Case: 2:11-cv-00221-MHW-EPD Doc #: 2 Filed: 03/11/11 Page: 1 of 6 PAGEID #: 2

l=',1 FO
\•~ A:.J:--oQN\N\
K
1-.:..1-..1\-_ 1 \-I

IN THE UNITED STATES DISTRICT COURi '''" R

FOR THE SOUTHERN DISTRICT OF OHfg, M~R \ \ ~M 3~ 51
DIMENSION SERVICE CORPORATION Case N'iPa : llrs-crv:~Oi.rJliiO 1
400 Metro Place North, Suite 300 II U. linll:pl ~\J \ ~~
Dublin, Ohio 43017 Judge~rCXE ~~ cctlH~BlIS
Plaintiff, Magistrate Judge

v.
WESTCHESTER FIRE INSURANCE

COMPANY

436 Walnut Street

Philadelphia, Pennsylvania 19106

Defendant.

COMPLAINT

WITH JURY DEMAND

Now comes the Plaintiff Dimension Service Corporation, by and through counsel, and for

its Complaint against Defendant Westchester Fire Insurance Company alleges on information

and belief as follows:

PARTIES, JURISDICTION. AND VENUE

1. This action arises under the common law.

2. This Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332. The parties are

citizens of different states and the amount in controversy exceeds $75,000.

3. Defendant has sufficient contact with this district generally and, in particular, with

respect to the events alleged herein so as to subject it to personal jurisdiction in this Court.

4. Venue is proper in the Southern District of Ohio because the events giving rise to this

dispute arose in the Southern District of Ohio.

5. Plaintiff Dimension Service Corporation ("Dimension") is an Ohio corporation with its

principal place of business at 400 Metro Place North, Suite 300, Dublin, Ohio 43017.
 Case: 2:11-cv-00221-MHW-EPD Doc #: 2 Filed: 03/11/11 Page: 2 of 6 PAGEID #: 3

6. Defendant Westchester Fire Insurance Company ("WFIC") is a New York corporation

with its principal place of business at 436 Walnut Street, Philadelphia, Pennsylvania 19106.

BACKGROUND

7. At all times relevant to this complaint WFIC, through its parent and sole shareholder

ACE USA, Inc., was the majority and controlling shareholder of Dimension.

8. WFIC, which was in the business of providing and administering vehicle service

contracts, had the need for a third party to administer all aspects of said contracts.

9. To that end, Dimension and WFIC entered intd a business relationship whereby

Dimension would fully administer all aspects ofWFIC's vehicle service contract business.

10. In connection with and to compensate Dimension for its services, Dimension and WFIC

entered into that certain Profit Share Agreement, executed on June 30, 1999 and made effective

January 1, 1999 (the "PSA"), attached hereto and incorporated herein as Exhibit "A."

11. Pursuant to the terms of the PSA, WFIC agreed to provide Dimension with 100% of

underwriting profits and investment income (as defined in the PSA) with respect to the vehicle

service contracts administered by Dimension.

12. The PSA also provided Dimension with the ri~t, but not the obligation, to direct certain

portions ofthe underwriting profits and investment income to agents and/or dealers who sold the

vehicle service contracts to consumers.

l3. Section 5 of the PSA provides that it was "to continue in full force and effect until all

contract obligations to contract holders and policy obligations of [WFIC] have expired and all

profit and investment income due Dimension hereunder has been paid."

14. Four years later, WFIC utilized its dominion alld control over Dimension to cause

Dimension to enter into another so-called agreement pursuant to which the PSA was terminated

 Case: 2:11-cv-00221-MHW-EPD Doc #: 2 Filed: 03/11/11 Page: 3 of 6 PAGEID #: 4

and Dimension forfeited to WFIC its rights to any underwriting profits and investment income
i

due thereunder for contracts issued after the effective 4.ate

,
of the termination of the PSA.

15. An arrangement in which the CLIP insurer retains underwriting profits and investment

income is unheard of in this industry.

16. The so-called agreement between Dimension and WFIC was entitled Profit Share

Funding Agreement and was executed on August 8, 2003 but made effective June 30, 2003 (the

"PSFA"). A copy of the PSFA is attached hereto and incorporated herein as Exhibit "8."

17. WFIC provided Dimension with no consideration whatsoever in exchange for the
,
wholesale concessions made by Dimension in the PSF:A. Notably, the PSFA fails to allege

consideration of any kind or in any amount.

18. The PSFA was executed on behalf of Dimension by an individual under the dominion

and control ofWFIC and/or its parent.

19. The PSFA was never approved by a majority Of disinterested directors or shareholders of

Dimension.

20. At the time the PSF A was executed, the PSA was, by its unambiguous terms, still in

effect.

