BOYKIN Et Al v. ILLINOIS UNION INSURANCE COMPANY Et Al Complaint

Case 2:11-cv-00326-SRC -MAS Document 1 Filed 01/19/11 Page 1 of 22 PageID: 1
Dughi & Hewit, P.e.

340 North Avenue
Cranford, New Jersey 07016
908.272.0200
RLH-3813
Attorneys for Plaintiffs,
Edward P. Boykin, Phyllis A. Boykin,
Azis S. Hasan, Carol A. Hasan,
Ronald K. Walker and Jane e. Walker
IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY
EDWARD P. BOYKIN, PHYLLIS A. Civil No.:

BOYKIN, AZIZ S. HASAN, CAROL A.
HASAN, RONALD K. WALKER, and
JANE C. WALKER, as assignees of
DAVID M. CONNOLLY,
Plaintiffs, COMPLAINT
v.
ILLINIOS UNION INSURANCE

COMPANY, MONTY L. DAVIS, MARY
R. DAVIS, RICHARD L. BERGMARK,
TONI L. BERGMARK,
Defendant
COMPLAINT
Plaintiffs, Edward P. Boykin and Phyllis A. Boykin (the "Boykins"), Azis S. Hasan and
Carol A. Hasan (the "Hasans"), and Ronald K. Walker and Jane C. Walker (the "Walkers")
(collectively, the "Plaintiffs"), by and through their attorneys, Dughi & Hewit, P.C., by way of
Complaint, state as follows:

