FILED: NEW YORK COUNTY CLERK 03/06/ :41 PM INDEX NO /2017 NYSCEF DOC. NO. 68 RECEIVED NYSCEF: 03/06/2018

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1 ZELLE 901 MAINsTREET-sUITE 4000 G. BRIAN ODOM DALLAs,TEXAS75202 (214) MAIN (214) FAX (214) VIA U.S. MAIL & Mr. Len R. Brignac KING KREBS & JURGENS PLLC 45* 201 St. Charles Avenue, Floor New Orleans, LA RE: Insured: Al Copeland Investments, LLC Insurer: First Specialty Insurance Corporation Policy Number: ESP Policy Period: March 5, 2015 through March 5, 2016 Dates of Loss: October 16, 2015 December 3, 2015 Claim Numbers: Loss Location: 109 Highway 1085 Madisonville, Louisiana Type of Loss: Equipment Failure (ammonia leak) Dear Mr. Brignac: This firm has been retained by First Specialty Insurance Corporation in connection with the referenced claims. Please direct all future communications regarding the claims to our attention. This letter responds to your letter of October 10, 2016 addressed to First Specialty's assigned independent adjuster, Jason Lowrimore of Cunningham Lindsey. As Investments' discussed more fully below, Al Copeland failure to satisfy certain conditions of the policy, including the duty to provide prompt notice of the losses, is a material breach of the First Specialty insurance policy. As such, First Specialty must deny coverage for the claims. BOSTONI DALLASI LONDON MIAMI ] MINNEAPOLIS NEWYORK] PHILADELPHIA SANFRANCISCO WASHINGTON,DC Zelle.corn

2 Page 2 FIRST SPECIALTY'S POSITION A. New York law applies to the interpretation of the First Specialty policy. Contrary to your suggestion that Louisiana law applies, the policy's Special Terms and Conditions Endorsement specifies that New York law will apply to any disputes between Al Copeland and First Specialty, and New York courts will have exclusive jurisdiction. Specifically, the policy reads, in pertinent part, as follows: Applicable Law; Court Jurisdiction The laws of the State of New York, without regard to any conflict of laws rules that would cause the application of the laws of any other jurisdiction, shall govern the construction, effect, and interpretation of the insurance agreement. The parties irrevocably submit to the exclusive jurisdiction of the Courts of the State of New York...and waive all rights to challenge or otherwise limit such jurisdiction. context.' The Louisiana Supreme Court upholds such forum selection clauses in this Forum selection clauses should be enforced in Louisiana unless the resisting party can "clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reason as fraud or overreaching...;[or that] enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared decision."2 by statute or by judicial None of the aforementioned exceptions apply in the case at hand. Accordingly, New York law will apply to any interpretation of the policy, and any dispute concerning the policy must be decided by a New York court. As such, parties' your citation to Louisiana law regarding late notice is not determinative of the rights and obligations under the policy in the context of the claims at issue. B. Al Copeland breached the conditions of the First Specialty policy. The Policy's "Duties In the Event of Loss or of an insured following a loss: Damage," includes the following obligations ' Shelter Mutual Insurance Company v. Rimkus Consulting Group, Inc. of Louisiana, 148 So.3d 871, 878 (La. 2014) (overruling prior decisions by Louisiana appellate courts which had used very limited statutory restrictions (which do not apply here) to develop a general prohibition against forum selection clauses). Id. (citing Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (U.S. 1972).

3 Page 3 3. Duties In The Event Of Loss Or Damage a. You must see that the following are done in the event of loss or damage to Covered Property: (1) Notify the police if a law may have been broken. (2) Give us prompt notice of the loss or damage. Include a description of the property involved. (3) As soon as possible, give us a description of how, when and where the loss or damage occurred. (4) Take all reasonable steps to protect the Covered Property from further damage, and keep a record of your expenses necessary to protect the Covered Property, for consideration in the settlement of the claim. This will not increase the Limit of Insurance. However, we will not pay for any subsequent loss or damage resulting from a cause of loss that is not a Covered Cause of Loss. Also, if feasible, set the damaged property aside and in the best possible order for examination. (5) At our request, give us complete inventories of the damaged and undamaged property. Include quantities, costs, values and amount of loss claimed. (6) As often as may be reasonably required, permit us to inspect the property proving the loss or damage and examine your books and records. Also permit us to take samples of damaged and undamaged property for inspection, testing and analysis, and permit us to make copies from your books and records. (7) Send us a signed, sworn proof of loss containing the information we request to investigate the claim. You must do this within 60 days after our request. We will supply you with the necessary forms.

