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IN THE UNITED STATES DISTRICT COURT
THE CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
FULL SERVICE HOSPITALITY , LLC and
TOWER CAPITAL GROUP, LP,
Plaintiffs,
v.
AFFILIATED FM INSURANCE COMPANY ,
Defendant.Case No. 3:25-03172-CRL-DJQ
Jury Trial Demanded
DEFENDANT’S ANSWER, AFFIRMATIVE DEFENSES, AND
COUNTERCLAIMS TO PLAINTIFFS’ COMPLAINT
Defendant, Affiliated FM Insurance Company (“Affiliated FM”), by and through its
attorneys, and for its Answer and Affirmative Defenses to Plaintiffs’ Complaint, states as follows:
1. Plaintiffs bring this action for damages resulting from Defendant’s breach of
contract and bad faith and unreasonable and vexatious delay in settling Plaintiffs’ claim. Each
cause of action arises out of Defendant’s mishandling of Plaintiffs’ claim after a vandalism event
caused significant property damage and business interruption losses and extra expenses.
ANSWER:
Affiliated FM admits that Plaintiffs have filed this action, and that vandalism caused
damage. Affiliated FM denies the remaining allegations in Paragraph No. 1, and further states that
Affiliated FM has not breached its contract, has not engaged in any bad faith or delay in
investigating Plaintiffs’ claim, and has not mishandled Plaintiffs’ claim.
2. Plaintiff, Full Service Hospitality, LLC (“Full Service”), is a Texas limited liability
company with its principal place of business located at 128 Westcourt Lane, San Antonio, Texas
78257.E-FILED
Monday, 25 August, 2025 03:17:15 PM
Clerk, U.S. District Court, ILCD3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 1 of 45
2 ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 2 and therefore denies the same.
3. Full Service has one member, Al Rajabi, who is a citizen and resident of San
Antonio, Texas.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 3 and therefore denies the same.
4. Plaintiff, Tower Capital Group, LP (“Tower”), is a Texas limited partnership with a
principal place of business located at 128 Westcourt Lane, San Antonio, Texas 78257.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 4 and therefore denies the same.
5. Tower has a general manger (sic), Al Rajabi, who is a citizen and resident of San
Antonio, Texas.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 5 and therefore denies the same.
6. Tower has a limited partner, Tower GP, LLC, a Texas limited liability company.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 6 and therefore denies the same.3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 2 of 45
3 7. Tower GP, LLC is a Texas limited liability company with its principal place of
business located at 128 Westcourt Lane, San Antonio, Texas 78257.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 7 and therefore denies the same.
8. Tower GP LLC has one member, Al Rajabi, who is a citizen and resident of San
Antonio, Texas.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 8 and therefore denies the same.
9. Defendant, Affiliated FM Insurance Company (“Affiliated FM”), is a Rhode Island
corporation with its principal place of business located at 270 Central Avenue, Johnston, Rhode
Island 02919.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 9.
10. For purposes of diversity jurisdiction, Full Service is a citizen of Texas.
ANSWER:
Assuming the allegations regarding its member are correct, Affiliated FM admits the
allegations in Paragraph No. 10.
11. For purposes of diversity jurisdiction, Tower is a citizen of Texas.
ANSWER:
Assuming the allegations regarding its manager and member are correct, Affiliated FM
admits the allegations in Paragraph No. 11.3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 3 of 45
4 12. For purposes of diversity jurisdiction, Affiliated FM is a citizen of Rhode Island.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 12.
13. This Court has jurisdiction over the matter pursuant to 28 U.S.C. §1332 because
this is a civil action between citizens of different states and the amount in controversary is in excess
of sum of $75,000.00, exclusive of costs and interest.
ANSWER:
Assuming the allegations of the citizenship of Plaintiffs are correct, Affiliated FM admits
the allegations in Paragraph No. 13.
14. Venue is proper in the Central District of Illinois, Springfield Division pursuant to
28 U.S.C. §1391 insofar as Defendant operates and transacts business in this judicial district and
the events giving rise to Plaintiffs’ claims occurred within this District.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 14.
15. Plaintiffs own the Wyndham Hotel Springfield City Centre (“Hotel”) located at 700
East Adams Street, Springfield, Illinois 62701.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to whether one
or both of the Plaintiffs owns the Hotel, and therefore denies the same.
16. The Hotel is a 369-hotel room and 27-apartment unit, 30-story building in a prime
location in downtown Springfield, Illinois, a busy state capital and major convention destination.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 16. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 4 of 45
5 17. The Hotel is the largest hotel and tallest building in Springfield, Illinois.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 17.
18. The Hotel has a full Starbucks, over 50,000 square feet of meeting space and retail
shops, and over 535 parking spaces.
ANSWER:
Affiliated FM admits the Hotel has a Starbucks, meeting space and retail shops, and parking
spaces. Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the remaining allegations in Paragraph No. 18 and therefore denies the same.
19. The Hotel regularly hosts large groups of people for meetings, parties, and
accommodations and also hosts numerous persons attending events at the Bank of Springfield
Center, a convention center, and other events in and around Springfield, Illinois in need of
accommodations.
ANSWER:
Affiliated FM admits that the Hotel has hosted groups of people in the past. Affiliated FM
lacks knowledge or information sufficient to form a belief as to the truth of the remaining
allegations in Paragraph No. 19 and therefore denies the same.
20. At most times, the Hotel is booked to full capacity for various large group meetings,
parties, and personal accommodations.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 20 and therefore denies the same.3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 5 of 45
6 21. On March 27, 2025, an unidentified person or persons vandalized the Hotel causing
extensive property damage (the “Event”).
ANSWER:
Affiliated FM admits that a person or persons vandalized the Hotel causing property
damage on March 27, 2025, some of which was extensive. Affiliated denies the remaining
allegations in Paragraph No. 21.
22. Fortunately, there were no fatalities or other personal injuries.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 22.
23. The Event caused significant property damage to, including, but not limited to, the
Hotel’s six (6) passenger elevators; passenger elevator controllers and other elevator equipment;
water heater piping; boiler/vessel control wires; jockey pumps; and build ing automation system
(“BAS”) panel.
ANSWER:
Affiliated FM admits that the vandalism on March 27, 2025 caused property damage to,
including, but not limited to, the Hotel’s six (6) passenger elevators; passenger elevator controllers
and other elevator equipment; water heater piping; boiler/vessel control wires; jockey pumps; and
building automation system (“BAS”) panel. Affiliated FM denies the remaining allegations in
Paragraph No. 23.
24. The Event also caused significant water damage to the Hotel’s restaurants, meeting
rooms, banquet rooms, hotel rooms, apartment units, and common spaces located on the majority
of the Hotel’s thirty (30) floors which required the removal of water and will require (among other 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 6 of 45
7 things) the replacement of electrical equipment, drywall, plaster, wallpaper, carpet and tile in the
future.
ANSWER:
Affiliated FM admits that the vandalism on March 27, 2025, caused water damage to
certain portions of the Hotel, in particular, certain restaurants, meeting rooms, banquet rooms, hotel
rooms and apartment spaces. Affiliated FM denies that the vandalism caused water damage to the
majority of the Hotel’s 30 floors. Affiliated FM denies that vandalism caused water damage to
apartment units. Affiliated FM admits that water was removed and will require repair or
replacement of certain electrical equipment, drywall, plaster, wallpaper, carpet and tile. Affiliated
FM denies the remaining allegations in Paragraph No. 24.
25. The Hotel’s six passenger elevators are inoperable.
ANSWER:
Affiliated FM admits that the Hotel’s six passenger elevators are inoperable, meaning that
they were not working.