THE PARTIES
1. At all times material hereto, the Boykins were citizens of the State of Florida,
residing at 14 Via Marino, in the City of Palm Coast.
2. At all times material hereto, the Hasans were citizens of the State of Florida,
residing at 2 Laguna Court, in the City of Palm Coast.
3. At all times material hereto, the Walkers were citizens of the State of Florida,
residing at 10 Via Marino, in the City of Palm Coast.
4. Upon information and belief, David M. Connolly ("Connolly") is a citizen of New
Jersey, residing at 106 Stanie Brae Drive, in the Borough of Watchung, and the president of
Connolly Properties, Inc. ("Connolly Properties").
5. Upon information and belief, Defendant lllinois Union Insurance Company
("lllinois Union") is a corporation organized and existing under the laws of the State of lllinois
with its principal place of business in the State of lllinois.
6. Upon information and belief, Defendants, Monty L. Davis and Mary R. Davis (the
"Davises") are citizens of the State of Texas, residing at 19827 Cypress Church Road, Cypress,
Texas.
7. Upon information and belief, Defendants Richard L. Bergmark and Toni M.
Bergmark (the "Bergmarks") are citizens of the State of Texas, residing at 60 Tiel Way,
Houston, Texas.
JURISDICTION AND VENUE
8. Jurisdiction is conferred on this Court pursuant to 28 U.S.C. § 1332 in that this is
an action between citizens of different states and the amount in controversy exceeds $75,000,
exclusive of interest and costs. The Plaintiffs are all residents of the State of Florida. Upon
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information and belief, Connolly is a resident of the State of New Jersey. Upon information and
belief, the Davises and the Bergmarks are all residents of the State of Texas. Upon information
and belief, lllinois Union is a corporation organized and existing under the laws of the State of
lllinois with its principal place of business in the State of lllinois.
9. Venue is proper in this District pursuant to 28 U.S.C. §§ 1391(a)(I) and (2), in
that Connolly resides in this District and a substantial part of the events or omissions giving rise
to the claims asserted herein occurred in this District.
GENERAL ALLEGATIONS
10. lllinois Union Insurance Company ("lllinois Union") issued a Business and
Management Indemnity Policy, bearing policy number BMI20062163 (the "lllinois Union
Policy"), for the benefit of Connolly Properties and Connolly.
11. The lllinois Union Policy covers Connolly for claims made under the lllinois
Union Policy during the policy period of December 12, 2008 to December 12, 2009 (the "Policy
Period").
12. The lllinois Union Policy has a $1,000,000 limit of liability under the
"Management Insureds and Company Coverage Section."
13. Upon information and belief, the remaining limits on the lllinois Union Policy are
$746,453.68 (the "Remaining Policy Limits").
14. Under the "Insuring Clauses" of the lllinois Union Policy, lllinois Union shall
"pay the Loss of the Management Insureds for which the Management Insureds are not
indemnified. by the Company and which the Management Insureds have become legally
obligated to pay by reason of a Claim first made against the Management Insureds during the
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Policy Period, . . . and reported to the Insurer pursuaut to subsection El herein, for auy
Wrongful Act taking place prior to the end of the Policy Period." (Emphasis in original).
15. Connolly is au "Insured" under the illinois Union Policy, due to his role as a
"Mauagement Insured" (defined in the illinois Union Policy to include all General Partners,
Directors, Officers, Mauagers, aud employees of Connolly Properties).
16. The Plaintiffs fust made a claim covered by the illinois Union Policy against
Connolly during the Policy Period and filed a Complaint in the United States District Court,
District of New Jersey, entitled, Edward P. Boykin, et ai. v. Connolly Properties, Inc., et ai.,
Civil Action No. 09-5267 (DRD) (the "Underlying Litigation") against Connolly and Connolly
Properties, seeking monetary relief for wrongful acts committed during the Policy Period.
17. The Complaint in the Underlying Litigation qualifies as a "Claim" under the
illinois Union Policy: "a civil proceeding against any Insured seeking monetary damages or non-
monetary or injunctive relief, commenced by the service of a complaint or similar proceeding."
18. Pursuaut to Judge Debevoise's October 25, 2010 Order (the "Underlying
Judgment") in the Underlying Litigation, judgment was entered in the amount of $1,368,502 plus
interest against Connolly, aud in favor of the Plaintiffs as follows: (1) in favor of the Boykins
aud against Connolly in the amount of $487,500 plus interest; (2) in favor of the Hasans and
against Connolly in the amount of $496,002 plus interest; and (3) in favor of the Walkers aud
against Connolly in the amount of $385,000 plus interest.
19. The Underlying Judgment is based on conduct that is covered by the illinois
Union Policy aud Connolly is legally obligated to pay the Underlying Judgment. The
Underlying Judgment qualifies as a covered "Loss" under the illinois Union Policy: "Loss meaus
damages, judgments, ... awarded by a court."
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20. Connolly's actions that precipitated the finding of liability qualify as "Wrongful
Acts" covered under the illinois Union Policy: "Wrongful Act means any actual or alleged error,
omission, misleading statement, misstatement, neglect, breach of duty or act allegedly committed
or attempted by: a) any of the Management Insureds, while acting in their capacity as such."
21. In connection with the Underlying Litigation, Connolly and the Plaintiffs entered
into an Assignment Agreement (the "Assignment Agreement"), pursuant to which Connolly
assigned to the Plaintiffs all of Connolly's rights and claims against illinois Union for, among
other things, coverage for the Underlying Judgment as well as for extra-contractual damages.
22. A true copy of the Assignment Agreement is attached as Exhibit A.
23. On or about September 8, 2009, the Davises and the Bergmarks filed an action
against Connolly in the United States District Court, District of New Jersey, alleging that
Connolly misappropriated the Plaintiffs' funds.
24. On or about February 11, 2010, the United States District Court, District of New
Jersey entered partial summary judgment against Connolly, finding Connolly liable to the
Davises and the Bergmarks for breach of fiduciary duty and conversion. In a second Opinion
and Order entered on September 2, 2010, United States District Court, District of New Jersey
entered a Final Judgment against Connolly and in favor of the Davises and the Bergmarks in the
total amount of $1,045,000.
FIRST COUNT
BREACH OF CONTRACT
25. The Plaintiffs repeat and reallege the allegations set forth in the preceding
Paragraphs of this Complaint with the same force and effect as if each were fully set forth at
length herein.
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26. The illinois Union Policy is a valid and enforceable contract, pursuant to which
illinois Union, among other things, is obligated to indemnify Connolly for any Loss incurred
during the Policy Period.
27. By reason of illinois Union's failure to indemnify Connolly for a Loss incurred
during the Policy Period, illinois Union has materially breached the illinois Union Policy and has
directly and proximately caused Connolly significant damages and loss in an amount to be
determined at trial, which claims Connolly has assigned and transferred to the Plaintiffs.
28. Connolly assigned any and all claims for coverage under the illinois Union Policy
to the Plaintiffs.
WHEREFORE, the Plaintiffs demand judgment against illinois Union as follows:
a. Declaring that the illinois Union Policy covers the Underlying Judgment;
b. Declaring that Connolly's interest in the Remaining Policy Limits, which has
been assigned to the Plaintiffs, is superior to that of the Davises and the
Bergmarks;
c. Ordering specific performance of the illinois Union Policy;
d. Ordering illinois Union to indemnify Connolly pursuant to the illinois Union
Policy;
e. Awarding compensatory damages;
f. Awarding pre- and post-judgment interest;
g. Awarding the Plaintiffs their attorneys' fees, costs, and disbursements; and
h. Granting other such relief as this Court deems just and proper.
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SECOND COUNT
BREACH OF FIDUCIARY DUTY - COMPENSATORY DAMAGES
length herein.
30. lllinois Union owed a fiduciary duty to Connolly with regard to the lllinois Union
Policy.
31. lllinois Union breached its fiduciary duty to Connolly by, among other things,
failing and refusing to indemnify Connolly for covered Loss under the lllinois Union Policy.
32. As a direct and proximate result of this breach by lllinois Union, the Plaintiffs, as
assignees of Connolly's rights and claims against lllinois Union, have been and continue to be
damaged in an amount to be determined at trial.
33. Connolly assigned any and all claims for breach of fiduciary duty to the Plaintiffs.
WHEREFORE, the Plaintiffs demand judgment against lllinois Union as follows:
a. Awarding compensatory damages;
b. Awarding pre- and post-judgment interest;
c. Declaring that Connolly's interest in the Remaining Policy Limits, which has
been assigned to the Plaintiffs, is superior to that of Davises and Bergmarks;
d. Awarding the Plaintiffs their attorneys' fees, costs, and disbursements; and
e. Granting other such relief as this Court deems just and proper.
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TIDRDCOUNT
BAD FAITH, BREACH OF FIDUCIARY DUTY AND BREACH OF IMPLIED

