A building fire in 2014 destroyed more than 2,300 archived gowns and dresses in Lebanese fashion designer Reem Acra’s esteemed collections.
In June, the designer was awarded a stunning $38.7 million total judgment, which it recently pursued in part by pressing landlord Meyer Chetrit’s Chetrit Group for financials.
Now, Acra is coming after the insurance companies she says are trying to dodge their part of the judgment.
The companies have a novel defense: they don’t have to pay because they were defrauded by the policyholder.
But in a legal complaint filed last week, lawyers for Acra’s bridal label say the insurance companies are participating in that same deception.
“This isn’t just an issue of an insurance company trying not to pay, but an issue of real deceptive behavior going on — not just against our client, but against the City of New York,” said Charles Wollman, an attorney for Reem Bridals with Amini LLC. “They’re making it look like there was fraud to avoid coverage under the policy.”
The 2014 fire was the result of construction work by MJR Construction, Acra’s label successfully argued in court. The company lost its spring bridal collection, 300 evening gowns, and other inventory to smoke damage.
Acra’s frocks don’t come cheap. Her designs have appeared on Beyoncé, Taylor Swift, Jill Biden and most recently, second lady Usha Vance. A judge in June awarded the brand $20.9 million in damages, which reached $38.7 million after a decade of interest.
But the companies insuring MJR say they were duped. Although the policyholder was Michael J. Russell, who held the title of CEO and owner at the firm, it was his father, Steven, who was running the operation, they say in complaints against the company. Since Steven forged Michael Russell’s signature on legal documents, the policies should be void, they argued in court. When MJR failed to oppose the litigation, a judge ruled in favor of the insurers.
However, Acra’s lawyers argue that Michael was indeed involved in the company. His signature was notarized on MJR’s 2009 general contractor application, along with a copy of his driver’s license. He received paychecks from the firm, they claim, and an agent for the insurers also signed many of the documents in question.
Even after the alleged fraud was discovered, Burlington paid for and arranged for attorneys to defend MJR in depositions, according to Acra’s complaint. And despite pleas from the insurers that the Russells wouldn’t cooperate with their investigations, the companies got both Steven and Michael Russell on the phone, according to the complaint.
Acra is seeking $7 million from the firms, plus interest.
The firms are Burlington Insurance Co. and Alterra America Insurance Co. Neither IFG Companies, the parent of Burlington, nor Markel, the successor to Alterra, responded to a request for comment Tuesday. Neither of the Russells could be reached for comment.
The fire took place at 245 West 34th Street in Manhattan, while Acra’s studio was nearby on the seventh floor of No. 240. The Chetrit Group owned the building that caught fire. Acra is trying to collect on the Chetrits’ portion of the judgment in separate legal proceedings.
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