Four Alarm Legal Fire at Fireman’s Fund
By Robert Warne - July 31, 2003 Fireman’s Fund attorneys’ conduct has sparked a federal appeals court decision to allow General Refractories Co. (GRC) to sue the carrier for abuse of process.
The dispute began when GRC was subject to a number of asbestos-related personal injury suits. As the cost of litigation mounted, GRC tapped Fireman’s Fund, its excess insurer to kick in its coverage.
The policy according to Fireman’s Fund had a total coverage limit of $5 million, but GRC insisted that the policy had three annual coverage limits of $5 million per year, or $15 million in total excess coverage.
Things heated up to a point where GRC moved to have Fireman’s Fund and its attorney Andrew Butz and defense team from Gilberg & Kiernan sanctioned for discovery and litigation abuses.
Philadelphia Judge, Mark I. Bernstein reviewed GRC’s allegations that Fireman’s Fund and its defense team had hid documents, obstructed discovery and fabricated privilege claims.
Bernstein didn’t like what he saw. In his ruling, according to Law.com, he said the discovery responses, “reveals a clear pattern of delay, stonewalling, deception, obfuscation and pretense. Defendant intentionally withheld critical documents, ignored court orders, permitted false testimony at depositions and misrepresented facts to opposing counsel and the court."
He found that their conduct was inexcusable, and levied a $125,000 fine against the attorneys and booted them off the case. Fireman’s Fund was also assessed a $125,000 fine.
The sanctions survived the appeal process and GRC then filed a new suit in state court, that alleged abuse of process, bad faith and breach of the covenant of good faith and fair dealing for the same alleged conduct.
GRC ran into some legal resistance this time around in court after a U.S. District Judge dismissed the claims.
But on appeal, a three-judge panel of the 3rd U.S. Circuit Court of Appeals unanimously found that the district judge had misinterpreted the claim and cleared the way for the suit to proceed.
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