Suit against Liberty Mutual alleging extortion by executive settled
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NEW YORK—A former law firm for a unit of Liberty Mutual Group Inc. has reached an undisclosed settlement with the insurer in which an unnamed executive was accused of bribery and extortion.
According to the complaint in Michael J. Devereaux & Associates vs. Liberty Insurance Underwriters, Mr. Devereaux's law firm had worked for the unit for seven years until December 2010, and had a “friendly and professional relationship” with the executive, “Mr. X.”
However, Mr. X “started and repeatedly sought favors from Mr. Devereaux, including, among other things, requests for Mr. Devereaux's house apartment keys and the use of Mr. Devereaux's home apartment.”
In late October and November 2010, the executive allegedly started making comments, such as defense attorneys being a “dime a dozen,” according to the complaint filed March 28.
Beginning last November, Mr. X demanded that Mr. Devereaux pay $50,000 for every $1 million of fees incurred in representing Liberty International's insureds “and threatened Mr. Devereaux that unless his bribe was met that he would make sure that the Devereaux firm would not be paid for its prior work, and would never get any more work,” according to the complaint. The complaint said Mr. Devereaux “refused to be extorted” and his firm was discharged.
The suit sought payment for numerous cases and accuses Liberty Mutual of breach of contract, extortion, unjust enrichment and bad faith, fraud, breach of fiduciary duty and unethical conduct, among other charges.
Mr. Devereaux said that while the amount of the settlement will not be disclosed by court order, Liberty Mutual had posted a $688,000 bond in the case.
“Our attorney's fees and costs are being paid,” said Mr. Devereaux. “I consider it a vindication of our firm” he said, adding Mr. X has been fired.
In a statement, Liberty Mutual said, “We are pleased that litigation has been resolved, and that we have concluded our relationship with the Devereaux firm.”