COVENANT OF GOOD FAITH AND FAIR DEALING - PUNITIVE DAMAGES
length herein.
35. The lllinois Union Policy included an implied covenant of good faith and fair
dealing.
36. Connolly and/or Connolly Properties at all times relevant hereto performed any
and all duties and obligations under the lllinois Union Policy.
37. At all times relevant hereto, lllinois Union, by its acts and omissions, acted in bad
faith and breached its fiduciary duties and the covenant of good faith and fair dealing, including
but not limited to the following:
a. Prior to entry of the Underlying Judgment, the Plaintiffs offered to Connolly to
settle and resolve the claims asserted in the Underlying Litigation for an amount within the
remaining limits of the lllinois Union Policy, which offer Connolly promptly forwarded to
lllinois Union and demanded that lllinois Union resolve and settle the Plaintiffs' claims within
the limits of the lllinois Union Policy;
b. With knowledge of a strong likelihood that a judgment would be entered against
its insured Connolly for an amount in excess of the remaining limits on the lllinois Union Policy
based on conduct covered by the lllinois Union Policy, lllinois Union did not settle or resolve the
claim but instead placed its interests ahead of its insured's interests and continued to wrongfully
deny coverage and wrongfully and unreasonably refuse to settle; and
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c. With knowledge of a strong likelihood that a judgment would be entered against
its insured Connolly for an amount in excess of the remaining limits on the lllinois Union Policy
based on conduct covered by the lllinois Union Policy and with knowledge of multiple claimants
making claims against Connolly, which claims were also covered by the lllinois Union Policy,
who would also make claim to the remaining limits of the lllinois Union Policy, lllinois Union
did not even make any attempt to enter into settlement discussions with the Plaintiffs or other
claimants to explore if the case could be settled or resolved with all claimants for any amount
less than the remaining limits on the policy. Instead, lllinois Union placed its interests ahead of
its insured's interests and continued to wrongfully deny coverage and wrongfully and
unreasonably refuse to settle or even to explore settlement opportunities, all to the detriment of
its insured Connolly.
38. The acts and omissions of lllinois Union constitute bad faith, breach of fiduciary
duty and breach of the implied covenant of good faith and fair dealing.
39. As a direct and proximate result of lllinois Union's bad faith and the breach(es) of
its fiduciary duty and implied covenant of good faith and fair dealing, judgments were entered
against its insured Connolly for amounts in excess of the remaining limits on the lllinois Union
Policy, causing Connolly significant damages.
40. lllinois Union's bad faith and the breach(es) of its fiduciary duty and implied
covenant of good faith and fair dealing constitute sufficiently wrongful conduct to entitle its
insured Connolly to punitive damages.
41. Connolly assigned any and all claims for bad faith, breach of fiduciary duty and
breach of implied covenant of good faith and fair dealing and for extra-contractual claims, extra-
contractual damages and punitive damages to the Plaintiffs.
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a. Awarding compensatory damages;
b. Awarding punitive damages;
c. Declaring that Connolly's interest in the Remaining Policy Limits, which has
been assigned to the Plaintiffs, is superior to that of the Davises and the Bergmarks;
d. Awarding pre-and post-judgment interest;
e. Awarding the Plaintiffs their attorneys' fees, costs, and disbursements; and
f. Granting such other relief as this Court deems just and proper.
FOURTH COUNT
DECLARATORY,lUDGMENT
length herein.
43. The only current property right or other right of Connolly in the Remaining Policy
Limits is his rights and cause of action against lllinois Union for coverage and for breach of
contract, breach of fiduciary duty, bad faith and breach of the covenant of good faith and fair
dealing ("Connolly Rights").
44. A creditor can secure an interest in such Connolly Rights by, among other things,
a legal proceeding to compel turn over of such rights and cause of action, which has not been
done by any party, or by Connolly assigning the Connolly Rights.
45. Connolly assigned the Connolly Rights (as well as any and all rights, claims and
causes of action for extra-contractual claims and punitive damages) to the Plaintiffs.
46. The Plaintiffs own all of the Connolly Rights.
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47. Any proceeding to attempt to enforce rights under the lllinois Policy, to turn over
the Remaining Policy Limits or to secure an interest in the Remaining Policy Limits requires
Connolly as an indispensable party. Any such proceeding in a jurisdiction which does have
personal jurisdiction over Connolly would be and is null and avoid for purposes of declaring
rights or priority to the Remaining Policy Limits.
48. The Plaintiffs' interest in the Remaining Policy Limits, by and through the
assignment of the Connolly Rights, is superior to the interest, if any, of the Davises and the
Bergmarks to such funds.
WHEREFORE, the Plaintiffs demand judgment against the Davises and the Bergmarks
as follows:
a. Declaring that the Plaintiffs have an interest in the Remaining Policy Limits;
b. Declaring that the Plaintiffs' interest in the Remaining Policy Limits is superior to
the interest, if any, of the Davises and the Bergmarks to such funds;
c. Awarding the Plaintiffs judgment in the amount of the Remaining Policy Limits;
d. Awarding the Plaintiffs their attorneys' fees, costs, and disbursements; and
e. Granting such other relief as this Court deems just and proper.
FIFTH COUNT
CONSTRUCTIVE TRUST
length herein.
50. The Underlying Judgment is a Loss covered under the lllinois Union Policy.
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51. As the Underlying Judgment is a Loss covered under the lllinois Union Policy,
lllinois Union must hold the Remaining Policy Limits in trust for the benefit of Connolly, whom
lllinois Union is obligated to indemnify.
52. lllinois Union is a constructive trustee of the Remaining Policy Limits for the
benefit of Connolly.
a. Imposing a constructive trust on the Remaining Policy Limits for the benefit of
Connolly;
b. Awarding the Plaintiffs judgment in the amount of the Remaining Policy Limits;
c. Awarding the Plaintiffs their attorneys' fees, costs, and disbursements; and
d. Granting such other relief as this Court deems just and proper.
DEMAND FOR JURY TRIAL
The Plaintiffs demand a trial by jury.
Respectfully submitted,
DUGHI & HEWIT, P.C.,

