PHILADELPHIA – A property restoration company initiated a lawsuit against an insurance broker and their employer insurance provider, for allegedly failing to secure proper coverage for them in an underlying federal court lawsuit.

Lower Bucks Restoration Services, Inc. of Levittown filed suit in the Philadelphia County Court of Common Pleas on April 12 versus Jody L. Klinger of Coopersburg and Univest Corporation, of Lansdale.

In December 2016, the suit says Klinger, acting on behalf of Univest, sold an insurance policy to LBRS through Donegal, which provided general commercial general liability coverage for personal injury liability.

Thereafter, in April 2017, LBRS dismissed one of its employees of nearly four years, Melinda Little. In May, LBRS’s owner Bill Kelly contacted Klinger and asked whether the policy in question included coverage for liability arising from employment-related practices.

The suit says Klinger responded to Kelly’s inquiry by telling him the Donegal policy’s coverage, believed to be $50,000, was limited in that area and inadequate, and Klinger advised Kelly to purchase additional coverage for LBRS.

Almost immediately afterwards, Kelly bought a policy from United States Liability Insurance Company (USLI) which provided coverage for employment practice and liability, in the amount of $1 million, for a premium of $1,299, the suit says.

However, Klinger supposedly did not request or procure for LBRS a “Prior Acts Endorsement” for the USLI policy, despite the fact that he had previously advised Kelly that the Employment Practices Liability Coverage under the original policy was inadequate, the suit says.

On Aug. 2, 2017, Little filed suit in the U.S. District Court for the Eastern District of Pennsylvania, alleging employment practices liability against LBRS and Kelly. At that time, Kelly forwarded a copy of Little’s federal court lawsuit to Klinger, who in turn, forwarded it to USLI, the suit says.

But, USLI denied indemnity coverage and defense to LBRS and Kelly, on the basis that Little’s firing took place prior to the effective date of the USLI policy and a “Prior Acts Endorsement” had not been purchased or requested by Klinger, the suit says.

At that point, Klinger forwarded a copy of the lawsuit to the provider of the original policy, Donegal, but that provider also allegedly denied coverage for the case based on an exclusion for liability arising from employment practices. As a result, LBRS says it and Kelly are without insurance coverage to provide indemnity or defense to the claim filed by Little.

Subsequently, LBRS and Kelly have been required to retain counsel to represent them in Little’s federal court action, thereby incurring counsel fees and costs, and are now subject to a potential liability verdict against them in favor of Little, for which there is no insurance coverage to provide indemnity, the suit says.

For counts of breach of contract and negligence, the plaintiff is seeking damages in excess of $50,000, plus pre-judgment interest, costs and such other relief as the Court may deem equitable and just.

The plaintiff is represented by Jonathan Wheeler in Philadelphia.

Philadelphia County Court of Common Pleas case 180401580

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at

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