A $650,000 offer. A $30 million verdict. One insurer says the other could have settled and didn't.
Colony Insurance Company, as successor via merger to Peleus Insurance Company, sued Accredited Surety and Casualty Company, Inc. in the Eastern District of New York on August 24, 2026. Colony wants $4,750,000 plus interest. The complaint alleges Accredited owed Colony a duty to settle an underlying Brooklyn construction injury case within Accredited's own limits, failed to do so, and left Colony to pay the rest.
The coverage chain runs through four companies. According to the filing, 508 Waverly LLC hired RM Construction and Development Corp. as general contractor for work at 508 Waverly Avenue in Brooklyn. RM subcontracted part of the job to Richmond Construction Inc., which passed work down to JW Salinas Corp. The subcontract required Richmond to carry general liability and excess cover naming RM as an additional insured on a primary, non-contributory basis - trade shorthand for going first and not asking anyone else to chip in.
Accredited issued both policies to Richmond, the complaint says. The primary policy carried a $2,000,000 occurrence limit and the excess policy added another $3,000,000, for $5,000,000 in total. Colony's own policies for RM sat behind them, with matching $2,000,000 and $3,000,000 limits.
The policy wording is central to what Colony claims. Accredited's additional-insured endorsement covers the scheduled organization “but only with respect to liability for ‘bodily injury’ . . . caused, in whole or in part, by” Richmond's acts or omissions, or those of anyone acting on Richmond's behalf, during work performed for the additional insured. The excess policy states: “This insurance is primary to and will not seek contribution from any other insurance available to an additional insured under which the additional insured is covered as a Named Insured.” Colony's primary policy points the other way, stating that its cover is excess over any other primary insurance for liability arising out of operations for which RM was added as an additional insured.
The underlying claim came from a worker employed by Salinas. He was allegedly injured on December 14, 2020, the complaint says, after falling from an elevation of more than ten feet, leaving his left leg impaled by rebar and requiring surgery to his left hip and back. He sued Waverly and RM in Kings County Supreme Court. Accredited agreed to defend and indemnify RM as an additional insured on a primary, non-contributory basis, according to the filing.
Then comes the offer trail.
In a June 3, 2024 report, the complaint says, the lawyers Accredited hired to defend RM told the carrier that a damages verdict above the combined $5,000,000 limits “would be sustainable,” and that the injured worker's lawyers had demanded $12,000,000 to settle.
On February 27, 2025, the court in the underlying case ruled against RM on liability under Labor Law § 240(1), the New York provision covering certain falls from height.
Accredited made no offer at all until April 17, 2026, a month before the case was scheduled for trial, when it offered $650,000, the filing states.
At a May 13, 2026 mediation, according to the complaint, the mediator recommended that Accredited offer $4.95 million and told RM's defense lawyers he was highly confident the worker would accept it. Colony alleges Accredited did not raise its offer.
The next day, Colony's lawyers wrote to Tradesman Program Managers, Accredited's claims administrator, demanding a settlement within the $5,000,000 available and setting out its position that failing to do so would breach a duty owed to Colony. Also on May 14, 2026, the complaint says, the worker's lawyers put a figure in writing: $5,000,000, if offered on or before May 18, 2026.
The deadline passed. On May 19, 2026, during jury selection, the filing states that the worker's lawyers said $5,000,000 would still close the case, the assigned judge told RM's defense lawyers the worker would accept less, and defense lawyers relayed to Accredited that $4,500,000 or something close would be enough. Colony alleges Accredited refused to go above $1,500,000.
The jury awarded the worker $30,000,000 in damages against RM.
To resolve the matter after trial, the complaint says, the worker accepted $9,750,000. Accredited paid its full $5,000,000. Colony paid the remaining $4,750,000 - the sum it now wants back.
Colony's claim rests on a duty it says runs from one insurer to another. It alleges that Accredited, holding the first layers of cover, owed Colony, holding the layers above, “a fiduciary duty to endeavor in good faith to resolve the Underlying Action within the Accredited Policies’ combined occurrence limits.” By not settling within those limits while knowing a larger verdict was “reasonably likely,” the complaint alleges, Accredited “acted with reckless disregard of Colony's interests.”
The allegations are untested, and no court has ruled on any of the claims.