4 1 b Page 4 (8) Cooperate with us in the investigation or claim.3 settlement of the The Policy unequivocally requires Al Copeland to give First Specialty "prompt any loss. Under New York law, timely notice where such a provision is included is a coverage.4 condition precedent to coverage. Notice is to be given as soon as practicable, and 5 delays of one to four months have been held to be unreasonable as a matter of law. Moreover, under New York law, the insured's subjective understanding of the availability of coverage is irrelevant-a â plaintiff is not excused from timely notice by his belief that elsewhere.6 the loss will be recovered or otherwise reimbursed elsewhere. notice" of C. First Specialty was prejudiced by Al Copeland's untimely notice, although no showing of prejudice is required. In your letter, you state that First Specialty fails to provide facts or allegations that hindered" "prejudiced or significantly its ability to investigate the cause of loss and evaluate the scope of the claimed damage and amount of loss. As an initial matter, New required.7 York law governs this point and is clear that a showing of prejudice is not Nonetheless, First Specialty was in fact prejudiced by Al Copeland's failure to meet the conditions of the policy, and the following facts provide the basis for First Specialty's position on the matter. Al Copeland failed to give prompt notice of either claim. The first loss occurred on October 16, On the same day, Al Copeland retained CIMCO Refrigeration, Inc. ("ClMCO") to investigate the cause of the leak. Al Copeland neglected to report the loss to First Specialty at that time. The second loss occurred December 3, Al Copeland again retained CIMCO to conduct an investigation of the incident. Similar to the first incident, Al Copeland reported this loss to its equipment breakdown insurer, Continental Casualty, but not to First Specialty. 3 Emphasis added. Nikolai Minasian and Harutyun Minasian v. IDS Property Casualty Insurance Company and State Farm Fire and Casualty Company, 2015 WL at *5 (S.D.N.Y. December 9, 2015) (citing Am. Ins. Co. v. Fairchild Indus., Inc., 56 F.3d 435, 438 (2d Cir. 1995); AXA Marine 4 Aviation Ins. (UK) Ltd. V. Seajet Indus., Inc., 84 F.3d 622, (2d Cir. 1996). 5 ld. at *7(see, e.g., Pfeffer v. Harleysville Grp., Inc., 502 F. App'x 28, 30 (2d Cir. 2012) (summary order)). Id. See Minasian v. IDS Property Casualty Insurance Company, 2015 WL at *5 (S.D.N.Y. Jan. 8, 2016) (citing Am. Ins. Co. v. Fairchild Indus., Inc., 56 F.3d 435, 438 (2d Cir. 1995)); But see, N.Y. Ins. Law 3420 which states that failure to give any notice required by a policy within a prescribed period of time shall not invalidate any claim unless prejudice is shown; however, this statute only applies to liability insurance policies and has not been applied to a property insurance policy.

5 Page 5 On April 6, 2016, almost six months after the October 2015 incident and over four months after the December 2015 incident, Al Copeland notified First Specialty for the first time that it was submitting a claim to First Specialty for additional amounts not paid by Continental Casualty arising out of the two losses. Cunningham Lindsey, on behalf of First Specialty, conducted an inspection of the Property on April 18, At the time of Cunningham Lindsey's inspection, property damage repairs associated with the two losses had already occurred, limiting Cunningham Lindsey's ability to conduct a thorough inspection and independently determine the cause of the losses. Additionally, the Policy explicitly requires that Al Copeland provide the insurer with the opportunity to inspect and take samples of the damaged property. Al Copeland failed to comply with this provision by first providing notice to First Specialty only after repairs had been completed. Ultimately, Al Copeland's failure to provide First Specialty with prompt notice or an opportunity to inspect the damaged property prior to repairs being made prejudiced First Specialty's ability to contemporaneously conduct its own investigation and determine based on that investigation whether the causes of loss are covered under the policy and, if so, assess the appropriate amount of loss. As it stands, First Specialty is required to rely completely on the conclusions drawn by Al Copeland's own consultant as to the cause of the losses and the loss measurements conducted by another insurance company. If First Specialty were required to demonstrate prejudice under New York law, and it is not, these facts unequivocally support such a determination. CONCLUSION AI Copeland waited more than six months after the first loss and more than four months after the second loss before providing notice of the losses to First Specialty. As a result, First Specialty was denied the opportunity to inspect the damaged property, contemporaneously perform a comprehensive cause and origin analysis, and assess the proper measure of the loss for itself. Under New York law, the substantive law specified by the policy, such a delay is unreasonable as a matter of law and acts as a complete bar to coverage. Accordingly, First Specialty respectfully denies coverage for the claims. First Specialty's investigation of this claim remains subject to a complete reservation of all rights. First Specialty does not intend to waive, and expressly reserves, any and all rights or defenses that may be available under the terms and conditions of the policy, the common law, or any applicable statute, including without limitation the right to rely Us" on the "Legal Action Against provision of the policy's Commercial Property Conditions.

6 ~ ~ ~ Page 6 Should you have any questions or wish to further discuss First Specialty's coverage position, I am available at your convenience. Sincerely, G. Brian Odom cc: VIA flowrimore@cl-na.com Jason Lowrimore National General Adjuster CUNNINGHAM LINDSEY PO Box Dallas, TX M1M899v v1