May 12, 2015 — Lumber Liquidators has filed a lawsuit against its insurance company for refusing to defend the company in class action lawsuits, according to the New York Post.
Court documents filed in Dane County Court in Madison, Wisconsin reveal that Lumber Liquidators has sued nine insurance carriers, including Wausau Business Insurance, Liberty Mutual, CNA Group, and units of Travelers Companies.
Lumber Liquidators accuses the insurers of breach of contract because they “wrongfully refused to defend (Lumber Liquidators) in accordance with the terms of commercial liability insurance policies they issued.”
Lumber Liquidators is also seeking unspecified damages because the dispute has impeded the company’s efforts to deal with problems involving formaldehyde in their flooring.
According to CNBC, the lawsuit states:
“As a result of these disagreements, [Lumber Liquidators] faces substantial uncertainty in determining its entitlement to a defense, or to indemnification for any judgments or settlements under the policies.”
Over 100 lawsuits and a number of class actions have been filed against Lumber Liquidators, with more on the way. If the company is forced to defend itself and pay out claims, it could cost tens of millions of dollars.
Last week, Lumber Liquidators stopped selling all Chinese-made laminate wood flooring. The products were labeled as compliant with California laws limiting formaldehyde emissions. However, several investigations have accused the company of boosting profits by selling products with higher levels of formaldehyde than what is reported on the box.