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A New Jersey state court has ordered Berkley Insurance Co. to pay $172,681 to a law firm in legal fees it incurred in defending a directors and officers liability insurance lawsuit against a pharmaceutical company in Delaware.
The New Jersey Superior Court in Elizabeth, New Jersey, ordered W.R. Berkley Corp. unit Berkley Insurance Co., based in Greenwich, Connecticut, to pay the fees in Monday’s ruling.
In December 2008, the same court had issued a ruling granting Cranford, New Jersey-based Mist Pharmaceuticals LLC ‘s motion for partial summary judgment requiring Berkley to defend it and Joseph Krivulka in the Delaware action.
According to the December ruling, the Delaware complaint charges that Mr. Krivulka developed a scheme in which he funneled licensing agreements and money from another company with which he was associated, Cranford-based Akrimax Pharmaceuticals LLC, to his personal companies including Mist, without the knowledge of another one of Akrimax’s owners.
According to the December ruling, Berkley had contended the issues raised in the Delaware litigation were first made in 2013, rendering Mist’s notice to Berkley in 2015 untimely under terms of its D&O policy.
Monday’s ruling said the court has concluded “without hesitation that Berkley had a duty to defend Mist and ordered it to pay past and future defense costs.”
“Simply put, in this case, the court has concluded that Mist had to unnecessarily litigate to simply get the benefit of its contractual bargain.
“In the court’s opinion, Berkley has failed to rebut Mist’s presumptive entitlement to a fee award and also that it would be an abuse of discretion to not award fees based upon the underlying circumstances,” said the ruling.
“The duty to defend was important, especially to this particular case. It gave us access to a $2 million policy limit,” said Mist attorney Eric Jesse, counsel with Sanford Lowenstein LLP in New York.
Mr. Jesse said the fee application decision “drives home the importance of allowing fee shifting on policies where an insurance company improperly withdraws from the defense and it really helps lower the playing field, and the insured, the policyholder, gets the full benefit of the insurance that was purchased.
Mr. Jesse said coverage litigation between Mist and Berkley, as well as the underlying D&O litigation, is continuing.
Berkley’s attorney could not immediately be reached for comment.
PartnerOne Environmental, a Charlottesville, Virginia-based program administrator and subsidiary of broker Beacon Hill Associates Inc., is now working in partnership with Berkley Environmental to offer workers compensation and automobile coverage in-house.