Northland’s Insurer Sues To Stop Paying

You didn’t mention the mess at Church Street South.

An insurance company is basically making that claim in court against the owner of the crumbling, condemned and hazardous federally subsidized 301-unit apartment complex across from Union Station, in an effort to end its six-figure payouts. The owner, meanwhile, sees another case of an insurance company making up reasons to squirrel out of its legal responsibility to pay.

Endurance American Specialty Insurance Company, or Endurance filed the lawsuit seeking to get out of paying hundreds of thousands of dollars more — on top of hundreds of thousands it has already spent — reimbursing the owner, Northland Investment Corp., for legal costs incurred in defending lawsuits brought by former tenants who got sick at the Church Street South complex.

Endurance claimed that Northland lied about its real estate liabilities when it took out the insurance policy.

Endurance filed the suit against the investment company Northland and a diverse array of other LLCs run by Lawrence Gottesdiener. Gottesdiener is the chairman and CEO of Northland Investment, which has owned the now being-demolished apartment complex since 2008.

The lawsuit, filed last month by Endurance in the U.S. District Court for the District of Massachusetts, alleges that Northland deliberately withheld and misrepresented information about Church Street South during its negotiations with Endurance to secure a multi-million-dollar Commercial General Liability (CGL) policy in the fall of 2015.

Specifically, Endurance claims that Northland, which is based out of Newton, Mass., presented itself solely as a high-end residential property owner. It claims Northland obscured the fact that it also owned a low-income, federally subsidized apartment complex in New Haven that had been largely condemned by city and federal housing authorities for busted roofs, mold infestations, crumbling porches and other hazardous conditions to its hundreds of low-income tenants.

Northland was seeking, and Endurance ultimately granted, an insurance policy promising to cover up to $2 million for each occurrence of bodily injury or property damage incurred on the landlord’s properties.

Endurance’s lawyers stated in court filings that the insurer already spent ​“hundreds of thousands of dollars” covering Northland’s legal fees in its defense against two recent lawsuits from former tenants, and that Northland is pressuring Endurance to continue to pony up hundreds of thousands of dollars more as those court cases wind their way through Connecticut Superior Court.

“Northland’s misrepresentation and omission of information during the negotiation of the Policy was willful, intentional, and made with intent to deceive,” Endurance’s lawyers write. And now, Endurance wants out.

Northland denied the allegations in its filings and has sued the insurer in state court over allegations of ​“bad faith conduct” aimed at avoiding paying a claim.

A Plea To Drop Northland

On April 13, Rachel J. Eisenhaure, a Boston-based attorney representing Endurance, filed the federal complaint, requesting that the court issue a recission, or cancellation, of two CGL insurance policies, one from 2015 and one from 2016, that the company had issued to Northland.

Click here to download the initial complaint.

The complaint references two lawsuits brought by former tenants at Church Street South against Northland: Noble v. Northland Investment Corp and Negron, et al. v. Northland Fund II, et al.

“Disputes have arisen between Northland and Endurance with respect to Northland’s knowledge –- prior to Policy issuance –- of the claims of these plaintiffs and the occurrences on which these claims were based,” Eisenahure wrote. ​“Among other things, Endurance contends that Northland omitted or misrepresented certain information during the negotiation of the Policy, increasing the risk of loss to Endurance, and warranting recission under applicable law.”

On May 11, Suzanne D. Abair, Northland’s chief operating officer, submitted an affidavit in which she claimed that Northland was prompt and responsible in notifying Endurance of the Noble and Negron lawsuits. She noted that Endurance agreed to defend Northland in the Noble action on Apr. 17, 2017, and agreed to defend Northland in the Negron action on Feb. 1, 2018.

“Thereafter,” she wrote, ​“Endurance participated in the defense with other insurers that had issued CGL and/or environmental coverage to Northland. Endurance has paid some of Northland’s defense costs (although substantially less than Northland believes to be owed).”

Abair also referenced a more detailed complaint filed by Endurance that, she claimed, contained confidential information relayed during privileged conversations between Northland and its lawyers about legal defense strategy in the Noble and Negron actions.

Abair wrote that Northland ​“vehemently disputes” Endurance’s claims of omission and mispresentation, and furthermore charges Endurance with violating its coverage obligations under the 2015 and 2016 insurance policies.

Court records show a number of declarations and oppositions submitted in mid-May by Endurance’s and Northland’s lawyers, debating the merits of Northland’s claims that privileged information was made public by Endurance in its complaint.

Endurance’s lawyers argue that they did not, that the information revealed pertained strictly to insurance coverage disputes, not legal strategy. On top of Abair’s initial complaint, Northland lawyer Beth Kinsley countered with a separate motion to dismiss the complaint on the grounds that the federal court lacks subject matter jurisdiction for a case in which both the plaintiff and the defendants were largely based out of the same state, New York. Both Northland and Endurance have offices in New York.

