A.J. Gallagher Negligence Case To Go To Mediator

A $3.7 million negligence case filed against insurance broker Arthur J. Gallagher in Missouri federal court will go to mediation, according to court documents filed last week.

The case brought by Triumph Foods, LLC, accuses the Itasca, Ill.-based insurance broker of failing to place certain insurance coverage the company requested.

The case dates back to a Triumph plant natural gas explosion on Oct. 12, 2005. That event injured several people and killed one. The explosion at a hog processing facility in St. Joseph, Mo., took place three weeks before the plant was scheduled to open, according to the court documents.

Triumph said it contacted A.J. Gallagher the previous year to place insurance for the plant. An insurance policy was placed with RLI Insurance Company, a Peoria, Ill.-based specialty insurer.

After the explosion, RLI paid out close to $8 million for repair, rebuilding and other costs. However, Triumph learned that the policy did not cover expenses related to pre-operation payroll, soft costs, extra expense and other losses--something the policyholder said it specifically requested.

Triumph contends the broker did not secure proper coverage "contrary to AJG's representations."

"A reasonable insurance broker and/or agent exercising ordinary diligence and care would have discovered that it failed to provide the coverage requested," the court filing said.

Triumph said the amount in question comes to more than $75,000, not including interests and costs. The plaintiff also seeks $3 million in damages.

According to court filings, this case was selected at random for the Early Assessment Program to be handled by an outside mediator.

A representative from A.J. Gallagher said it is the firm's policy not to comment on ongoing litigation.

The explosion also drew in three other insurers in a separate civil action involving personal liability insurance. The action dates back to December of last year.

Triumph in its action accuses The Hartford of breach of contract for failing to provide defense coverage under terms of the policy. It also alleges that Travelers failed to fully cover Triumph under terms of its policy, and Liberty Mutual did not meet its obligations under terms of an excess policy.

All three insurers deny the allegations in court papers.

Triumph revealed in its filings that it sought a mediation agreement to settle with The Hartford for $15 million, after initially seeking $30 million, to cover settlements the company has made with injured parties from the explosion. Triumph said The Hartford refused the mediation agreement.