26. The Hotel’s elevators are inoperable due to the Event.
ANSWER:
Affiliated FM admits the Hotel’s six passenger elevators are inoperable, meaning that they
are not working, due to the vandalism on March 27, 2025.
27. On March 28, 2025, the Hotel was closed by the State Fire Marshall and the
Springfield Fire Department Fire Safety Division for not meeting the code standards due to non-
working elevator and out-of-service fire alarm, sprinkler systems, and water lines.
ANSWER:3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 7 of 45
8 Affiliated FM admits the Hotel was closed by the State Fire Marshall and/or the Springfield
Fire Department after the vandalism on March 27, 2025, but that the restaurant on the 1st floor area
and Starbucks coffee shop were allowed to stay open for business as long as a fire watch was being
conducted during all hours of operation. Affiliated FM lacks knowledge or information sufficient
to form a belief as to the truth of the remaining allegations in Paragraph No. 27, in particular, as to
all the reasons for the closure, and therefore denies the same.
28. Plaintiffs have been forced to cancel the numerous large group and other
reservations the Hotel had on the books following the Event leading to considerable business
income losses and extra expenses.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 28 and therefore denies the same.
29. The Springfield Convention & Visitors Bureau has been trying to develop a
contingency plan for impacted conventions, meetings, and events that are now unavailable due to
the Event.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 29 and therefore denies the same.
30. At this time, it is unclear how long the Hotel will remain closed.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 30 and therefore denies the same. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 8 of 45
9 31. At this time, experts predict that the Hotel may be closed 12 to 18 months in order
to address the substantial replacement and repair work that is required to make the Hotel
operational and safe for guests.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 31 and therefore denies the same.
32. The closure of the Hotel for such a significant period of time will cause Plaintiffs
to suffer further business income and losses and extra expenses of multiple millions of dollars.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 32 and therefore denies the same.
33. Plaintiffs have suffered losses and will continue to suffer losses from (among other
things) the lost sales opportunities to rent hotel rooms, apartment units, meeting spaces, retail
shops, and parking spaces, and lost sales from its Starbucks and restaurants.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 33 and therefore denies the same.
34. Prior to the Event, Plaintiffs purchased a property insurance policy from Affiliated
FM.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 34.
35. Specifically, Plaintiffs purchased a property insurance policy against ALL RISKS
OF PHYSICAL LOSS OR DAMAGE from Affiliated FM, Policy No. 1134905, for the policy 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 9 of 45
10 period of June 30, 2024 to June 30, 2025 (“Policy”). A copy of the Policy, subject to verification
for completeness is discovery, is attached hereto as Exhibit A.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 35.
36. Plaintiffs paid considerable premiums in exchange for the Policy.
ANSWER:
Affiliated FM admits the premiums were paid in exchange for the Policy.
37. The Policy provides a total limit of liability of $230,788,864.00.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 37.
38. Plaintiffs (among others) are Named Insureds on the Policy.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 38.
39. The Policy insures five locations in Illinois and Arkansas, including the Hotel in
Springfield, Illinois.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 39.
40. The Policy provides coverage for (among other things) damage to property and
equipment, including, but not limited to, damage for acts vandalism.
ANSWER:
Affiliated FM admits the Policy is subject to its terms, conditions, exclusions, limits and
other provisions, and not otherwise. Affiliated FM further states that there is no coverage under
the Policy for damage for acts of vandalism if they were intentionally caused by Mr. Rajabi, if Mr. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 10 of 45
11 Rajabi colluded with others to cause the damage, and/or if the damage was caused by other
individuals with the knowledge of Mr. Rajabi. Nor is there coverage if the misrepresentation and
fraud provision applies. Affiliated FM denies any allegations of Paragraph No. 40 that are
inconsistent with the terms of the Policy.
41. The Policy also provides coverage for (among other things) lost business income
and extra expense.
ANSWER:
Affiliated FM admits the Policy is subject to its terms, conditions, exclusions, limits and
other provisions, and not otherwise. Affiliated FM further states that there is no coverage under
the Policy for damage for acts of vandalism if they were intentionally caused by Mr. Rajabi, if Mr.
Rajabi colluded with others to cause the damage, and/or if the damage was caused by other
individuals with the knowledge of Mr. Rajabi. Nor is there coverage if the misrepresentation and
fraud provision applies. Affiliated FM denies any allegations of Paragraph No. 41 that are
inconsistent with the terms of the Policy.
42. Following the Event, Plaintiffs timely submitted a claim to Affiliated FM.
ANSWER:
Affiliated FM admits Plaintiffs timely submitted the loss to Affiliated FM.
43. Following the Event, Affiliated FM has requested numerous types of information
and documents from Plaintiffs.
ANSWER:
Affiliated FM admits that after the vandalism on March 27, 2025, it requested numerous
types of information and documents from Plaintiffs.3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 11 of 45
12 44. Plaintiffs have complied with Affiliated FM’s requests for information and
documents and employee interviews, and Plaintiffs will continue to cooperate with Affiliated FM
and provide requested information, documents, and employees for interviews.
ANSWER:
Affiliated FM admits that Plaintiffs have complied with some of Affiliated FM’s requests
for information and documents, have complied with the requests for employee interviews, and
that, after Plaintiffs filed suit, they continued to cooperate with Affiliated FM, including providing
certain information, documents, and employees for interviews under oath.
45. Following the Event, Plaintiffs and Hotel management met with Affiliated FM’s
claim representative and personnel from mitigation companies retained by Affiliated FM at the
Hotel in order to inspect the damages and start mitigation efforts.
ANSWER:
Affiliated FM admits that following the vandalism on March 27, 2025, Plaintiffs and Hotel
management met with Affiliated FM’s claim representative and personnel from mitigation
companies at the Hotel in order to inspect the damages and start mitigation efforts. Affiliated FM
denies it “retained” the mitigation companies, as they were hired by Plaintiffs.
46. At this Hotel site visit, Affiliated FM’s claim representative inappropriately
informed Plaintiffs that he would be “very angry” if Plaintiffs retained a public adjustor or an
attorney to assist Plaintiffs’ with the adjustment of their insurance claim related to the Event.
ANSWER:
Affiliated FM denies the allegations in Paragraph No. 46.
47. On April 1, 2025, Affiliated FM sent a letter to Plaintiffs outlining multiple ways in
which the Event caused damage to the Hotel. SeeExhibit B (Letter dated April 1, 2025). 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 12 of 45
13 ANSWER:
Affiliated FM admits that on April 1, 2025, it sent an acknowledgement letter to Plaintiffs
which set forth observations of damage and other comments based on an inspection. Affiliated
FM states that the letter speaks for itself, and denies any allegations that are inconsistent with the
letter. Affiliated FM states that on April 2, 2025, it sent a revised acknowledgment letter to
Plaintiffs.
48. In the Letter, Affiliated FM stated (among other things): “We will confirm
applicable coverage, loss payables, deductibles, and extent of liability under the policy in a
separate letter.” Id. at 2.
ANSWER:
Affiliated FM admits that on April 1, 2025, it sent an acknowledgment letter to Plaintiffs
which had the alleged language. Affiliated FM states that the letter speaks for itself, and denies
any allegations that are inconsistent with the letter. Affiliated FM states that on April 2, 2025, it
sent a revised acknowledgment letter to Plaintiffs.
49. Despite Affiliated FM’s representation made on April 1, 2025, it still has not issued
a coverage position letter or make any payments to Plaintiffs pursuant to the Policy in the 76 days
that have passed since the Event (emphasis in Complaint).
