Mr. Keyser’s extensive experience in handling all types of claims has in turn given him extensive...

The following is list of legal and insurance coverage issues dealt with over my career.​

Services Offered

British American School, Chicago, Illinois.  Johnson Controls was retained by the mechanical contractor to supply 4 roof top units at the school.  After installation the school brought a claim against the mechanical contractor alleging water infiltration related to the roof top units.  The mechanical contractor forwarded the claim to JCI saying that the units were letting in water through a damper, condensation from an economizer within the unit, and condensate from heat burners that overflowed collection trays on the roof.  Our investigation disclosed that all of the above were working properly and that in any event the amount of water from possible malfunctions in these areas was not enough to cause the damages complained about.   Further investigation at the site and from the specs of the isolation curb supplier disclosed that the isolation curbs were improperly installed on the base of the units allowing water on the roof to flow into the building.  The mechanical did not contest our position and the claim was closed with no loss payment or legal fees

US Oil Company, Appleton, Wisconsin.  Johnson Controls’ branch was retained by a mechanical contractor to supply a roof top unit for this company.  For the unit to work properly the drain trap needed to be charged or filled with water to prevent the roof top unit from pulling air through the trap and into the unit.  This was not done and as a result air was pulled through the trap and water overflowed drain pans within the unit causing $100,000 of damage to the interior.  JCI and the contractor disagreed as to responsibility for charging the drain.  Investigation of the AGC contract documents disclosed the existence of an All Risk Builders Risk Insurance Policy required to be purchased by the owner or the general contractor on the project covering all subcontractors, providing for subrogation waivers for all parties, and covering “workmanship.”  We indicated that as an additional insured under such a policy the claim should be paid on a no fault basis.

The claim was then dropped with no loss payment and no legal expenses.

CORPORATE LEGAL DEPARTMENT, JOHNSON CONTROLS, INC. 

Construction, Construction Defect, Builders Risk Policies, Indemnification clauses, Additional Insureds, Product Liability, in Construction Contract Setting, under an insurance company sanctioned in house TPA program.

Nyala Farms, Westport, Connecticut.  Johnson Controls contracted with this real estate development company to provide ongoing maintenance for three chillers.  All the chillers were obsolete being installed between 1971 and 1976.  A starter failed on one of the chillers, the chiller could not be repaired and the amalgam of property carriers for Nyala paid $360,000 to buy and install a new chiller and then made a claim against the JCI branch to recover these amounts.  Our investigation discovered that it was unlikely starter maintenance was part of our maintenance contract and more importantly the fair market value of the ruined chiller was $14,000 for metal salvage because the chiller was energy inefficient and parts were unavailable for future problems.  Attorneys for the carriers disagreed until we cited Connecticut cases that stated damage calculations were based on the lower amount of fair market value at the time of the accident versus costs to repair and we provided additional information that supported our position that starter maintenance was not included in our contract.  The case then settled for $14,000, avoiding legal fees and possible loss exposure.

SUBROGATION CLAIMS ARISING FROM FIRST PARTY PROPERTY CLAIMS.

Insurance coverage analysis of property policies for authority to pursue subrogation.  Analysis of liability of targeted parties and expert reports, negotiation and settlement.

Texas theater fire claim.  Avoided a potential bad faith claim for under $500 legal costs to insured’s personal counsel for a subrogation action brought against lessor of our insured that was in violation of subrogation waiver agreement in the property policy and for which was additionally wrongly denied a defense by another Travelers claim unit.

Recovered a unit high $1,000,000 in my first year.

Sears Department Store, Eureka, California.  A claim was made against our insured, a structural engineer, by the architect on the project that the structural steel design of the Sears was under designed related to earthquake considerations as alleged by the City of Eureka Building Department.   Sears was the anchor store in the shopping center.  Sears indicated they were concerned with the claim but more concerned about the delay in opening the store before the Christmas season such that they would incur a business loss. Our office analysis was to avoid litigation and any appointment of attorneys and speed resolution by meeting with the Building Department to discuss the issues.  We retained a leading structural expert on earthquake design in San Francisco and met in Eureka with the City’s engineer.  At the meeting, our expert literally drew calculations on a blackboard indicating that additional construction details such as sheer walls not factored in the calculations of their engineer provided additional reinforcement for a potential earthquake.  These calculations and some minor bracing underneath the roof for under $100,000 resolved the claim such that Sears could open their store on time with no delay claim.

ENVIRONMENTAL CLAIMS ARISING FROM GENERAL LIABILITY POLICIES.

