A federal district court refused Wednesday to dismiss contract breach charges filed by a credit reporting agency against Lloyd’s underwriters and CFC Underwriting Ltd. because of their alleged long delay in paying its attorneys fees under its management liability coverage.

Princeton, New Jersey-based MicroBilt Corp. obtained a management liability policy from Lloyd’s and CFC Underwriting in 2017 that provided for the payment of legal fees, according to the ruling by the U.S. District Court in Trenton, New Jersey, in MicroBilt Corp. v. Certain Underwriters at Lloyd’s, London and CFC Underwriting Ltd.

The lawsuit charged that the defendants took at least 16 months to fully pay MicroBilt’s 2018 attorneys fees, which led to counsel refusing to continue to represent the company and created additional expenses associated with finding new counsel. The insurer also allegedly took more than eight months to pay MicroBilt’s 2019 attorneys fees. The lawsuit did not reveal how much in fees was involved. 

The judge said in her ruling she would not dismiss the case even though the policy did not include an express timing requirement for reimbursement.

“Put simply, regardless of whether Defendants’ reimbursement for Plaintiff’s legal expense was required within a reasonable amount of time or immediately upon notice of the claims and attorney invoices, these allegations are sufficient to at least sustain a claim for breach of contract,” the ruling said.

“Moreover, the mere fact that defendants have reimbursed Plaintiff’s legal expenses, in full, does not extinguish Plaintiff’s claim, since Plaintiffs claim damages resulting from the delay in payment. The Court construes Defendants’ purported breach of the Policy as arising from their late payment, not their refusal to pay.”

MicroBilt attorney Robert D. Chesler, a shareholder with Anderson Kill P.C. in Newark, New Jersey, said, “This type of delay by insurance companies is very common, and it can cause real damage.”

The defendant's attorney in the case did not respond to a request for comment.