ST. LOUIS – American Family Mutual Insurance Co. is seeking declaratory judgment in a dispute with its insured who was sued for breach of contract in the construction of a grain storage and distribution facility near Palmyra.
In response to the suit filed July 3 in the U.S. District Court for the Eastern District of Missouri, American Family claims it has no duty to defend or indemnify Mid-American Grain Distributors LLC and John Ayer for counterclaims it faces from Lehenbauer Farms of Hannibal, which sought to have a grain facility designed and built then claimed the construction was defective.
The parties had entered into an agreement in February 2015, with work ongoing until mid-March 2016 when Lehenbauer Farms terminated Mid-American's and Ayer's services. Lehenbauer Farms claims it paid $693,915.67 for allegedly defectively designed and constructed work by Mid-American and Ayer.
Mid-American initiated litigation in Marion County Circuit Court in July 2016, seeking payment from Lehenbauer in the amount of $84,261.22. In response, Lehenbauer filed a four-count counter claim.
American Family filed suit in federal court seeking relief under the Federal Declaratory Judgment Act.
According to the lawsuit, American Family provided "business key policy" insurance coverage to Mid-American during the construction period with a $1 million per occurrence limit and a $2 million general aggregate limit, the suit states. However, the insurer claims that no coverage exists because in Lehenbauer Farms' counterclaim, it does not allege property damage. Rather, Lehenbauer Farms seeks repair or replacement of work performed.
"American Family contends that because there is no coverage under the Policy, American Family does not owe a duty to defend nor indemnify Mid-American and/or Ayer," the declaratory judgment petition states.
American Family is represented by Philip C. Graham and Kenneth R. Goleaner of Sandberg Phoenix & von Gontard of St. Louis.