Minnesota Guys File $7 Million Suit: Against Their Insurance Company

Friday, Jul 10,2009, 12:56:03 PM Click:

Jul 9 - The boys of Minnesota filed suit against their insurance company seeking more than $ 7 million in damages to Exchange Place.

Berkley Regional Specialty Insurance, based in Scottsdale, Ariz., provided the vacant seat of former Bank IV and Douglas market.

The plaintiffs, Lofts at Exchange Place, Exchange Place and DGL investments are to Berkley and his own insurance broker, Willis HRH.

The building, now known as Exchange Place, has been vandalized during the summer of 2007.

Thieves climbed a ladder mounted on a truck to an elevated walkway to break into a third or fourth story window, said Jay Fowler, the attorney representing the plaintiffs.

The thieves ripped out copper wires and plumbing throughout the building and did so much damage to the five elevators that they are inoperable.

"It's a mess; it's a total mess," Fowler said, "It took many, many hours to accomplish that task."

At least one person was arrested and convicted of the crime, Fowler said.

The suit contends that the damage actually exceeded the coverage limit. It hasn't been repaired.

Michael Elzufon and David Lundberg, known as the Minnesota Guys, plan to renovate the building into apartments. If they are to recover the approximately $7 million from the insurance company, Fowler said, it would have to be spent on repairing the vandalism.

The building had been vandalized three times before Berkley issued the policy in April 2007.

The doors were welded shut and windows boarded, he said.

"The point we are arguing that the insurance company had the information on the safety of the building and decided to publish the policy," he said.

A spokesman for Berkley declined comment, as did a spokesman for Willis HRH.

Reach Dan Voorhis at 316-268-6577 or dvoorhis@wichitaeagle.com.

Berkley investigated the vandalism extensively and sent a letter to the plaintiffs in May that its own agent and the Willis broker made a "significant mutual mistake" in not understanding that the building wasn't as secure as they had thought.

The fact that thieves were able to break into the building repeatedly is evidence that the building wasn't "locked up tight as a drum" as the company was assured, the letter contends.

Under Kansas law, a contract can be rescinded if both parties are mistaken about the facts upon which the contract is based.

Therefore, the letter said, Berkley was rescinding the policy and returning the $69,000 premium paid by the plaintiffs.