21. Ultimately, the PSFA was entered into solely fur the benefit ofWFIC to the exclusion

and at the expense of Dimension, its subsidiary.

22. When the parent has received a benefit to the exclusion and at the expense of the

subsidiary, the "intrinsic fairness" rule requires the parent to prove that its transactions were

objectively fair. Sinclair Oil Corp. v. Levien, 280 A.2d 717,720 (DeL,1971). See also,

Schreiber v. Pennzoil Co., 419 A.2d 952 (Del.Ch., 1980); Warren v. Century Bankcorporation,

Inc., 741 P.2d 846 (Okl.,1987).

3
 Case: 2:11-cv-00221-MHW-EPD Doc #: 2 Filed: 03/11/11 Page: 4 of 6 PAGEID #: 5

23. Under no circumstances can the tenns of the PSFA be considered objectively fair.

24. WFIC engaged in impennissible self-dealing when, by virtue of its domination and

control of Dimension, it caused Dimension to enter into the PSF A, resulting in WFIC receiving

the benefits of the PSFA, most importantly its purport~d tennination of the PSA and

Dimension's rights to underwriting profits and investn!tent income from the vehicle service

contracts, to the exclusion of and detriment to Dimension. Id.

25. Further, WFIC's wrongful acts, which began ptior to the present ownership of

Dimension's acquisition of the company, continue to cause Dimension loss and place Dimension

in jeopardy of additional loss in that Dimension continues to be burdened by the tenns of the

PSFA and WFIC continues to wrongfully benefit therefrom.

26. Additionally, WFIC concealed the unconscionable change in tenns purportedly brought

about by the PSFA from Dimension's minority shareholders and current ownership.

27. Once the PSFA is declared unenforceable, the amount due to Dimension under the PSA

exceeds $75,000.00.

COUNTI-DECLARATO~Y JUDGMENT

28. Dimension incorporates each of the preceding paragraphs as if fully rewritten herein.

29. There is ajusticiable controversy between Dimension and WFIC regarding the validity

and enforceability of the PSFA.

i
30. WFIC contends that Dimension is bound by the unfair and unconscionable terms of the

PSF A and is not entitled to payments due to Dimension under the PSA.

31. Dimension avers it is not bound by the PSFA because it was entered into solely for the

benefit ofWFIC to the exclusion and at the expense of Dimension, its subsidiary, and was

entered into with any consideration of any kind inuring to the benefit of Dimension.

4
 Case: 2:11-cv-00221-MHW-EPD Doc #: 2 Filed: 03/11/11 Page: 5 of 6 PAGEID #: 6

WHEREFORE, Dimension requests that this Court enter judgment in its favor and against WFIC

as follows:

(i) Declaring, pursuant to Ohio Revised Code § 2721 et. seq., that the PSFA is not a valid

or enforceable agreement and that the PSA is the contt.olling agreement between the parties with

respect to the subject matter set forth therein;

(ii) Awarding attorneys fees and costs as appropriate;

(iii) Awarding prejudgment interest and costs as appropriate; and

(iv) Awarding such other and further relief as this Court and/or jury deems equitable,

appropriate and just.

COUNT II - BREACH OF CONTRACT

32. Dimension incorporates each of the preceding paragraphs as if fully rewritten herein.

33. The PSA constitutes a valid and enforceable contract between WFIC and Dimension.

34. Dimension has performed pursuant to the terms of the PSA.

35. WFIC has breached the terms of the PSA by, inter alia, failing to pay to Dimension the

underwriting profits and investment income from the vehicle service contracts due to Dimension
-!

pursuant to the terms of the PSA.

36. Dimension has suffered damages as a result ofsaid breach.

WHEREFORE, Dimension requests that this Court enter judgment in its favor and against WFIC

as follows:

(i) Awarding Dimension damages for WFIC's breach of the PSA;

(ii) Awarding attorneys fees and costs as apprdpriate;

(iii) Awarding prejudgment interest and costs as appropriate; and

5
 Case: 2:11-cv-00221-MHW-EPD Doc #: 2 Filed: 03/11/11 Page: 6 of 6 PAGEID #: 7

(iv) Awarding such other and further relief as this Court and/or jury deems equitable,

appropriate and just.

JURY DEMAND

Dimension demands a jury on all issues so triable.

Dated: March 11,2011

Jdseph F. Murray, Tr ru Attorney (0063373)
Brian K. Murphy (0070654)
Robert H. Miller (0076939)
Murray Murphy Moul + Basil LLP
1533 Lake Shore Drive
Columbus, OH 43204
Telephone: 614.488.0400
Facsimile: 614.488.0401
E+-mail: murray@mmmb.com
murphy@mmmb.com
miller@mmmb.com
Counsel for Dimension Service Corporation