Milwaukee Court Fire Case Kicked to Federal

MILWAUKEE (CN) - A federal judge has been tasked with resolving the insurance dispute over the July 2013 fire at the Milwaukee County Courthouse.

The State of Wisconsin Local Government Property Insurance Fund brought the lawsuit on Dec. 12, 2014, in Milwaukee County Circuit Court.

It says its insurer, Massachusetts-based Lexington Insurance Co., and Milwaukee County's insurer, The Cincinnati Insurance Co., delayed investigations and refused to cover damages.

Flames engulfed the courthouse on July 6, 2013, originating in the courthouse's basement electrical system, according to the state complaint.

The fund allegedly began an investigation immediately and has since advanced more than $18 million to cover damages.

It says distribution of the money did not waive the fund's rights to determine each insurer's liability at a later date.

After forwarding the county's written proof of loss to Lexington in August 2014, Lexington reimbursed the fund $5 million - but has since refused to further reimburse it, the complaint states.

Lexington's cause and origin report did not arrive until November 2014, according to the complaint, which notes that the insurer declaimed all liability.

In addition to delaying investigations on multiple occasions, the insurer attempted to enforce a $1.8 million deductible that was explicitly excluded from its contract with the fund, the complaint states.

The fund intends to arbitrate a $1.6 million dispute with Cincinnati, but seeks reimbursement of its $800,000 advance under a joint loss agreement, according to the complaint.

Court records show that case was transferred last week to U.S. District Court for the Eastern District of Wisconsin.

Attorneys for Lexington did not consent for the case to be heard before a magistrate judge and the case has been reassigned to U.S. District Judge J.P. Stadtmueller.

The fund is represented by Patryk Silver and Robert Burrell with Borgelt Powell Peterson & Frauen SC.

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