ANSWER:
Affiliated FM admits that at the time Plaintiffs filed this Complaint, it had not issued a
coverage position letter or made any payments. As Affiliated FM repeatedly advised Plaintiffs, its
investigation was still continuing, and it was still seeking documents and information from
Plaintiffs in connection with its investigation. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 13 of 45
14 50. Although Affiliated FM initially retained Service Master and Paul Davis to assist
with mitigation efforts at the Hotel following the Event, thereby leading Plaintiffs to believe that
Affiliated FM acknowledged its coverage obligations, Affiliated FM later stated that Plaintiffs
themselves would need to pay the thousands of dollars in costs associated with these companies’
mitigation work.
ANSWER:
Affiliated FM denies it “retained” Service Master and Paul Davis to assist with mitigation
efforts, as Plaintiffs retained and entered into contracts with Service Master and Paul Davis, and
are therefore obligated to pay them. Affiliated FM denies the remaining allegations in Paragraph
No. 50.
51. On April 10, 2025, Affiliated FM sent a letter to Plaintiffs warning about the
possible application of a Policy exclusion and condition and also cited the carve back to the
exclusion which makes clear that the Policy provides coverage for acts of vandalism: “This Policy
does insure acts of direct insured physical damage intentionally caused by an employee of an
Insured or any individual specified in b above, and done without the knowledge of the Insured.”
Exhibit C (Letter dated April 10, 2025).
ANSWER:
Affiliated FM admits that on April 10, 2025, it sent a letter to Plaintiffs which contained a
reservation of rights and cited to language in the Policy. Affiliated FM denies that the language
cited is properly characterized as a “carve back”. Affiliated FM states that the letter speaks for
itself, and denies any allegations that are inconsistent with the letter.
52. Despite Affiliated FM’s acknowledgment that the Policy provides coverage for
vandalism on April 10, 2025, it belatedly informed Plaintiffs that Affiliated FM is conducting its 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 14 of 45
15 own investigation into the cause of the Event separate and apart from the investigation by the local
authorities.
ANSWER:
Affiliated FM never acknowledged, represented or stated to the Plaintiffs that there was
coverage under the Policy for the claimed vandalism damage and denies the allegations in
Paragraph No. 52 that state to the contrary. Affiliated FM admits it informed Plaintiffs it was
conducting its own separate and independent investigation. Affiliated FM denies that it informed
Plaintiffs “belatedly”.
53. Plaintiffs have repeatedly asked Affiliated FM when it will conclude its
investigation and issue a complete coverage position.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 53.
54. Prior to June 4, 2025, Affiliated FM’s claim representative repeatedly stated that
Affiliated FM’s investigation is ongoing; he does not have anything to do with such investigation
as others at Affiliated FM are involved; and he is uncertain when the inve stigation will conclude
and a coverage position will be issued.
ANSWER:
Affiliated FM admits that prior to June 4, 2025, its claim representative repeatedly stated
to the Plaintiffs that Affiliated FM’s investigation was ongoing and being conducted under a
reservation of rights, and that he did not know when the investigation would be completed and a
coverage position issued. Affiliated FM denies the remaining allegations in Paragraph No. 54.
55. Instead of timely conducting and concluding its own investigation and issuing a
complete coverage position and payments, Affiliated FM has needlessly engaged in a “wait and 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 15 of 45
16 see” approach in purportedly conducting its own separate investigation and not bringing such
purported investigation to a close to either try to generate a coverage denial or limit its losses.
ANSWER:
Affiliated FM denies the allegations in Paragraph No. 55.
56. Instead of timely conducting and concluding its own investigation and issuing a
complete coverage position and payments, Affiliated FM has retained its own alleged specialists
to either try to generate a coverage denial or limit its losses.
ANSWER:
Affiliated FM admits it retained consultants to assist with its investigation and denies the
remaining allegations in Paragraph No. 56.
57. By at least April 2, 2025, Affiliated FM had retained MDD, a forensic accountant;
Newmann Construction, a construction company, and Donnelly & Associates, an elevator
consultant.
ANSWER:
Affiliated denies it had retained MD&D, a forensic accountant, by April 2, 2025, and denies
that Newman Construction Consulting is a “construction” company. Affiliated FM admits the
remaining allegations in Paragraph No. 57.
58. Instead of timely conducting and concluding its investigation and issuing a
complete coverage position and payments, Affiliated FM has also elected to play the “request for
needless information” game by slowly and repeatedly issuing numerous requests for information
to Plaintiffs from April 2, 2025 to May 31, 2025, the great majority of which have absolutely
nothing to do with the investigation into the cause of the Event and the issuance of a coverage
position in connection with the Event. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 16 of 45
17 ANSWER:
Affiliated FM admits it made requests for information to Plaintiffs and denies the
remaining allegations in Paragraph No. 58.
59. By way of example only, Affiliated FM has requested that Plaintiffs produce a
“[l]ist of all renovations and repairs conducted on the premises/structure since the insured
purchased the property” and “[l]ist of all damage prior to the current loss event, whether repaired
or not; and all documentation of the repairs to include contracts, who completed the work,
payments, receipts, etc.” – without explaining the relevancy and temporal connection of the
information to the Event and coverage issues related thereto. SeeExhibit D (Letter dated April 24,
2025).
ANSWER:
Affiliated FM admits that on April 24, 2025, it sent a letter to Plaintiffs requesting certain
relevant information and documentation including, but not limited to, what is alleged in Paragraph
No. 59. Affiliated FM states that the letter speaks for itself, and denies any allegations that are
inconsistent with the letter.
60. By way of further example only, Affiliated FM has requested monthly profit and
loss statements; daily occupancy and revenue details reports; lists of all customers displaced; and
any events/functions cancelled in connection with the Event – information related to the
calculation of business income losses despite the fact that this information does not relate to the
investigation into the cause of the Event and the issuance of coverage position connection with the
Event.
ANSWER:3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 17 of 45
18 Affiliated FM admits that on May 30, 2025, it sent a letter to Plaintiffs requesting certain
relevant information and documentation including, but not limited to, what is alleged in Paragraph
No. 60. Affiliated FM states that the letter speaks for itself, and denies any allegations that are
inconsistent with the letter.
61. Instead of timely conducting and concluding its investigation and issuing a
complete coverage position and payments, Affiliated FM has refused to make any advance or
partial payments to the Plaintiffs.
ANSWER:
Affiliated FM admits it did not make any advance or partial payments to Plaintiffs because,
as it repeatedly advised Plaintiffs, it was conducting an investigation under a reservation of rights.
Affiliated FM denies that its investigation was untimely.
62. Affiliated FM has refused to pay for Plaintiffs to retain their own forensic
accountant to help with Plaintiffs’ claim preparation even though the Policy provides coverage for
Plaintiffs’ claim preparation costs.
ANSWER:
Affiliated FM admits it advised Plaintiffs, in response to their request, that it would not
agree to pay Plaintiffs to retain their own forensic accountant because Affiliated FM was
investigating the claim under a reservation for rights, and that if it is determined there is no
coverage under the Policy, Plaintiffs would not be entitled to recover their costs to retain a forensic
accountant.
63. On June 4, 2025 which was 69 days after the Event , Affiliated FM’s claim
representative sent a letter to Plaintiffs revealing for the first time – in direct opposition to his 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 18 of 45
19 repeated prior statements – that he is running the separate investigation into the cause of the Event.
SeeExhibit E (Letter dated June 4, 2025) (emphasis in Complaint).
ANSWER:
Affiliated FM admits that on June 4, 2025, it sent a letter to Plaintiffs. Affiliated FM denies
that the letter is the “first time” that Affiliated FM had advised Plaintiffs that FM was conducting
its own investigation, separate from any being conducted by local authorities, and denies that the
letter was in “direct opposition to repeated prior statements.”
64. In the same letter, Affiliated FM formally requested for the first time to take the
recorded statements of three Hotel employees in person in Springfield, Illinois. See Id.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 64.