Attorneys for Plaintiffs,
Edward P. Boykin, Phyllis A. Boykin,
Aziz S. Hasan, Carol A. Hasan,
Ronald K. Walker, and Jane C. Walker
By: Russell L. Hewit (RLH -- 3813)
Dughi & Hewit, P.c.

340 North Avenue
Cranford, New Jersey 07016
908.272.0200
Dated: January 19, 2011
12
Exhibit A
Assignment Agreement
from
Connolly to the Boykin Parties
13
ASSIGNMENT AGREEIHENT
This Assignment Agreement ("Assignment Agreement" or "Agreement") made this __
of December 2010, by and among David M. Connolly ("Connolly" or "Assignor"), on the one
hand, and Edwal'd Boykin, Phyllis Boykin, Aziz Ha.all, Carol Hasan, Ronald Walker and Jane
Walker (jointly "Boykin Plaintiffs" or "Assignee"), on the other hand,
WITNESSETH:
WHEREAS Connolly andlor Connolly P!'Operties, Inc. ("Connolly Properties")
purchased certain policies of insurance known as Business and Management Indemnity Policies
f!'Om Illinois Union Insurance Company ("Illinois Union"), including but not limited to policy
number BM120062 J63 (all policies of insurance issued by JIIinois Union to Connolly, including
,
both known andlor identified policies and policy number BMJ2OQ62163 as well as unidentified
andlor unknown policies are referred to jointly as "Illinois Union Policies"); and
WHEREAS the BoyJdn Plaintiffs asserted claims for damages a~d loss against Connolly,
including but nol.limited to claims asserted in a lawsuit entitled Edward P. Boykin el al. v.
Connolly Properties, Tnc" ct al. Civil Action No. 09-5267 (ORD), in the United States District
Court for the District of New Jersey ("Lawsuit"). which claims were and are covered under
Dlinojs Union Policies; and
WHEREAS Connolly timely tendered the claims to Illinois Union and demanded defense
and indemnity of the claims under the Illinois Union Policies, and Illinois Union provided
defense but not indemnity ot' the claims and reserved its rights to deny and wrongfully denied
coverage for indemnity and damages arising from these claims under the IIlinoi. [Jninn Policies
in breach of its contractual obligations; and
Assignmenl Agreement
Connolly and the Boykin Plaintiffs
Page I of9
476BOtOOO6 7lS077Sv2
WHEREAS notwithstanding that the Boykin Plaintiffs' claims exceeded the limits of the
Illinois Union PCllicies, the Boykin Plaintiffs offered to Connolly to compromise. settle and
resolve the claims against Connolly for an amount within what Were the remaining limits of the
Illinois Union Policies, which offer would have avoided Connolly being exposed to damages in
excess of the Jimits of the Dlinois Union Poticies; and
WHEREAS Connolly communicated to flIinoi. Union the offer by the Boykin Plaintiffs
to seWe within the limits of the Illinois Union Policies and avoid damages in excess of the limits
of the Illinois Union Policies "nd consented [0 and requested that Illinois Union settle the claims
of the Boykin Plaintiffs for an amount within the remaining limits of the lIiinois Union Policies;
and
WHEREAS Illinois Union knew or should have known that there was an overwhelming
likelihood lhallhe Boykin Plaintiffs would obtain a judgment against Connolly for an amount in
excess of the limits of [he Diinois Policies' limits based Oil claims covered by the Illinois Union
Policies, yet refused to settle the claims of the Boykin Plaintiffs within the limits of its policies
and continued to wrongfully deny coverage for the claims for the Boykin Plaintiffs damages,
exposing Connolly to a high likelihood of a jUdgment in excess of policy limits in breach of
Illinois Union's fiduciary duty to Connolly as Connolly's insurer and in breach of' its duty of fair
dealing and good failh; ""d
WHEREAS in the Lawsuit, the district court entered an order granting the Boykin
Plaintiffs summary judgment against Connolly for $1,368,000 (the "Boykin Judgment" or
"Order'), un amount in excess of the rcnul.lniug limits of [he IlHnojs Union 'POliCies,
unnecessarily exposing Connolly to damages in eXcess oflhe limits of the rIlinois Union
Policies; and
Connolly and [he Boykin PI.intiffs
Page2of9
4768010006 nsn77Sv2
WHEREAS the Boykm Judgment also divested the Boykin Plaintiffs of their interests in
the Hillside Valley Investment Trust (the ''Trust'') and those interests reverted to Connolly; and
WHEREAS Connolly tendered the Boykin Judgment to Illinois Union for payment, and
lllinois Union has refused to pay the Boykin Judgment or the remaining limits of the Illinois
Union Policy in breach ofDlinois Union's fiduciary duty to Connolly as Connolly's insurer and
in breach of its duty of fair dealing and good faith, and Illinois Union continues to wrongfully
deny coverage for the claims of the Boykin Plaintiffs under the IllinoiS Union Policies; and
WHEREAS Connolly and the Boykin Plaintiffs have rCllched agreement on the terms of
