Two carriers have asked a federal court to rule that they owe nothing further to a bankrupt property management company that has gone silent on its own defense lawyers.
Argonaut Insurance Company and AXIS Surplus Insurance Company filed the complaint on September 11, 2026, in the US District Court for the Southern District of New York. They are asking a judge to formally declare - through what is known as a declaratory judgment - that their coverage obligations to Common Living, Inc., which operates as Noah Living, are extinguished. The five LLC property owners pursuing the underlying arbitration against Common Living are also named as defendants.
Argonaut issued Common Living a professional liability policy running from June 26, 2021, to September 26, 2022. AXIS issued an excess policy that sits above Argonaut's and mirrors its terms. Common Living is the company covered under both.
The roots of the dispute stretch back to November 2021. According to the complaint, a real estate capital firm that had hired Common Living to manage five workforce housing properties prepared a report outlining alleged management failures across financial reporting, tenant relations and rent collection, property maintenance, and vendor oversight.
A formal termination notice followed on January 28, 2022, ending the five management agreements effective February 7, 2022. The complaint states the notice placed damages at $9,355,935.15 and demanded disgorgement of management fees the filing describes as exceeding $350,000, along with more than $700,000 in employee salaries and benefits billed as operating costs. The notice also floated an $8,000,000 settlement figure, according to the complaint.
An arbitration demand landed in January 2023 before the American Arbitration Association, asserting breach of contract plus claims the complaint labels as "fraudulent concealment" and "constructive fraud." That demand sought damages of $9,355,935.15, $200,000 in attorney's fees and costs, punitive damages, and pre- and post-judgment interest, the complaint states. Five individual demands from the property-owning LLCs followed in September 2023 and were eventually rolled into a single proceeding.
Argonaut appointed a law firm to defend Common Living. But on May 31, 2024, Common Living filed for Chapter 7 bankruptcy in the US Bankruptcy Court for the District of Delaware. In August 2025, the bankruptcy court lifted the automatic stay - the freeze on legal proceedings that kicks in when a company enters bankruptcy - to let the property owners press ahead with the arbitration and enforce any award solely against the insurance policies, the complaint states.
After the bankruptcy filing, Common Living effectively ceased to function as a going concern, the complaint alleges. Defense counsel moved to withdraw in November 2025, telling the arbitrator that no employees or personnel remained at the company and that counsel had been unable to reach anyone. The arbitrator granted the withdrawal in March 2026.
The filing then describes a string of unanswered letters. Between January and March 2026, Argonaut and AXIS wrote to the company's former in-house counsel, its founder, the general counsel of its European parent company, and the bankruptcy trustees. One former contact replied asking to be taken off the mailing list, noting it had been almost two years since they last worked at Common Living. Another redirected the inquiry to a colleague who never responded. A third returned an auto-reply saying they had left the parent company.
Argonaut formally denied coverage on February 18, 2026, the complaint states. AXIS followed with a March 2026 letter asserting that Common Living had breached the cooperation requirements in both policies and reserving its right to deny coverage as well.
The cooperation clause in the Argonaut policy - which AXIS's policy incorporates by reference - requires the insured to help investigate and defend claims, sit for examinations, attend hearings and depositions, hand over documents, and meet with the insurer's representatives. The complaint alleges Common Living did none of this after filing for bankruptcy.
The carriers press five separate claims in the suit. The headline claim asks the court to declare that the cooperation breakdown relieves both insurers of all obligations.
The four backup claims kick in only if the court disagrees on cooperation. The second and third seek a ruling that each policy's available coverage is capped at $1 million rather than a higher figure. The policies tie their limits to what the complaint calls retroactive dates - essentially, cutoff dates that determine which layer of coverage applies based on when the alleged wrongdoing began. The Argonaut policy provides $1 million for acts dating back to January 24, 2017, and an additional $1 million only for acts on or after June 26, 2021. Because the property owners' claims trace to alleged mismanagement beginning as early as March 2020 - before the June 2021 cutoff - the insurers argue only the first $1 million layer is in play. The same logic applies to the AXIS excess policy, which has an August 1, 2021 cutoff for its second $1 million.
The fourth claim targets the types of relief the property owners are chasing. The Argonaut policy defines covered "damages" in a way that excludes the return or disgorgement of fees, costs, and expenses - a significant carve-out given that the arbitration claimants are seeking repayment of management fees and staff costs. The complaint also notes that punitive damages are not insurable under applicable New York law.
The fifth claim invokes the fraud exclusion. The policy bars coverage for any claim arising out of "intentional, criminal, dishonest, malicious or fraudulent" conduct if that conduct is established by a final ruling. Because the arbitration includes counts for "fraudulent concealment" and "constructive fraud," the insurers seek a declaration that any award on those counts falls outside coverage.
The complaint adds that the property owners opposed defense counsel's withdrawal and have told the arbitrator and the insurers that they intend to push ahead with the arbitration, obtain a default award, and collect against the policies.
One wrinkle the court will likely consider: the Argonaut policy itself states that the bankruptcy or insolvency of any insured does not relieve the insurer of its obligations or strip it of its rights under the policy.
The allegations in the complaint have not been tested in court, and no judge has ruled on the merits.