65. These same three Hotel employees were previously interviewed by local authorities
immediately after the Event.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 65 and therefore denies the same.
66. On information and belief, Affiliated FM’s purported need for recorded statements
of these three Hotel employees is not based on any new information.
ANSWER:
Affiliated FM denies the allegations contained in Paragraph No. 66.
67. On information and belief, Affiliated FM has not reported this claim to the
Department of Insurance or any law enforcement agency as a fraudulent claim that Plaintiffs knew
about before the Event took place. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 19 of 45
20 ANSWER:
Affiliated FM admits the allegations in Paragraph No. 67.
68. Instead of timely conducting and concluding its investigation and issuing a
complete coverage position and payments, Affiliated FM failed to promptly request employee
interviews in a pretextual effort to delay or deny providing coverage for Plaintiffs’ claim.
ANSWER:
Affiliated FM denies the allegations in Paragraph No. 68.
69. On information and belief, Affiliated FM has obtained enough information about
the Event to make at least a partial determination of how coverage applies.
ANSWER:
Affiliated FM denies that, as of the time of the filing of the Complaint, it had enough
information to make a coverage decision, as its investigation was still continuing.
70. Plaintiffs and Plaintiffs’ employees have fully cooperated with the law enforcement
investigation of the event.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 70 and therefore denies the same.
71. Law enforcement has assured Plaintiffs that they require no further information
from Plaintiffs to complete any investigation of the event.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 71 and therefore denies the same3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 20 of 45
21 72. At the time of the filing of this Complaint, no local or other authorities or Affiliated
FM has suggested that their investigations have revealed any information that would alter
Plaintiffs’ entitlement to insurance proceeds pursuant to the Policy.
ANSWER:
Affiliated FM lacks knowledge or information sufficient to form a belief as to the truth of
the allegations in Paragraph No. 72 regarding local or other authorities and therefore denies the
same. Affiliated FM states that prior to, at the time of the filing of the Complaint, and for a period
of time thereafter, Affiliated FM was continuing to investigate the Hotel’s claim under a full
reservation of rights. Affiliated FM repeatedly advised the Hotel and its counsel of the same, in
emails, letters and during conference calls, and Affiliated FM also provided to the Hotel, in writing,
with the provisions of the Policy that may be applicable. Further, at the time of the filing of the
Complaint, the Hotel knew, and had been informed, that Affiliated FM’s investigation was not
complete. Affiliated FM never stated, represented, or advised Plaintiffs that they were entitled to
insurance proceeds under the Policy. Affiliated FM denies the allegation that the Hotel is entitled
to insurance proceeds.
COUNT ONE
(Breach of Contract)
73. Plaintiffs hereby incorporate by reference and restate all preceding Paragraphs as if
fully stated herein.
ANSWER:
Affiliated FM incorporates by reference and restates it answers to Paragraphs 1 through 72
above for its answer to Paragraph No. 73.
74. Plaintiffs have paid all required premiums and have complied with all policy terms
and/or such compliance is excused. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 21 of 45
22 ANSWER:
Affiliated FM admits that premiums have been paid and denies the remaining allegations
contained in Paragraph No. 74.
75. Plaintiffs provided timely notice to Affiliated FM of the Event.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 75.
76. Plaintiffs have complied with all conditions precedent, if any, under the Policy.
ANSWER:
Affiliated FM denies the allegations in Paragraph No. 76.
77. Pursuant to the Policy, Affiliated FM is obligated to provide (among other things)
replacement costs for equipment, lost business income, and extra expense.
ANSWER:
Affiliated FM denies the allegations in Paragraph No. 77.
78. The Event triggers coverage under the Policy, or, in the alternative, the terms and
conditions of the Policy are ambiguous and must be construed in favor of providing coverage for
the Event.
ANSWER:
Affiliated FM denies the allegations in Paragraph No. 78.
79. Plaintiffs have demonstrated that they are entitled to replacement costs for
equipment, lost business income and extra expense.
ANSWER:
Affiliated FM denies the allegations in Paragraph No. 79.3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 22 of 45
23 80. Plaintiffs have repeatedly demanded a coverage position and payments for the
replacement costs for equipment, lost business income, and extra expense.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 80.
81. As of the date of this filing, Affiliated FM has refused and continue to refuse to
issue a coverage position or to pay Plaintiffs for the replacement costs for equipment, lost business
income, and extra expense.
ANSWER:
Affiliated FM states that prior to, at the time of the filing of the Complaint, and for a period
of time thereafter, Affiliated FM was continuing to investigate the Hotel’s claim under a full
reservation of rights. Affiliated FM repeatedly advised the Hotel and its counsel of the same, in
emails, letters and during conference calls, and Affiliated FM also provided to the Hotel, in writing,
with the provisions of the Policy that may be applicable. Further, at the time of the filing of the
Complaint, the Hotel knew, and had been informed, that Affiliated FM’s investigation was not
complete. Affiliated FM never stated, represented, or advised Plaintiffs that they were entitled to
insurance proceeds under the Policy. Affiliated FM admits it had not provided the Hotel with its
coverage decision nor had it provided any payments to the Hotel as of the date of the filing of the
Complaint.
82. Affiliated FM is in breach of the Policy.
ANSWER:
Affiliated FM denies the allegations in Paragraph No. 82.
83. Plaintiffs have been and will continue to damage as a proximate result of Affiliated
FM’s breach of the Policy. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 23 of 45
24 ANSWER:
Affiliated FM denies the allegations in Paragraph No. 83.
COUNT TWO
(Violation of 215 ILCS 5/155)
84. Plaintiffs hereby incorporate by reference and restate all preceding Paragraphs as if
fully stated herein.
ANSWER:
Affiliated FM incorporates by reference and restates it answers to Paragraphs 1 through
83 above for its answer to Paragraph No. 84.
85. The acts and omissions of Affiliated FM as set forth above, and some yet to be
discovered in this matter, constitute bad faith and unreasonable and vexatious delay in settling
Plaintiffs’ claim.
ANSWER:
Affiliated FM denies the allegations in Paragraph No. 85.
86. Affiliated FM has a duty to act in good faith in the handling and payment of the
claims of their insureds, Plaintiffs.
ANSWER:
Affiliated FM admits the allegations in Paragraph No. 86.
87. Affiliated FM’s refusal to issue a coverage acknowledgement and pay Plaintiffs’
claim is not predicated upon any circumstances that furnish reasonable justification in support of
Affiliated FM’s refusal to pay.
ANSWER:
Affiliated FM denies the allegations in Paragraph No. 87.3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 24 of 45
25 88. Affiliated FM’s refusal to pay Plaintiffs under the Policy is arbitrary and capricious,
not supported by any rational or reasonable determination process, and is done solely in its own
interests.
ANSWER:
Affiliated FM denies the allegations in Paragraph No. 88.
89. As stated throughout this Complaint, Affiliated FM has been conducting its own
investigation into the cause of the Event for 76 days, and it refuses to advise on the status of the
investigation, when it will be completed, when it will issue a coverage position, and when it will
make payments to Plaintiffs. That was arbitrary and capricious and bad faith and unreasonable
and vexatious delay in settling Plaintiffs’ claim.
ANSWER:
Affiliated FM states that prior to, at the time of the filing of the Complaint, and for a period
of time thereafter, Affiliated FM was continuing to investigate the Hotel’s claim under a full
reservation of rights. Affiliated FM repeatedly advised the Hotel and its counsel of the same, in
emails, letters and during conference calls, and Affiliated FM also provided to the Hotel, in writing,
with the provisions of the Policy that may be applicable. Further, at the time of the filing of the
Complaint, the Hotel knew, and had been informed, that Affiliated FM’s investigation was not
complete. Affiliated FM never stated, represented, or advised Plaintiffs that they were entitled to
insurance proceeds under the Policy. Affiliated FM admits it had not provided the Hotel with its
coverage decision nor had it provided any payments to the Hotel as of the date of the filing of the
Complaint. Affiliated FM denies the remaining allegations in Paragraph No. 89.