Connolly' agreement to assign and transfer to the Boykin Plaintiffs any and aJl rights and claims
against BIinois Union (a) in any way related to, under or arising ftom breach of the Jilinois Union
Policies, (b) for coverage under the IllinOis Union Policies, (e) to any and all proceeds due under
the fIlinois Union Policies, (d) for extra-contractual damages, punitive damages and any and all
other available remedies and relief arising from or in breach of Illinois Union's fiduciary duty to
Connolly as Connolly's insurer and in breach of irs duty of fair dealing and good faith; and
WHEREAS, in addition to the assignments and transfers related If) the Illinois Union
Policies, Connolly also agrees to assign and transfer to the Boykin Plaintiffs the interests that the
Boykin Plaintiffs were divested of in the Trust under the terms of the Order; and
NOW, THEREFORF.. Connolly and the Boykin Plaintiffs agree to the following tonns
and conditions.
1. Recitations. The recitations in the WHEREAS clauses are incorporated into the
body of this Agreement"" rcpl'Cscntntions ortl.e parties.
2. Assignment of Insurance Hights. Connolly irrevocably assigns, transfers and
delivers to the Boykin Plaintiffs to the maximum extent permitted by law, outright and free of
Page 3 of9
476SOIQC()(j 7lS0778v2
any and all liens, clnims and encumbrances, any and all rights, claims, causes of action and
entitlements (u) to any and all proceeds due, payable or [0 be paid under the lIIinois Union
Policies, (b) to any and all claims for insurance coverage under the lIIinois Union Policies, (c) to
any and all claims arising from breach of the lllinois Union Policies, (d) to any and all claims for
extra-contractual damages. punitive damages lind any and all other available remedies and relief
arising from Illinois Union's breach of its fiduciary duty co Connolly us Connolly'S insurer
and/or arising froOl its breach of its duty of fair dealing and good faith (jointly. the "Assigned
Claims"). The Assigned Claims include any and all rights. claims, causes of accion and
entitlements arising from or relaled in any way to any claims Connolly had. has or may have
against Illinois Union for any reason.
3. Assignment of Interests in and to HUis/de. Connolly irrevocably assigns.
transfers and delivers to lhe Boykin Plaintiffs to the maximum extent permitted by law. outright
and free of any and all liens, any and all shares, membership interests. partnership interests.
ownership interests and any and ull claims. encumbrances. rights, causes of action and
entitlements previously owned or held by the Boykin Plaintiffs, which he received pursuant to
the (erms of the Order divesting Che Boykin Plaintiffs of their interests in the Trust ("Boykin
Hillside Interests").
4. k..,.rfion and Filing of Claims/Costs of Pursuing ASSigned Claims. The
Boykin Plaintiffs are authorized by ConnoUy to assen and prosecute. and shall assen and
prosecute, che Assigned Claims us assignee as though ConnoUy was asserting and prosecuting
the Assigned Claims in it, own righ' and name, and the Boykin Plamuf!s shall be solely entitled
to any recovery on the ASSigned Claims. In the event that formal litigation is filed, the Boykin
Plaintiffs shalI caption the case in the name of the Boykin Plaintiffs, individually and as assignee
Page4of9
476&0l0006 725077Rv2
of Connolly and shall also recite In tile pleadings that the Assigned Claims have been assigned
by Connolly to the Boykin Plaintiffs,
The Boykin Plaintiffs shall be solely responsible for the costs, including but not limited
to attorneys fees and expenses and costs, incun'ed in asserting and prosecuting the Assigned
Claims,
5. Representations of Connolly. Connolly represents and warrants that (1) he owns
the Assigned Claims, he bas not released tile Assigned Claims lind he has the right and authority
to assign and transfer the Assigned Claims and the Boykin Hillside Interests to the Boykin
Plaintiffs, and (2) he has not assigned, pledged, transferred or otherwise encumbered any of the
Assigned Claims and the Boykin Hillside Interests and he assigns them to the Boykin Plaintiffs
free and cleur of any and all liens, claims and encumbmnces of any third partiers, Connolly shall
not assign or transfer to any other persons or entities the Assigned Claims or the Boykin Hillside
Interests and shall not assign to any other persons or entities any other rights or claims (a) to any
proceeds due, payable or to be paid under the Illinois Union Policies, (b) for any other claims for
insur-dnce coverage under the Illinois Union Policies, (c) for any other claim~ ",ising from breach
of the Illinois Union Policies, Cd) for any other claims for extra-contractual damages, punitive
damages or any other available remedies or relief against Illinois Union for any reason or (e) to
the Boykin Hillside Interests,
