred by you or 

others for the loss of use, withdrawal, recall, inspection, repair, 

replacement, adjustment, removal or disposal of:

(1) "Your product";

(2) "Your work"; or

(3) "Impaired property";

if such product, work or property is withdrawn or recalled from the 

market or from use by any person or organization because of a 

known or suspected defect, deficiency, inadequacy or dangerous 

condition in it.

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

68. Coverage (defense or indemnity) for the Grand Timber Complaint is 

excluded to the extent that Exclusion n applies to the claims asserted by Grand Timber. 

69. The Policy contains the Exterior Insulation and Finish Systems (“EIFS”) and 

Direct-Applied Exterior Finish Systems (“DEFS”) Exclusion which states, in relevant part:

a. This insurance does not apply to ... “property damage” ...that arises out of, 

is caused by, or is attributable to, whether in whole or in part, any of the 

following:

(1) The design, manufacture, sale, service, handling, construction, 

fabrication, preparation, installation, application, maintenance, 

disposal or repair, including remodeling, service, correction, or 

replacement, of a “wall finish system”, or any part thereof, including 

any method or procedure used to correct problems with installed or 

partially installed “wall finish systems”; or

(2) Any work or operations conducted by or on behalf of any insured on 

or to a “wall finish system”, or any component thereof, or any 

component of a structure to which a “wall finish system” attaches that 

results, directly or indirectly, in the intrusion of water or moisture ... 

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 15 of 17 PageID #:15
16

regardless of whether any other cause, event, material, or product 

contributed concurrently or in any sequence to such injury or 

damage.

(Form CSGA 343 03 08, Exhibit 9 at CSU00061).

70. Coverage (defense or indemnity) for the Grand Timber Complaint is 

excluded to the extent that the EIFS/DEFS exclusion applies to the claims asserted by 

Grand Timber. 

72. These exclusions, singly or in combination, bar all coverage for the claims 

asserted against Ajax in the Grand Timber lawsuit. 

73. CSU is entitled to a declaration that it has no obligation to provide coverage 

(defense or indemnity) to Ajax or for liability that is asserted against it in the Grand Timber 

lawsuit.

COUNT III

SCHERENCEL IS NOT ENTITLED TO COVERAGE 

FOR THE GRAND TIMBER LAWSUIT 

74. CSU incorporates and realleges paragraphs 1-73 as if fully set forth herein.

75. Jason Scherencel is not entitled to any coverage under the Policy unless 

he qualifies as an “insured.” 

76. Jason Scherencel is an “insured” only for acts or omissions in his role as 

President of Ajax. To the extent the Grand Timber Complaint alleges that Jason 

Scherencel is liable to it in any other role, coverage is not available under the Policy. 

77. There is no coverage for Jason Scherencel for the Grand Timber Complaint 

for the same reasons that there is no coverage for Ajax: (a) coverage has not been 

triggered because the requirements of the Insuring Agreement have not been met and 

(b) one or more policy exclusions apply to bar coverage for the Grand Timber Complaint. 

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 16 of 17 PageID #:16
17

78. The exclusions addressed and incorporated in this Count III, singly or in 

combination, bar all coverage for the damages sought from Jason Scherencel in the 

Grand Timber lawsuit. 

79. CSU is entitled to a declaration that it has no obligation to provide coverage 

(defense or indemnity) to Jason Scherencel or for liability that is asserted against him in 

the Grand Timber lawsuit.

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

order declaring that:

1. CSU has no obligation to defend or indemnify Ajax or Jason Scherencel for 

the Grand Timber lawsuit.

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

the circumstances. 

Respectfully submitted,

/s/_____________

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)

Hope Nightingale

Case: 1:20-cv-03176 Document #: 1 Filed: 05/29/20 Page 17 of 17 PageID #:17