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September 17, 2019Cart

Business

by Westchester County Business Journal
by WCBJ

Westchester sues insurance firm for extra costs from firing Spiezio waste company

Westchester County is demanding that an insurance company pay the extra costs of hiring waste removal companies to replace a firm it fired.

The county sued International Fidelity Insurance Co. of Newark, N.J., for $163,000 on  March 7 in Westchester Supreme Court.

Two years ago, the complaint states, the county awarded R&S Waste Services a contract to remove trash from Westchester County Airport and other locations, for up to $1.4 million a year.

R&S, based in New Rochelle and owned by Joseph F. Spiezio III, was required to get a performance bond payable to the county. The contract also required the company to comply with all federal, state and local laws, rules and regulations.

Last summer – after a federal judge ruled that R&S had violated a federal pension law and owed a Teamsters Union trust fund $4.2 million – the county canceled the contract.

Westchester replaced Spiezio’s firm with City Carting & Recycling of Stamford, Connecticut, and eventually hired Waste Management Reduction Services of Brewster for the airport portion of trash removal.

The new deals cost more, according to the complaint, so the county invoked the performance bond and demanded that International Fidelity make up the difference. The insurance company denied the claim and refused to make any payments.

Westchester is asking the court for a declaration that International Fidelity breached the terms of the performance bond, and it is demanding that the insurer covers all costs caused by R&S’ breach of contract.

International Fidelity was recently acquired by IAT Insurance Group of Raleigh, North Carolina. Spokeswoman Caryn Best declined to respond to the allegations because the matter is in litigation.

Last month, R&S’ parent company, Waste Services Inc. of Mamaroneck, filed for Chapter 11 bankruptcy protection. Revenues had declined from $10 million in 2017 to $6.9 million last year. Spiezio declared $5 million in assets and $7.6 million in liabilities.