Hydrogeological review with our in house hydrogeologist related to extent of contamination, cleanup alternatives, and impact or not into groundwater, coverage analysis related to time on the risk, sudden and accidental pollution exclusions, owned property exclusion, expected and intended, coordination with other carriers, and choice of law.

Louisiana Creosote Pollution Claim, Pearl River, Louisiana.  An oil company and railroad owners of a creosote treating facility brought a claim against our insured, the lessee who treated railroad ties at the facility for $10,000,000 in cleanup costs. Investigation disclosed contamination at the site and the possibility of a claim by the Louisiana DEQ regarding ground water contamination and that the insured had moved operations to a Mississippi site with possible similar contamination issues.  Over a period of years met with insured and claimants and discussed claim and coverage issues. Eventually, a settlement was reached for $1,000,000 by which the insured contributed personally $500,000, Wausau contributed $250,000 for the claim and $250,000 for a buyback of all policies protecting Wausau from any further issues while providing funding for the insured.

City of Seattle Gas Station Claim. A claim was made against our insured, the former owner of a gas station, for petroleum contamination at the site by a subsequent purchaser. Working with our staff hydrogeologist we determined that contamination was in the soil only, that the groundwater was 50 feet below the soil contamination, that no wells were impacted because all users were on municipal water, and that the site was nearly capped already with buildings and asphalt.  Our office worked out a consent decree with the State of Washington DEQ that covering minor open areas with asphalt would be acceptable. Upon completion of this work, claimant agreed to drop its claim.

Northbrook’s conduct following the…judgment does not indicate lack of good faith. …Northbrook might legitimately fear that, because of its prior adversarial relationship with Gold, Farrell, that firm might attempt to direct towards Northbrook any liability on VSL’s part in the UDC action. It was not unreasonable for Northbrook to insist on counsel independent of both itself and VSL.

New York State Urban Development Corp vs VSL Corporation 738 F. 2d 61.  This claim involved an appeal by our insured VSL Corporation from a US District Court decision in New York related to Northbrook’s obligation to provide a defense to VSL in the UDC litigation.  Northbrook originally denied coverage to VSL indicating the contracting work UDC prescribed by that entity to replace a haul rope and track rope on a tramway running between Manhattan and Roosevelt Island constituted general contracting activity and not professional liability activity such that coverage was not afforded under the professional liability policy.  VSL disagreed and the lower court ruled that Northbrook needed to provide a defense to VSL under a reservation of rights based upon a broad reading of interrogatories submitted later in the underlying litigation. Pursuant to that decision Northbrook offered to provide a defense through independent counsel that neither VSL nor Northbrook had any prior relationship.  VSL declined to accept any counsel other than their personal counsel involved in the coverage dispute.  Northbrook then, through my suggestion, provided a list of 5 construction counsel in New York City with whom Northbrook had no prior relationship and asked VSL to select one.  VSL declined and after Northbrook selected one of these counsel, VSL brought this appeal to the 2nd circuit. During the appeal, discussion within the Shand Morahan office centered on whether we should acquiesce in appointing the insured’s personal counsel...  My advice was that if we do so the case would essentially be over as that firm antagonistic to Northbrook would generate legal billings on the claim to the extent that it would force Northbrook to pay for the loss to avoid further defense costs.  This strategy was borne out in the 2nd circuit’s decision by which they upheld Northbrook’s position with the following language:

Featured Resolutions

PROFESSIONAL LIABILITY, ARCHITECTS AND ENGINEERS.

Construction defect, AIA contract review, insurance coverage, and declaratory judgment litigation.

Harvard Molecular Biology Building, Cambridge, Massachusetts.  Our insured was the architect retained by Harvard for the above project.  Our insured’s contract with Harvard required disputes to be resolved by arbitration while our retained electrical engineer had no arbitration clause such that disputes could only be resolved by civil litigation. Harvard brought a claim against the architect alleging electrical problems related to the building labs. Rather than commence suit with the engineer we arranged and attended a meeting with the engineer and their representatives and indicated the problem was essentially an electrical problem and if we would lose in the arbitration we would have no other choice but to initiate litigation later.  We requested that it was in their interest to cooperate with the architect in discussions with Harvard to resolve the claim.  In addition, we requested authority from the engineer authorizing the architect to settle the claim on their behalf since the claim was primarily electrical.  After some discussion, the engineer agreed to contribute 2/3 of any settlement to a total authorization up to $65,000 with the architect having 1/3.   Within weeks the claims was settled for a total of around $35,000 saving arbitration costs, litigation costs, and preserving the insured’s business relationship with Harvard.


Mr. Keyser is a graduate of Marquette University Law School and has been a licensed attorney in...

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