On May 24, Boston-based attorney Eric B. Hermanson, also representing Endurance, submitted a slightly redacted version of the more detailed complaint that Northland had initially looked to quash from the public record on privacy concerns.

In the complaint, Hermanson outlined just how Northland allegedly misled Endurance in regards to Church Street South.

Click here to download the full complaint.

“Omissions Were Made In Bad Faith”

The complaint offers a brief background of Northland’s history with Church Street South: that the complex was built in the late 1960s in New Haven; that Northland purchased it in July 2008; that the complex had become significantly dilapidated by 2015, when Northland itself described it as ​“functionally obsolete.”

In mid-2015, the complaint notes, the City of New Haven and federal housing authorities stepped up its inspections of the property, and ultimately condemned 23 apartment units and ordered repairs or replacements for roofs at 17 of the 19 buildings in the complex.

Hermanson wrote that mid-2015 also saw tenants at Church Street South beginning to complain publicly about respiratory diseases and other ailments which they attributed to the rampant mold, fungi, bacteria, dust mites, and other health hazards at the property.

“The tenants attributed these unhealthy conditions,” Hermanson wrote, ​“to poor maintenance and neglect by Northland during its ownership of the Project.”

On Aug. 15, 2016, the complaint notes, federal housing authorities found Northland out of compliance with its contract to provide decent, safe and sanitary low-income housing at the property. On Sep. 2, 2015, the feds conducted a further inspection that revealed 1,015 violations, of which 512 were characterized as ​“life-threatening,” and found that 113 of 272 apartments showed signs of mold or mildew.

It notes that Northland started spending a lot of money putting up former tenants in area hotels as early as August and September 2015. And, it notes, New Haven attorney David Rosen held a press conference on Oct. 23, 2015, announcing that he was going to file a class action lawsuit against Northland.

With all of these costly health and safety and imminent legal proceedings playing out in full public view in mid-2015, Hermanson wrote, Northland’s relationship with its insurance company, Navigators Specialty Insurance Company, deteriorated. After Navigators dropped Northland as a client, the landlords went looking for a new insurer. In August 2015, they found Endurance.

On Aug. 18, 2015, Hermanson wrote, Northland provided Endurance with introductory information about their real estate company. They passed along a link to a website that stressed Northland’s holdings in high-end residential real estate. The website did not include any mentions or links to or information on Church Street South.

That packet also included a set of loss runs from Northland’s previous insurer, Navogators, which similarly did not mention Church Street South or any of the claims of bodily injury that Northland had received and was continuing to receive from tenants.

On Oct. 19, 2015, Hermanson wrote, Endurance provided Northland with an initial quote. The two companies negotiated for a number of weeks before finally agreeing to a coverage policy on Nov. 13. In the intervening weeks, no one at Northland mentioned anything about Church Street South to anyone at Endurance.

They did, however, push for expanding its CGL coverage in a way that left Endurance ​“puzzled.”

According to Hermanson, Northland asked Endurance to delete exclusions for ​“Chemical Diseases,” ​“Real Estate Property Managed,” and ​“Designated Work / Designated Ongoing Operations.” They also pressed Endurance to add a broadened definition of ​“bodily injury.”

“It did not mention the issues at the Church Street Project,” Hermanson wrote, ​“the claims of bodily injury that it was receiving from tenants, or the class action litigation that Attorney Rosen would be bringing on behalf of those tenants.”

As a stipulation of the November 2015 agreement, Endurance required Northland to fill out an updated ​“loss history” with an up-to-date list of claims on each of their policies over the past three years. Again, Hermanson wrote, Northland made no mention of Church Street South.

“As Northland surely recognized,” Hermanson wrote, ​“if Endurance had been truthfully advised of the numerous issues at the Church Street Project – including the large-scale condemnation of apartments, the letters from Federal housing authorities, the health issues tenants were alleging, the widespread movement of tenants to hotels, the involvement of legal counsel on tenants’ behalf, and the impending class action litigation – Endurance would not have provided CGL coverage, or, at a minimum, it would not have written the Policy on the terms and at the premium it did.”

Click here to download a copy of Endurance’s 2016 policy agreement with Northland, which the insurance company’s lawyers said is largely identical to its 2015 agreement.

Endurance finally learned about Northland’s trouble at Church Street South after Oct. 21, 2016, when Rosen filed the Noble class action lawsuit against Northland in the U.S. District Court for the District of Connecticut. Rosen subsequently withdrew that initial suit, and refiled it in New Haven Superior Court. The Noble and Negron cases are currently pending trial in Connecticut Superior Court in Waterbury.

Northland let Endurance know about Rosen’s class action complaint in October 2016, according to the complaint, and Endurance, still unaware of the larger history of the project, agreed to defend Northland.

In March 2018, Northland provided Endurance and a number of other insurers it had purchased policies from with a status report on the two lawsuits. That report included a background section, Hermanson noted, which led to Endurance doing some digging.