90. As stated throughout this Complaint, Affiliated FM purportedly has been
conducting its own investigation into the cause of the Event for 76 days, and it refuses to provide 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 25 of 45
26 contact information for the persons at Affiliated FM who are conducting the investigation into the
cause of the Event. Affiliated FM, on information and belief, has (or could have) recognized that
at least some coverage applies to Plaintiffs’ losses under the Policy. That course of conduct was
arbitrary and capricious and bad faith and unreasonable and vexatious delay in settling Plaintiffs’
claim.
ANSWER:
Affiliated FM states that prior to, at the time of the filing of the Complaint, and for a period
of time thereafter, Affiliated FM was continuing to investigate the Hotel’s claim under a full
reservation of rights. Affiliated FM repeatedly advised the Hotel and its counsel of the same, in
emails, letters and during conference calls, and Affiliated FM also provided to the Hotel, in writing,
with the provisions of the Policy that may be applicable. Further, at the time of the filing of the
Complaint, the Hotel knew, and had been informed, that Affiliated FM’s investigation was not
complete. Affiliated FM never stated, represented, or advised Plaintiffs that they were entitled to
insurance proceeds under the Policy. Affiliated FM admits it had not provided the Hotel with its
coverage decision nor had it provided any payments to the Hotel as of the date of the filing of the
Complaint Affiliated FM denies the remaining allegations in Paragraph No. 90.
91. As stated throughout this Complaint, Affiliated FM purportedly has been
conducting its own investigation into the cause of the Event for 76 days, and it did not need this
amount of time to investigate, conclude the investigation, and report its findings for such
investigation and issue a coverage position and make partial or advance payments to Plaintiffs.
That was arbitrary and capricious and bad faith and unreasonable and vexatious delay in settling
Plaintiffs’ claim
ANSWER:3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 26 of 45
27 Affiliated FM states that prior to, at the time of the filing of the Complaint, and for a period
of time thereafter, Affiliated FM was continuing to investigate the Hotel’s claim under a full
reservation of rights. Affiliated FM repeatedly advised the Hotel and its counsel of the same, in
emails, letters and during conference calls, and Affiliated FM also provided to the Hotel, in writing,
with the provisions of the Policy that may be applicable. Further, at the time of the filing of the
Complaint, the Hotel knew, and had been informed, that Affiliated FM’s investigation was not
complete. Affiliated FM never stated, represented, or advised Plaintiffs that they were entitled to
insurance proceeds under the Policy. Affiliated FM admits it had not provided the Hotel with its
coverage decision nor had it provided any payments to the Hotel as of the date of the filing of the
Complaint Affiliated FM denies the remaining allegations in Paragraph No. 91.
92. As stated throughout this Complaint, Affiliated FM purportedly has been
conducting its own investigation into the cause of the Event for 76 days, stated that another person
was running the investigation instead of the lead adjuster but then contradicted those prior
assertions on June 4, and it belatedly make a pretextual request to take recorded statements of
certain Hotel employees in an effort to delay or deny coverage for Plaintiffs’ claim. That was
arbitrary and capricious and bad faith and unreasonable and vexatious delay in settling Plaintiffs’
claim.
ANSWER:
Affiliated FM states that prior to, at the time of the filing of the Complaint, and for a period
of time thereafter, Affiliated FM was continuing to investigate the Hotel’s claim under a full
reservation of rights. Affiliated FM repeatedly advised the Hotel and its counsel of the same, in
emails, letters and during conference calls, and Affiliated FM also provided to the Hotel, in writing,
with the provisions of the Policy that may be applicable. Further, at the time of the filing of the 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 27 of 45
28 Complaint, the Hotel knew, and had been informed, that Affiliated FM’s investigation was not
complete. Affiliated FM never stated, represented, or advised Plaintiffs that they were entitled to
insurance proceeds under the Policy. Affiliated FM admits it had not provided the Hotel with its
coverage decision nor had it provided any payments to the Hotel as of the date of the filing of the
Complaint Affiliated FM denies the remaining allegations in Paragraph No. 92.
93. As a direct and proximate result of the bad faith and unreasonable and vexatious
delay in settling Plaintiffs’ claim exhibited by Affiliated FM, Plaintiffs have suffered damages.
ANSWER:
Affiliated FM denies the allegations in Paragraph No. 93.
94. In refusing to pay Plaintiffs’ insurance claim, Affiliated FM has acted with malice,
intentionally refusing reimbursement so as to purportedly avoid a claim payout of multiple millions
of dollars.
ANSWER:
Affiliated FM denies the allegations in Paragraph No. 94.
95. Due to Affiliated FM’s malice, bad faith, and unreasonable and vexatious delay in
settling Plaintiffs’ claim, Plaintiffs are entitled to punitive damages under Illinois law.
ANSWER:
Affiliated FM denies the allegations in Paragraph No. 95.
96. Due to Affiliated FM’s malice, bad faith, and unreasonable and vexatious delay in
settling Plaintiffs’ claim, Plaintiffs are entitled to attorneys’ fees under Illinois law.
ANSWER:
Affiliated FM denies the allegations in Paragraph No. 96.3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 28 of 45
29 WHEREFORE, Affiliated FM requests that the Court dismiss Plaintiffs’ Complaint with
prejudice, that judgment be rendered in favor of Affiliated FM, that Affiliated FM be awarded its
fees and costs, and for such other relief as the Court deems proper. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 29 of 45
30 AFFIRMATIVE DEFENSES
FIRST AFFIRMATIVE DEFENSE
The Policy contains the following Exclusion:
C. EXCLUSIONS
***
GROUP I : This Policy excludes loss or damage directly or indirectly caused by
or resulting from any of the following regardless of any other cause or event,
whether or not insured under this Policy, contributing concurrently or in any other
sequence to the loss or damage:
***
3. Any dishonest act, including but not limited to theft, committed alone or in
collusion with others, at any time by:
a)An Insured or any proprietor, partner, director, trustee, officer or
employee of an Insured; or
b)Any proprietor, partner, director, trustee, or officer of any business or
entity (other than a common carrier) engaged by an Insured to do anything
in connection with property insured under this Policy.
This Policy does insure acts of direct insured physical damage intentionally
caused by an employee of an Insured or any individual specified in b above, and
done without the knowledge of the Insured. This coverage does not apply to any
act excluded in Group I Item 2g of this Exclusions clause. In no event does this
Policy cover loss by theft by any individual specified in a or b above.
(Policy, PRO AR 4100 (01/23) Pages II-III of XLII.)
The vandalism and resulting loss and damage that occurred on March 27, 2025, at the Hotel
was intentionally caused by Mr. Rajabi, Mr. Rajabi colluded with others to cause the damage,
and/or the damages was caused by other individuals with the knowledge of Mr. Rajabi.
Accordingly, the exclusion applies and there is no coverage.
SECOND AFFIRMATIVE DEFENSE
The Policy contains the following General Condition:
MISREPRESENTATION AND FRAUD
1. This entire Policy will be void if an Insured has: 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 30 of 45
31 a)Willfully concealed or misrepresented any material fact or
circumstance concerning this insurance, the subject thereof, or the
interest of an Insured;
b)Such fact or circumstance is stated in the policy, endorsement or rider
attached thereto, or in the written application therefore; and
c)The concealment or misrepresentation is made with the intent to
deceive, or materially affected either the acceptance of the risk or
the hazard assumed by the Company.