Connolly represents and wan'ants that he has no assets or income, and that he has no
current right or entitlement to future assets or income, except as expressly listed in his Asset
Disclosures he previously disclosed to the Doykin Plaintiffs, ConnOJlyrecognlzes,underslands
and agrees that if there is a misrepresentation in his Asset Disclosures that the Agreement to look
to Illinois Union and the Boykin Hillside Interests for relief and not to pursue relief from
PageS of9
4i6RnJOQOG 1250719v2
Connully as set forth In paragraph 7 shall be void and unenforceable and thaI the Boykin
Plaintiffs shall have the right to pursue recovery from Connolly.
6, CooperaliolL Connolly shall cooperate with the Boykin Plaintiffs in the
prosecution of the ASSigned Claims, including but not Umited to (1) providing the Boykin
Plaintiffs and/or their attorneys and representatives with access to and copies of books, records,
documents, data, storage media, communications and other materials, whether created or stored
in hard copy or electronic or computer format, relevant to the Assigned Claims, (2) authorizing
and insl.nlcling his employees or employees of entities under his control, with relevant
knowledge about the Assigned Claims to meet with the Boykin Plaintiffs and/or their attorneys
and representatives upon reasonable notice and at reasonable times, in order to respond to
discovery requests and to prepare and prosecute the Assigned Claims, and (3) cooperating in the
scheduling and appearance at deposition, heating, arbitration or trial and, in such event, to meet
with the Boykin Plaintiffs and/or their attorneys and representatives to prepare for such
deposition, hearing, arbitration or trial.
In the event Connolly is contacted by Illinois Union or persons acting on it.. bebalf or is
contacted by any person concerning or related to the Assigned Claims, Connolly shall make no
comment about the Assigned Claims and shall refer any such persons to the Boykin Plaintiffs.
Connolly shall not provide any docllments or wlitings concerning the Assigned Claims to any
persons, except in response to valid subpoena or COUlt order and, even then, only after first
providing copies to the Boykin Plaintiffs and/or his attorneys and a reasonable opportunity to
review prior to production, nor shall Connolly discu"s ur ,-,ummem on the Assigned Claims, in
writing or orally, to any other person, excluding, his lawyers, tax advisors and spouse, except in
the presences of the Boykin Plaintiffs or their attorneys.
Page 60f9
,(768010006 7250718v2
7. Agreement to Look to Illinois Union and Hillside Interests Only for Relief.
The Boykin Plalntiffs agree that they shall not seek relief or recovery from Connolly with regard
to any and all claims against Connolly asserted in Ihe Lawsuit amI/or to which they are entitled
under the Boykin Plaintiffs' Judgment. but shall limit their recovery solely to what they receive
from !IIinois Union and the Hillside Inrcresl,. To the extent that the Boykin Plaintiffs can
release any and all chlims against Connolly asserted in the Lawsuit and to which they are entitled
underthe Boykin Plaintiffs' Judgment without impairing or limiting in any way Connolly's
rights and claims against lIlinois Union (which have been assigned to the Boykin Plaintiffs)
and/or the Boykin Plaintiffs' rights and claims against Illinois Union pursuant to the Assigned
Claims. d,CY release such claims against Connolly. If, however. for any reason, such a release
impairs or limits in any way the rights and claims of the Boykin Plaintiffs against IllinOis Union
pursuant to the ASSigned Claims, then they do not release Connolly, but agree to look solely to
Illinois Union and the Boykin flillside Interests for relief and recovery. The Boykin Plaintiffs
further agree that they will not seek ta collcct or recover manies or payment of the judgment
from Connolly but will look to Illinois Union to satisfy the judgment.. IJpon resolution of the
Assigned Claims with Illinois Union, by way of verdict, court order or settlement, the Boykin
Plaintiffs will execute and provide to Connolly a warrant to satisfy judgment.
A. Authority. Connolly has the full right and authOlity to assign and transfer 10 the
Boykin Plaintiffs the Assigned Claims and the Boykin Hillside Interest.
B. Binding. This Assignment Agrc:ement is binding upon and shaJl inure to the
benefit of the parties and their successors and assigns.
Page 7 of9
47680101106 nS017Bv2
C. Entire Agreement. Tlus Assignment Agreement is the entire agreement between
the parties and there are no oral agreements. This Assignment Agreement represents the
complete understanding between the parties and supersedes nny and all previous negotiations,
represenrations or agreemenrs as to the subject matter of this Assignment Agreement. This

