A major insurer is chasing more than $1.5 million after claiming two companies trashed crucial evidence from a D.C. property fire, blocking any shot at recouping its losses.
On August 18, 2025, American Zurich Insurance Company filed a lawsuit in the US District Court for the District of Columbia against Petra Development, LLC and Flood Doctor, LLC, trading as Flood Masters. Zurich insured the real property at 1363 Peabody Street, NW, Washington, D.C. 20011, where a fire broke out on February 27, 2024. The fire department report concluded the fire started from a lithium-ion battery from an unknown e-scooter, and the building suffered severe damage.
Zurich’s complaint states that 1363 LLC had a contract with Petra to manage the property. Sedgwick, Zurich’s third-party administrator, emailed a Petra representative at 6:48 PM on the day of the fire with the instruction: “Evidence – Please retain all evidence and do not discard and parts, components, evidence which may have contributed to the fire.” Petra then hired Flood Masters to conduct restoration at the property.
Zurich alleges that Petra and Flood Masters did not preserve evidence as instructed. The complaint states that Flood Masters gutted the unit where the fire began, making it impossible to conduct a fire investigation. Flood Masters also allegedly bagged and threw out debris from the fire, further blocking a fire investigation.
Because of this, Zurich claims it cannot pursue the scooter manufacturer and its battery manufacturer for subrogation, as the destruction of evidence has made it impossible to identify responsible parties. Zurich asserts it has spent money to repair the property but cannot recoup those costs.
The complaint includes two counts against both defendants: subrogation and negligence. Zurich alleges that, having paid the debt belonging to the defendants, it should be able to recover its loss from the parties who should have paid it, to prevent unjust enrichment. Zurich also claims Petra and Flood Masters had a duty to preserve evidence, which they breached by failing to do so, gutting the unit, and discarding fire debris.
Zurich demands judgment, jointly and severally, in an amount to exceed $1,500,000 to be determined at trial, along with prejudgment interest, post-judgment interest, and costs. Zurich has requested a jury trial.
No insurance policy clauses are discussed in the complaint. The focus is on the alleged failure to preserve evidence and the resulting impact on Zurich’s ability to pursue subrogation.
It is important to note that these are allegations made by Zurich in its complaint, not established facts. The outcome of the case will depend on the court’s findings and any defenses raised by the defendants.
For insurance professionals, this case highlights the significance of evidence preservation following a loss event and the potential consequences for insurers when third parties do not comply with such instructions. The proceedings will be watched for their implications on claims handling and subrogation practices within the insurance industry.
