The American Club is calling the $18.5m lawsuit against it "entirely groundless, with absolutely no foundation in fact or law."
The suit, filed Monday in Manhattan federal court by Munich Re-backed Great Lakes Insurance, argues the club and George and Stathis Gourdomichalis conspired to abandon a ship detained in Brazil in 2014.
At the time, George Gourdomichalis was a director at the club. He is now chairman.
"The allegations set out in the complaint contain serious errors of fact, egregiously false accusations and thoroughly offensive statements against the club, its Board of Directors, managers and innocent employees," a letter from chief executive Joseph Hughes to TradeWinds states.
"The American Club, its managers and their employees, acted in accordance with the rules of the club and did not engage in any plot or scheme to defraud Great Lakes or any other interested party. They most strenuously refute such allegations. Appropriate legal action will be taken in this respect."
In the lawsuit, Great Lakes, represented by George Chalos of Chalos & Co, said the American Club dropped coverage of the 73,500-dwt Adamastos (built 1995) in early 2015 in order to avoid having to pay an enormous claim.
It said the two Gourdomichalis brothers filed a letter with the Greek government that January, declaring their company, Phoenix Shipping & Trading, was no longer operating the Adamastos — which the brothers also allegedly owned through a second company, Adamastos Shipping & Trading.
In turn, the American Club notified the Gourdomichalises that it was terminating coverage due to a change in operation.
The Adamastos was chartered to Pacific Gulf Shipping Co in April 2014, then sub-chartered twice to ship soybeans from Brazil to Japan and Singapore. But the ship never made it out of Brazil, when authorities there seized it in August 2014 after an inspection turned up 42 deficiencies.
The ship was declared abandoned in February 2015.
The claim would likely have been eight-figures, more than several years worth of claims paid out by the American Club, the lawsuit states.
As an alleged reward, two American Club employees, Donald Moore and Dorthea Ioannou, were promoted, the complaint says.
The $18.5m figure came from several London arbitration cases between the Adamastos' various charterers, the lawsuit indicates.
The recent lawsuit is the second legal tiff between the Adamastos' charterers and the American Club, amid a broader legal saga around the ship.
In December 2018, Pacific Gulf sued the New York protection and indemnity club in Brooklyn federal court, accusing it of withholding documents in another lawsuit in Portland, Oregon federal court.
Pacific Gulf, also represented by Chalos & Co, said the club was doing so at the behest of George Gourdomichalis, who became chairman earlier that year.
In response, the club made similar arguments to TradeWinds. Pacific Gulf ultimately failed in Brooklyn court when a judge granted a motion to quash the subpoena as overbroad.
"The club is simply supporting a member in good standing as it would any member, regardless of whether that member was represented on the board, under the terms of the member's insurance coverage," Joseph Hughes wrote in a January 2018 letter to TradeWinds.