Assignment Agreement may nO[ be amended except by a written instrument signed by all parties.
D. Preservation of Agreement. If a court or other hearing officer of competent
jurisdiction holds any part of this Agreement to be invalid or unenforceable, the remainder of the
Assignment Agreement shall remain in full force and effect.
E. Countcmarts. This Assignment Agreement mny be signed in counterparts, each
of which is deemed nn original, and all of which taken together constitute one and the same
agreement.
F. Additional Documents. The Parties agree to execute and deliver to each other
any documents reasonably necessary to effectuate the terms of this Assignment Agreement.
G. New Jersey Law. The law of the State of New Jersey shall apply in the
interpretation and enforcement of this Assignment Agreement without regard to choice of law
principles.
H. Signatory for Boykin Plaintiffs. Louis Modugno, attorney for the Boykin
Plaintiffs. is authorized to sign thi~ A..ignment Agreement on behalf of each and everyone of
the Boykin Plaintiffs and to bind them to the terms of this Assignment Agreement.
The NOW, THEREFORE, clause and signature pnge is the next immediate page.]
ASSignment Agreemclu
Connolly and Ihe Boykin Plointilfs
Page 8 019
4768WOOO67'J.S071BIlZ
NOW, THEREFORE, David M. Connolly, on the one hand, and Edward Boykin, Phyllis
Boykin, Azi.2. Hasan, Carol Hasan, Ronald Walker and Jane Walker, by and through their
attorney, Louis Modugno, on the other hand, sign this Assignment Agreement intending to be
legally bound by all of its terms and conditions.
ASSIGNORS;
DAVID M. CONNOLLY
David M. Connolly, Individually