2. This Company will not pay for any loss or damage if an Insured has:
a)Willfully concealed or misrepresented any material fact or circumstance
concerning the loss or damage, or the interest of an Insured; and
b)The concealment or misrepresentation is made with the intent to
deceive or materially affected the claim.
(Policy, AMF 1726 (01/23), Page IV of IV.)
There were willful misrepresentations and concealments of material fact. Mr. Rajabi
represented to Affiliated FM that two individuals unknown to him were likely involved in causing
the loss and were being investigated by the local police. Mr. Rajabi also represented to Affiliated
FM that the loss was likely caused by disgruntled employees without his knowledge. Further, Mr.
Rajabi concealed his involvement causing the damage, as well as his conduct and actions leading
up to the vandalism. Finally, through his misrepresentations and concealments related to this loss,
Mr. Rajabi intended to deceive Affiliated FM or materially affect the claim. Accordingly, there is
no coverage.
THIRD AFFIRMATIVE DEFENSE
The vandalism and resulting loss and damage that occurred on March 27, 2025, at the Hotel
was intentionally caused by Mr. Rajabi, Mr. Rajabi colluded with others to cause the damage,
and/or the damages was caused by other individuals with the knowledge of Mr. Rajabi.
Accordingly, the doctrine of fortuity applies, and there is no coverage because the loss was not a
fortuitous loss. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 31 of 45
32 FOURTH AFFIRMATIVE DEFENSE
Under Illinois law, Plaintiffs are not entitled to recover punitive damages as claimed in
Plaintiffs’ Prayer For Relief.
Demand For Trial By Jury
Affiliated FM demands trial by jury.
WHEREFORE, Affiliated FM requests that the Court dismiss Plaintiffs’ Complaint
with prejudice, that judgment be rendered in favor of Affiliated FM, that Affiliated FM be
awarded its fees and costs, and for such other relief as the Court deems proper.
COUNTERCLAIMS
Overview
1. Affiliated FM Insurance Company (“Affiliated FM”) brings these counterclaims
against Full Service Hospitality, LLC (“Full Service”) and Tower Capital Group, LP (“Tower
Capital”) (collectively “Plaintiffs”) relating to claimed losses at the Wyndham Hotel Springfield
City Centre (“Hotel”) located at 700 East Adams Street, Springfield, Illinois. Al Rajabi is owner
of the Hotel.
2. The first claim involves vandalism and resulting damage at the Hotel in the early
morning of March 27, 2025 (the “Vandalism Claim”). Affiliated FM conducted an extensive
investigation into the Vandalism Claim. Based on that investigation, Affiliated FM concluded that
the vandalism and resulting loss and damage that occurred on March 27, 2025, at the Hotel was
intentionally caused by Mr. Rajabi, Mr. Rajabi colluded with others to cause the damage, and/or
the damages was caused by other individuals with the knowledge of Mr. Rajabi. Further, there 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 32 of 45
33 were willful misrepresentations and concealments of material facts, with intent to deceive
Affiliated FM or materially affect the claim. Accordingly, there is no coverage.
3. During the course of investigating the Vandalism Claim, Affiliated FM learned, for
the first time, that there was new information related to the Hotel’s 2024 claim made to Affiliated
FM relating to an alleged lightning strike and resulting power surge that purportedly occurred on
March 14, 2024 (the “‘Lightning’ Claim”). Affiliated FM further investigated based on this new
information. Affiliated FM concluded that if lightning struck the Hotel on March 14, 2024, the
damage was minimal. Affiliated FM concluded that the cause of the electrical disturbances was
intentional, and the vast majority of the damage claimed by the Hotel was not caused by an alleged
lightning strike and resulting power surge. Affiliated FM determined that the damage was
intentionally caused by Mr. Rajabi, Mr. Rajabi colluded with others to cause the damage, and/or
the damages were caused by other individuals with the knowledge of Mr. Rajabi. Further, there
were willful misrepresentations and concealments of material facts, with intent to deceive
Affiliated FM or materially affect the claim. Further, some of the equipment that the Hotel claims
was allegedly damaged as a result of the alleged lightning strike and power surge, had been
damaged and out of service long before March 14, 2024. Accordingly, there is no coverage.
4. Without knowing these facts, Affiliated FM paid the Hotel $4,054,000 for the
“Lightning” Claim.
5. There is no coverage for the Vandalism Claim and no coverage for the “Lightning”
Claim. Affiliated FM seeks a judgment in its favor as to both claims, and a return of the $4,054,000
it paid to the Hotel on the “Lightning” Claim.
6. The Court has jurisdiction over these Counterclaims pursuant to 28 U.S.C. §
1332(a)(1), as there is diversity, and the amount in controversy is in excess of $75,000. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 33 of 45
34 The Policies
7. Affiliated FM issued a property insurance policy to the Plaintiffs, Policy No.
1134905, for the policy period of June 30, 2024, to June 30, 2025 (the “2024-2025 Policy”). A
copy is attached as Exhibit A to the Complaint.
8. Affiliated FM issued a property insurance policy to the Plaintiffs, Policy No.
118767, for the policy period of July 10, 2023, to June 30, 2024 (the “2023-2024 Policy”). A copy
is attached as Exhibit A.
9. The 2023-2024 Policy and 2024-2025 Policy contain the following exclusion:
C. EXCLUSIONS
***
GROUP I : This Policy excludes loss or damage directly or indirectly caused by
or resulting from any of the following regardless of any other cause or event,
whether or not insured under this Policy, contributing concurrently or in any other
sequence to the loss or damage:
***
3. Any dishonest act, including but not limited to theft, committed alone or in
collusion with others, at any time by:
c)An Insured or any proprietor, partner, director, trustee, officer or
employee of an Insured; or
d)Any proprietor, partner, director, trustee, or officer of any business or
entity (other than a common carrier) engaged by an Insured to do anything
in connection with property insured under this Policy.
This Policy does insure acts of direct insured physical damage intentionally
caused by an employee of an Insured or any individual specified in b above, and
done without the knowledge of the Insured. This coverage does not apply to any
act excluded in Group I Item 2g of this Exclusions clause. In no event does this
Policy cover loss by theft by any individual specified in a or b above.
(Policy, PRO AR 4100 (01/23).
10. The 2023-2024 Policy and 2024-2025 Policy contain the following General
Condition:
MISREPRESENTATION AND FRAUD3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 34 of 45
35 1. This entire Policy will be void if an Insured has:
(a) Willfully concealed or misrepresented any material fact or
circumstance concerning this insurance, the subject thereof, or the
interest of an Insured;
(b) Such fact or circumstance is stated in the policy, endorsement or rider
attached thereto, or in the written application therefore; and
c)The concealment or misrepresentation is made with the intent to
deceive, or materially affected either the acceptance of the risk or
the hazard assumed by the Company.
2. This Company will not pay for any loss or damage if an Insured has:
a) Willfully concealed or misrepresented any material fact or
circumstance concerning the loss or damage, or the interest of an
Insured; and
b)The concealment or misrepresentation is made with the intent
to deceive or materially affected the claim.
(Policy, AMF 1726 (01/23).
The Vandalism Claim
11. The Hotel submitted a claim to Affiliated FM for vandalism that occurred at the
Hotel on March 27, 2025, and caused damage to the Hotel.
12. Affiliated FM conducted an investigation of the Vandalism Claim under a
reservation of rights.
13. Affiliated FM retained a private investigator to assist with its investigation.
14. Affiliated FM and its consultants conducted numerous inspections of the Hotel and
the damage due to the vandalism on March 27, 2025. Affiliated FM and its consultants were also
present during the time remediation work was being done and then after it was completed.
