A federal appeals court has affirmed a Zurich Insurance Group unit was obligated to defend a car dealership operator in a family dispute, in a case that led to a $4.3 million award against the insurer.

Tamara Darvish Fallahi sued her father, his company and her two half-brothers asserting, among other claims, tortious interference with economic relationships and tortious interference with contract, according to Friday’s ruling by the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, in Mariam Inc; John Darvish, Sr; John Darvish, Jr.; Jamshyd Darvish v. Universal Underwriters Insurances Co., a subsidiary of Zurich America Insurance Co.

According to the complaint in the case, which was filed in October 2017 in U.S. District Court in Greenbelt, Maryland, Ms. Fallahi’s suit against the company and her father in state court in Maryland alleged that Mr. Darvish Sr. made certain promises to her to give her one-third interest in the company but ultimately did not follow through with that promise. Her half-brothers were later added as defendants.

The complaint said Zurich had refused to provide a defense in the case. The district court granted the plaintiffs summary judgment on their duty-to-defend claim and, following a trial, a jury awarded them $4.3 million in May 2019.

A three-judge appeals court panel affirmed the court’s ruling.  The parties’ primary dispute concerned the applicability of a policy exclusion for actions taken with the intent to cause harm, the appeals court ruling said.

“Universal insists that ‘harm’ means any harm whatever, while Appellees maintain that, read in context, ‘harm’ could refer only to physical harms,” the ruling said. “We agree with Appellees’ assertion that the exclusion is ambiguous.”

The ruling added,  “In light of this ambiguity we construe the exclusion against Universal as drafter of the policy … which leads us to adopt the narrower formulation for the exclusion — i.e. physical harms only.”

The ruling further states: “There is no doubt that the exclusion, narrowly construed, did not apply to the economic torts at issue in the Fallahi action. Thus, we conclude that the exclusion did not justify Universal’s decision to refuse Appellees’ request to defend the underlying suit.”

Mariam Inc.’s attorney, Rebecca D. Pomeroy, a partner with Bailey Glasser LLP in Charleston, West Virginia, said Mariam has several car dealerships throughout Maryland, and although the litigation was between family members, “it was a very serious lawsuit that our clients took very seriously. … We hope this decision will finally bring this case to its rightful conclusion.

Zurich’s attorney had no comment.