USF&G sues developer False information allegedly given

May 30, 1992|By Norris P. West | Norris P. West,Staff Writer

United States Fidelity and Guaranty Co. charges in a lawsuit that an Indianapolis developer provided false information to obtain a $44 million loan to pay for the construction of industrial buildings in Cincinnati, Nashville, Tenn., and Indianapolis.

The Baltimore-based insurance company, a unit of USF&G Corp., alleges fraud and breach of contract by Indianapolis-based Phillip R. Duke & Associates in the suit, filed Wednesday in U.S. District Court in Baltimore. It said the partnership covered up facts about its anchor tenant.

The insurer is seeking to recover the $44 million loan plus $20 million in punitive damages.

USF&G said Duke & Associates claimed in 1990 that a single company, McDowell Packaging & Supply Co Inc., had leased two buildings in a Cincinnati business park called World Park but did not mention that McDowell had defaulted on its rent and was in financial difficulty.

Dorothy Harmon, a spokeswoman for Duke & Associates, said, "The lawsuit has no merit, and we will defend ourselves vigorously."

The company, which owns 25 million square feet of commercial and industrial space, filed its own suit against USF&G in a federal court in Ohio, also Wednesday, claiming the insurer failed to provide an additional $1 million to the company's partnerships, Ms. Harmon said.

USF&G's suit said the insurer would not have granted the loan, made April 10, 1990, had it known about McDowell's condition.

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