15. Affiliated FM and its consultants spoke with Al Rajabi and Scott Larsen, the chief
operating officer of the Hotel, in person, by phone, and via video conference, on many occasions.
16. Affiliated FM requested documents and information from Mr. Rajabi, Mr. Larsen,
and counsel for the Hotel. These requests and questions have been in writing, as well as verbally 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 35 of 45
36 during video conferences. Counsel for the Hotel has provided certain documents and information
in response to those requests and questions.
17. Affiliated FM conducted the examinations under oath of certain employees. In
addition to their sworn testimony, they provided photos, text messages, screen shots and/or videos.
18. The private investigator retained by Affiliated FM conducted an extensive
investigation on behalf of Affiliated FM. The investigation included, but was not limited to,
interviewing numerous people, including former employees of the Hotel, as well as the review and
analysis of documents and information. The investigator provided Affiliated FM with
memorandum reports regarding each of the interviews, as well as documents obtained during the
investigation.
19. On August 4, 2025, the private investigator provided Affiliated FM with summary
report, which details her investigation and findings.
20. On August 11, 2025, Affiliated FM sent a letter to the Hotel, advising that it was
denying the Vandalism Claim. A copy is attached as Exhibit B.
The “Lightning” Claim
21. On April 16, 2024, the Hotel provided Affiliated FM with a claim for damage to
equipment that occurred on March 14, 2024, when there was reportedly a storm and lightning
strikes in the area that evening.
22. The Hotel reported and stated that there was a large lightning and thunderstorm that
passed through the area on the night of March 14, 2014, the Hotel’s lights flickered and there was
a power outage.
23. The Hotel reported and stated that, as a result, there was damage to equipment,
including burns to boards and wiring. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 36 of 45
37 24. The Hotel reported and stated that the equipment that was claimed to be damaged
on March 14, 2024, by the alleged lightning strike and resulting power surge, included: (a) water
cooled chiller systems, (b) roof top units, (c) and closed-loop water sourced heat pumps located in
67 individual guest rooms.
25. Affiliated FM investigated the “Lightning Claim”, which included site visits on
May 8, 2024, and June 17, 2024, by a representative of Affiliated FM, and a consultant hired by
Affiliated FM.
26. Affiliated FM completed its investigation, and, in total, paid the Hotel $4,054,000
for the “Lightning” Claim. Affiliated FM’s payment included payment for damage to the chillers,
roof top units, and water source heat pumps in the rooms.
27. During the course of Affiliated FM’s investigation of the Vandalism Claim, it
uncovered new information regarding the “Lightning” Claim. In particular, a consultant retained
by FM Affiliated to investigate the damage caused by the vandalism was told in mid-April 2025
by Hotel management that the prior “Lightning” Claim was fraudulent. The consultant was advised
by Hotel management that Mr. Rajabi had told the Hotel’s Chief Engineer to short the roof top
units and the units in the rooms to make it look like a lightning strike. Per Hotel management, the
Chief Engineer refused to do so. Further, the consultant was advised by Hotel management that
when Affiliated FM was planning to come to do an inspection, the Chief Engineer, who lived at
the Hotel in an apartment unit, was told to stay in his room.
28. Affiliated FM further investigated this new information it was first provided in mid-
April 2025. This included interviews of former employees of the Hotel, who advised that they had
heard, in the past, that Mr. Rajabi wanted the Chief Engineer to do electrical damage, but the Chief
Engineer refused to do so. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 37 of 45
38 29. During the course of Affiliated FM’s investigation of the Vandalism Claim, it
requested that the Hotel provide a list of guest rooms that had not been available for use on March
27, 2025, the reason for the same, and the date each room was first taken out of service.
30. On May 12, 2025, the Hotel provided Affiliated FM with a list, which had 87 rooms.
Of the 87 rooms, the list contained 55 guest rooms that were removed from operation well before
March 14, 2024, because of maintenance issues, the reason being HV AC. None of the rooms on
the list of 87 rooms were reported to have been taken out of service on March 14, 2024.
31. As part of Affiliated FM’s current investigation, former employees confirmed that
the Hotel had issues with the HV ACs in guest rooms for years, and none of them were repaired or
replaced. In fact, in the list the Hotel provided in May 2025, many rooms were taken out of service
due to HV AC issues in 2021 (8 total in that year, the earliest being August 15, 2021, and 6 of those
were later claimed to have been damaged on March 14, 2024), 2022 and 2023.
32. Affiliated FM took the examination under oath of the Chief Engineer on July 1,
2025. He testified, under oath, about how he was instructed, in person and phone, by Mr. Rajabi,
to intentionally do damage to the electrical system before the insurance people came, and make it
look like a storm caused the damage. The Chief Engineer refused, telling Mr. Rajabi he was trying
to commit insurance fraud, and that the Chief Engineer would have no part of it.
33. The Chief Engineer also testified that he was told that when the insurance people
came to inspect, he was to stay in his apartment unit in the Hotel all day, with the excuse being
that his wife was ill.
34. Affiliated FM also took the examination under oath of the Hotel manager on July
1, 2025, who provided the same information as the Chief Engineer. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 38 of 45
39 35. On May 8, 2024, and then again on June 17, 2024, when the adjuster from Affiliated
FM and a consultant retained by it were at the Hotel and performed an inspection, the Chief
Engineer was not present. On May 8, 2024, the adjuster and consultant were told that the Chief
Engineer’s wife or child were ill that day. Mr. Rajabi, and another engineer from Texas, attended
the inspection on behalf of the Hotel that day. On June 17, 2024, the adjuster and consultant were
told that the Chief Engineer was not available that day.
COUNT I
(Declaratory Judgment – Vandalism Claim)
36. Affiliated FM restates, realleges and incorporates by reference its allegations in
Paragraphs 1 through 35 above, as if fully set forth herein.
37. Pursuant to Rule 57 of the Federal Rules of Civil Procedure, and 28 U.S.C. §
2201(a), Affiliated FM seeks a declaratory judgment in its favor, holding that there is no coverage
under the 2024-2025 Policy for the Vandalism Claim.
38. There is an actual controversy between Affiliated FM and Plaintiffs regarding
whether there is coverage for the Vandalism Claim.
39. There is no coverage for the Vandalism Claim because the dishonest act exclusion
applies.
40. There is no coverage for the Vandalism Claim because Plaintiffs’ breached the
Misrepresentation and Fraud Condition.
41. There were willful misrepresentations and concealments of material fact.
42. Mr. Rajabi represented to Affiliated FM that two individuals unknown to him were
likely involved in causing the loss and were being investigated by the local police. Mr. Rajabi also
represented to Affiliated FM that the loss was likely caused by disgruntled employees without his
knowledge. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 39 of 45
40 43. Mr. Rajabi concealed his involvement causing the damage, as well as his conduct
and actions leading up to the vandalism.
44. Through his misrepresentations and concealments related to this loss, Mr. Rajabi
intended to deceive Affiliated FM or materially affect the Vandalism Claim.
45. Mr. Rajabi’s misrepresentations and concealments were calculated to discourage,
mislead, or deflect Affiliated FM’s investigation.
WHEREFORE, Affiliated FM seeks a declaration that: (1) there is no coverage for the
Vandalism C laim because the “dishonest act” exclusion applies; (2) there is no coverage for the
Vandalism C laim because the Misrepresentation and Fraud policy condition language applies; and
(3) for such other relief as this Court deems fair and just.
COUNT II
(Declaratory Judgment – “Lightning” Claim)
46. Affiliated FM restates, realleges and incorporates by reference its allegations in
Paragraphs 1 through 45 above, as if fully set forth herein.