Among other findings, it discovered this Oct. 23, 2015 article in the New Haven Independent about Rosen’s plans to file a class action … in the midst of Northland’s negotiations with Endurance. On April 13, Endurance sent a letter to Northland, rescinding its 2015 policy. Northland rejected the proposed recission, which in turn ended the two up in court.

“Over the past months,” Hermanson wrote, ​“Endurance has paid hundreds of thousands of dollars in legal fees and related expenses for the Noble and Negron matters, under significant pressure from Northland. Northland’s legal defense is ongoing, and Northland’s counsel has continued to press Endurance for additional defense payments totaling hundreds of thousands of dollars more.”

“Upon information and belief,” he continued, ​“Northland’s misrepresentations and omissions were made in bad faith, with intent to deceive, and with knowledge that its responses were materially incomplete and false.”

The complaint requests that the court recognize the 2015 and 2016 policies between Endurance and Northland as null and void because of Northland’s omissions, concealments, and breaches of the insurance policy.

The complaint says that, if the court declines to uphold the recission, then it should nevertheless find that Endurance has no obligation to defend claims asserted by Church Street South tenants in the Noble and Negron cases.

Northland Responds

Northland issued a statement to the Independent characterizing the insurer’s suit as filled with ​“one-sided claims and misinformation.” The action, it said, ​“unfortunately reflects what too many people have experienced, an insurance company that collects premiums but does everything it can to avoid paying claims.

​“When Endurance sold its insurance policies to Northland, it happily accepted substantial premiums. But since the Church Street litigation arose, Endurance has spent nearly two years trying to figure out ways not to make good on its contractual duties. First it delayed responding to Northland’s request for coverage. Then it agreed it owed coverage obligations to Northland, but dragged its feet on paying anything, and then only paid a mere fraction of what it owed. When Northland pressed for payment, Endurance filed this lawsuit to try to walk away from all its obligations to Northland.”

The state added that ​“Endurance filed its meritless suit at the same time it is facing allegations of unfair, deceptive and bad faith conduct, now the subject of a state court lawsuit brought by Northland. Sadly, some insurance companies will do anything to avoid paying a claim. When this litigation is resolved, Northland is confident that Endurance will be held accountable.”

Meanwhile, Judge F. Dennis Saylor is scheduled to hold a hearing on Northland’s motion to dismiss Endurance’s complaint for lack of jurisdiction at the U.S. District Court of Massachusetts on July 12, 2018. No other court dates are currently set for Endurance’s complaint against Northland, according to federal court records.

Previous coverage of Church Street South:
•Who Broke Church Street South?
•Amid Destruction, Last Tenant Holds On
• Survey: 48% Of Complex’s Kids Had Asthma
• Families Relocated After Ceiling Collapses
• Housing Disaster Spawns 4 Lawsuits
• 20 Last Families Urged To Move Out
• Church St. South Refugees Fight Back
• Church St. South Transfers 82 Section 8 Units
• Tenants Seek A Ticket Back Home
• City Teams With Northland To Rebuild
• Church Street South Tenants’ Tickets Have Arrived
• Church Street South Demolition Begins
• This Time, Harp Gets HUD Face Time
• Nightmare In 74B
• Surprise! Now HUD Flunks Church St. South
• Church St. South Tenants Get A Choice
• Home-For-Xmas? Not Happening
• Now It’s Christmas, Not Thanksgiving
• Pols Enlist In Church Street South Fight
• Raze? Preserve? Or Renew?
• Church Street South Has A Suitor
• Northland Faces Class-Action Lawsuit On Church Street South
• First Attempt To Help Tenants Shuts Down
• Few Details For Left-Behind Tenants
• HUD: Help’s Here. Details To Follow
• Mixed Signals For Church Street South Families
• Church St. South Families Displaced A 2nd Time — For Yale Family Weekend
• Church Street South Getting Cleared Out
• 200 Apartments Identified For Church Street South Families
• Northland Asks Housing Authority For Help
• Welcome Home
• Shoddy Repairs Raise Alarm — & Northland Offer
• Northland Gets Default Order — & A New Offer
• HUD, Pike Step In
• Northland Ordered To Fix Another 17 Roofs
• Church Street South Evacuees Crammed In Hotel
• Church Street South Endgame: Raze, Rebuild
• Harp Blasts Northland, HUD
• Flooding Plagues Once-Condemned Apartment
• Church Street South Hit With 30 New Orders
• Complaints Mount Against Church Street South
• City Cracks Down On Church Street South, Again
• Complex Flunks Fed Inspection, Rakes In Fed $$
• Welcome Home — To Frozen Pipes
• City Spotted Deadly Dangers; Feds Gave OK
• No One Called 911 | ​“Hero” Didn’t Hesitate
• ​“New” Church Street South Goes Nowhere Fast
• Church Street South Tenants Organize