A Storm Surge Ends Up In Court

Aug. 20--Nearly two years after Superstorm Sandy socked North Jersey, a Carlstadt printer has filed suit against its insurance company, seeking $37 million for storm-related damage that continues to hamper its operations.

The lawsuit by Pictorial Offset Corp., a printer of pamphlets, brochures, catalogs and other items, says the electronics and electrical systems of several printing machines still don't work properly due to damage from electrical surges during the storm.

The damage was just part of the impact from the storm, a company official said – it left 14 inches of water in the building and shut the business for a month, forcing customers to |go elsewhere, which in turn shrank the workforce from 250 to 135.

Zurich American Insurance Co. of Illinois has refused to pay for the damage to the machines, contending it was "caused by the flood, rather than electrical overstressing prior to flood," says the suit, which was filed in U.S. District Court in Newark last week.

That distinction is important because the suit says the insurance policy limits flood damage payments to $1 million but that the limit for all types of damage – including electrical overstressing – exceeds $80 million.

Zurich paid Pictorial Offset $1.25 million, including $250,000 for debris removal, and told the company in a May 5 letter that was "all sums owed," the suit says.

The insurance company did not return a request for comment.

The printer is the latest in a line of companies to turn to the courts for compensation over damage caused by Sandy.

Of the 1,200 Sandy-related civil cases filed in federal court in New Jersey against insurance companies, only about 60 involve business plaintiffs, according to Chief Judge Jerome B. Simandle.

However, many other suits are filed in New Jersey state courts. Among them is one from Public Service Enterprise Group, the parent company of PSE&G, against 11 insurance companies.

The suit, filed last year, accuses the insurers of shortchanging |the power company in payouts over flood damage. The case is pending.

Pictorial Offset Corp.'s suit seeks $400,000 for debris removal, $3.1 million for building damage, $23.9 million for damage to business personal property and $9.4 million for business interruption.

Two months after the insurer made its payment, the suit says, the company sought to determine why there were "significant and elevated levels of ongoing electrical problems" with its production equipment.

A company study showed that on Oct. 29, 2012, the day the storm hit New Jersey, there was a series of "high-magnitude electrical service fluctuations" shortly before the power shut down completely.

In March 2013, the company gave the insurance company a list of machines that needed to be replaced, with a total cost of $32.8 million.

Only now has the insurer sent several claims adjusters and consultants to assess the damage, the suit says.

"We have been struggling since the storm," said Don Samuels, the company's managing director, adding that "it took Zurich over 15 months to really get a group of professionals to inspect the equipment."

In June, another Carlstadt printer, C&R Printing Corp., settled a case with its insurance company over Sandy damage.

Ottavio Clarizio, owner of C&R Printing, said his company had business-interruption coverage from Selective Insurance Co. of America, and he sued Selective for $108,000 for business lost due to power failure and while company machines dried out. Clarizio said he settled for a $45,000 payment because he couldn't afford to continue, adding that all the settlement money would go to his attorney, to whom he still owes $3,000.

"I got nothing. I lost money on the deal," Clarizio said. "It was very obvious they [Selective] were trying to outlast us, because they have more money than we do."

Selective Insurance Co. of America declined to comment on the case, saying it was bound by confidentiality.

Clarizio's attorney, Jeffrey Ullman of Morristown, who also represented a Flanders restaurant in a Sandy-related insurance dispute, said it is tough for the plaintiff to prevail against insurance companies.

The policies "are so tangled and complex," Ullman said, that it's tough for the court to nail down what exactly is covered and apply it to a particular situation.

"The language of the policies would confound a Talmudic scholar," he said.

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