47. Pursuant to Rule 57 of the Federal Rules of Civil Procedure, and 28 U.S.C. §
2201(a), Affiliated FM seeks a declaratory judgment in its favor, holding that there is no coverage
under the 2023-2024 Policy for the “Lightning” Claim.
48. There is an actual controversy between Affiliated FM and Plaintiffs regarding
whether there is coverage for the “Lightning” Claim.
49. There is no coverage for the “Lightning” Claim because the dishonest act exclusion
applies.
50. If lightning struck the Hotel on March 14, 2024, the damage was minimal. The
cause of the electrical disturbances was intentional, and the vast majority of the damage claimed
by the Hotel was not caused by an alleged lightning strike and resulting power surge. The damage 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 40 of 45
41 was intentionally caused by Mr. Rajabi, Mr. Rajabi colluded with others to cause the damage,
and/or the damages were caused by other individuals with the knowledge of Mr. Rajabi.
51. There is no coverage for the “Lightning” Claim because Plaintiffs’ breached the
Misrepresentation and Fraud Condition.
52. There were willful misrepresentations and concealments of material facts, with
intent to deceive Affiliated FM or materially affect the claim.
53. The Hotel reported and stated that the March 14, 2024, lightning strike and storm
caused damage to multiple chillers, roof top units, and water source heat pumps in numerous
rooms. This was not true, and the Hotel knew it was not true. Some of the chillers and roof top
units had been damaged, inoperable and/or taken out of service before March 14, 2024. Further,
the water source heat pumps in rooms had been damaged and/or taken out of service for
maintenance issues long before March 14, 2024.
54. The Hotel concealed the material facts regarding the water source heat pumps, as
well as the fact that chillers and roof top units had been damaged, inoperable and/or taken out of
service before March 14, 2024. The Hotel concealed the material fact that damage was
intentionally caused by Mr. Rajabi, Mr. Rajabi colluded with others to cause the damage, and/or
the damages were caused by other individuals with the knowledge of Mr. Rajabi. The Hotel
concealed the Chief Engineer from Affiliated FM, falsely stating to Affiliated FM and its
consultants during site visits that the Chief Engineer was not available because his wife or child
were ill.
55. Affiliated FM is entitled to recoupment and recovery of the $4,054,000 paid on the
“Lightning” Claim. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 41 of 45
42 WHEREFORE, Affiliated FM seeks a declaration that: (1) there is no coverage for the
Lightning C laim because the “dishonest act” exclusion applies; (2) there is no coverage for the
Lightning Cl aim because the Misrepresentation and Fraud policy condition language applies; (3)
recoupment and recovery of the $4,054,000, along with pre-judgment interest and costs, and (4)
for such other relief as is equitable and just.
COUNT III
(Breach of Contract – “Lightning” Claim)
56. Affiliated FM restates, realleges and incorporates by reference its allegations in
Paragraphs 1 through 55 above, as if fully set forth herein.
57. The 2023-2024 Policy is an enforceable agreement between Affiliated FM and
Plaintiffs.
58. The Plaintiffs are each an Insured under the 2023-2024 Policy.
59. The “dishonest act” exclusion and the Misrepresentation and Fraud condition in the
2023-2024 Policy constitute an agreement between the Plaintiffs and Affiliated FM to refrain from
paying for losses which would be excluded by those provisions.
60. Plaintiffs intentionally misrepresented to Affiliated FM that they were owed
$4,054,000 in connection with the “Lightning” Claim.
61. Plaintiffs concealed the involvement of Mr. Rajabi in causing or directing to cause
damage that in an effort to increase the amount of insurance benefits that Plaintiffs induced
Affiliated FM to ultimately pay. Plaintiffs concealed the fact that certain roof top units, chiller and
water source heat pumps in rooms had been had been damaged, inoperable and/or taken out of
service before March 14, 2024.
62. In reliance upon the misrepresentations and/or concealments by Plaintiffs,
Affiliated FM paid $4,054,000 to Plaintiffs for the “Lightning” Claim. 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 42 of 45
43 63. Plaintiffs’ misrepresentations and concealment constituted a material breach of
the 2023-2024 Policy.
64. As a result of Plaintiffs’ breach of the 2023-2024 Policy, Affiliated FM is entitled
to damages in the amount of $4,054,000.
WHEREFORE, Affiliated FM respectfully requests that this Court enter judgment in favor
of Affiliated FM and against Plaintiffs in the amount of $4,054,000, along with pre-judgment
interest and costs, and for such other relief as is equitable and just.
COUNT IV
(5/17-10.5 -- “Lightning” Claim)
65. Affiliated FM restates, realleges and incorporates by reference its allegations in
Paragraphs 1 through 64 above, as if fully set forth herein.
66. 720 ILCS 5/17-10.5 provides:
(e) Civil damages for insurance fraud
(1) A person who knowingly obtains, attempts to obtain, or causes to be obtained, by
deception, control over the property of any insurance company by the making of a
false claim or by causing a false claim to be made on a policy of insurance issued
by an insurance company, or by the making of a false claim or by causing a false
claim to be made to a self-insured entity, intending to deprive an insurance
company or self-insured entity permanently of the use and benefit of that
property, shall be civilly liable to the insurance company or self-insured entity
that paid the claim or against whom the claim was made or to the subrogee of that
insurance company or self-insured entity in an amount equal to either 3 times the
value of the property wrongfully obtained or, if no property was wrongfully
obtained, twice the value of the property attempted to be obtained, whichever
amount is greater, plus reasonable attorney's fees.
67. Plaintiffs are “persons” under 5/17-10.5(e)(1).
68. Plaintiffs knowingly obtained, attempted to obtain, or caused to be obtained, by
deception, control over the property of Affiliated FM by the making of a false claim or by causing 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 43 of 45
44 a false claim to be made on the 2023-2024 Policy. In connection therewith, Plaintiffs intended to
deprive Affiliated FM permanently of the use and benefit of that property.
69. Affiliated FM paid $4,054,000 for the “Lightning” Claim.
70. Under 5/17-10.5(e)(1), Affiliated FM is entitled to recover 3 times the value of the
$4,054,000, or $12,162,000, as well as attorney’s fees.
WHEREFORE, Affiliated FM respectfully requests that this Court enter judgment in favor
of Affiliated FM and against Plaintiffs in the amount of $12,162,000, plus attorney’s fees, interest
and costs, and such other relief as is equitable and just.
Demand For Trial By Jury
Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Affiliated FM demands a trial
by jury.
Respectfully submitted,
By: /s/ K. Clark Schirle
K. Clark Schirle, Esq. (#6199270)
Jonathan K. Barger, Esq. (#6277079)
BUTLER WEIHMULLER KATZ CRAIG LLP
190 S. LaSalle Street – Suite 2675
Chicago, Illinois 60603
(312) 456-0900
(312) 456-0909 Facsimile
[email protected]
[email protected]
Attorneys for Affiliated FM Insurance Company 3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 44 of 45
45 CERTIFICATE OF SERVICE
I hereby certify that a copy of the foregoing has been served on all counsel of record
identified on the below Service List electronically by operation of the Court’s ECF/CM system
this 25th Day of August, 2025.
Counsel for Plaintiffs
Kevin Dreher, Esq.
Barnes & Thormburg LLP
One North Wacker Drive – Suite 4400
Chicago, Illinois 60606
[email protected]
Carrie M. Raver, Esq.
Barnes & Thornburg LLP
888 S. Harrison Street, - Suite 600
Fort Wayne, IN 46802
[email protected]
Scott N. Godes, Esq.
Barnes & Thornburg LLP
555 12th Street, NW
Washington, DC 20004
[email protected]
/s/ K. Clark Schirle3:25-cv-03172-CRL-EIL # 9 Filed: 08/25/25 Page 45 of 45