Nautilus Insurance sues over demolition fallout and insurer clash
Published by John on
A botched demolition job and a cascade of insurance disputes have landed three insurers and a demolition contractor in federal court, with significant cleanup costs at issue.
Nautilus Insurance Company, acting on behalf of MCM Management Corp., has filed a suit in the US District Court for the Eastern District of Michigan against Advantage Blasting & Demolition LLC, Everest Indemnity Insurance Company, and Tokio Marine Specialty Insurance Company. The complaint, filed October 14, 2025, details contractual obligations, environmental fallout, and insurance coverage issues following a failed demolition project.
The story began in April 2018, when MCM Management Corp. secured a contract to demolish a 450-foot smokestack at the Duke Energy Beckjord Power Plant in Clermont County, Ohio. MCM hired Advantage Blasting & Demolition (ABD) to handle the demolition, requiring ABD to assume all risk for property damage and to indemnify, defend, and hold MCM harmless for any damages arising from the demolition – except for those caused solely by MCM’s own negligence. The contract also required ABD to carry commercial general liability and pollution insurance, with MCM named as an additional insured.
On February 26, 2021, the demolition did not go as planned. According to the complaint, ABD failed to bring down the smokestack within the designated fall zone. Approximately 75 cubic yards of concrete debris entered the Ohio River. The United States Army Corps of Engineers became aware of the discharge and issued a compliance order, warning that the discharge was not in compliance with the Department of the Army permit and threatening civil penalties not to exceed $54,833 and judicially imposed penalties not to exceed $54,833 per day under the Clean Water Act.
MCM was required to commission a sonar survey to locate the debris and develop a corrective action plan for removal. Terracon Consulting Engineers & Scientists conducted the survey, and C.J. Mahan Construction Company, LLC was retained for the underwater excavation. The removal operation required barges, cranes, and divers, with oversight from the Corps. The corrective measures were completed on October 20, 2021, and the Corps confirmed the successful resolution on January 26, 2022.
Throughout the process, MCM notified ABD and its insurers – Everest and Tokio Marine – of the costs and their contractual obligations. The complaint alleges that ABD questioned whether the incident was an insurance matter and requested MCM to document and itemize costs. Everest and Tokio Marine are alleged to have failed to pay for the property damage and cleanup, despite MCM’s status as an additional insured on both policies.
Nautilus, which had issued its own policy to MCM, paid nearly all the expenses tied to the cleanup. Now, as subrogee, Nautilus is seeking to recover those payments, claiming damages in excess of $75,000.
Central to the dispute are the insurance clauses. The demolition subcontract required ABD “to indemnify, hold harmless, and defend MCM from and against any and all damages, expenses, and claims of whatever kind or nature – including attorney fees – arising out of or in any way connected with ABD’s work at the Beckjord Project, except for property damage caused by the sole negligence of MCM.” The insurance certificates provided by ABD confirmed that MCM was an additional insured on a primary and non-contributory basis for both the general liability and pollution policies.
The complaint further alleges that ABD’s failure to perform its work competently and within the prescribed fall zone constituted both a breach of contract and negligence. It claims that ABD’s actions forced MCM to bear the regulatory burden and associated costs, even though the contract placed those risks on the contractor.
As the case stands, all claims remain allegations. No court has yet ruled on the merits, and the outcome is pending. The dispute offers a cautionary tale for insurers, brokers, and risk managers: when demolition, environmental risk, and insurance intersect, the consequences can be far-reaching.