Dated: December &, 2010
ASSIGNEES:
LOUIS MODUGNO,
ATIORNEY FOR AND ON BEHALF OF
EDWARD BOYKIN, PHYLLIS BOYKlN,
AZIZ HASAl'l, CAROL HASAN,
RONALD ~ALKER, ANI}1ANB WALKER
/1-:/~
,'/"
J ~
Louiii Modugno, AltoOley for and on
behalf of Edward Boykin, Phyllis
Boykin, Aziz Hasan, Carol Hasan,
Ronald Walker, and Jane Walker
.p,ll- : ;C,""i ?, .)011
Connolly alld the Boykin Plaintiffs
Page 9 of9
4768010006 72S07']S ...;l

BOYKIN Et Al v. ILLINOIS UNION INSURANCE COMPANY Et Al Complaint

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BOYKIN Et Al v. ILLINOIS UNION INSURANCE COMPANY Et Al Complaint

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Case 2:11-cv-00326-SRC -MAS Document 1 Filed 01/19/11 Page 1 of 22 PageID: 1

Dughi & Hewit, P.e.

IN THE UNITED STATES DISTRICT COURT

EDWARD P. BOYKIN, PHYLLIS A. Civil No.:

ILLINIOS UNION INSURANCE

Complaint, state as follows:

residing at 14 Via Marino, in the City of Palm Coast.

residing at 2 Laguna Court, in the City of Palm Coast.

residing at 10 Via Marino, in the City of Palm Coast.

4. Upon information and belief, David M. Connolly ("Connolly") is a citizen of New

Connolly Properties, Inc. ("Connolly Properties").

5. Upon information and belief, Defendant lllinois Union Insurance Company

with its principal place of business in the State of lllinois.

7. Upon information and belief, Defendants Richard L. Bergmark and Toni M.

JURISDICTION AND VENUE

8. Jurisdiction is conferred on this Court pursuant to 28 U.S.C. § 1332 in that this is

lllinois with its principal place of business in the State of lllinois.

9. Venue is proper in this District pursuant to 28 U.S.C. §§ 1391(a)(I) and (2), in

to the claims asserted herein occurred in this District.

Policy"), for the benefit of Connolly Properties and Connolly.

"Management Insureds and Company Coverage Section."

$746,453.68 (the "Remaining Policy Limits").

Directors, Officers, Mauagers, aud employees of Connolly Properties).

monetary or injunctive relief, commenced by the service of a complaint or similar proceeding."

against Connolly in the amount of $385,000 plus interest.

damages, judgments, ... awarded by a court."

into an Assignment Agreement (the "Assignment Agreement"), pursuant to which Connolly

22. A true copy of the Assignment Agreement is attached as Exhibit A.

Connolly misappropriated the Plaintiffs' funds.

total amount of $1,045,000.

during the Policy Period.

WHEREFORE, the Plaintiffs demand judgment against illinois Union as follows:

c. Ordering specific performance of the illinois Union Policy;

d. Ordering illinois Union to indemnify Connolly pursuant to the illinois Union

e. Awarding compensatory damages;

f. Awarding pre- and post-judgment interest;

BREACH OF FIDUCIARY DUTY - COMPENSATORY DAMAGES

damaged in an amount to be determined at trial.

WHEREFORE, the Plaintiffs demand judgment against lllinois Union as follows:

a. Awarding compensatory damages;

b. Awarding pre- and post-judgment interest;

been assigned to the Plaintiffs, is superior to that of Davises and Bergmarks;

BAD FAITH, BREACH OF FIDUCIARY DUTY AND BREACH OF IMPLIED

but not limited to the following:

a. Prior to entry of the Underlying Judgment, the Plaintiffs offered to Connolly to

the limits of the lllinois Union Policy;

b. With knowledge of a strong likelihood that a judgment would be entered against

deny coverage and wrongfully and unreasonably refuse to settle; and

c. With knowledge of a strong likelihood that a judgment would be entered against

its insured Connolly.

Policy, causing Connolly significant damages.

insured Connolly to punitive damages.

contractual damages and punitive damages to the Plaintiffs.

WHEREFORE, the Plaintiffs demand judgment against lllinois Union as follows:

a. Awarding compensatory damages;

b. Awarding punitive damages;

d. Awarding pre-and post-judgment interest;

dealing ("Connolly Rights").

done by any party, or by Connolly assigning the Connolly Rights.

46. The Plaintiffs own all of the Connolly Rights.

rights or priority to the Remaining Policy Limits.

Bergmarks to such funds.