The Delaware Supreme Court on Friday overturned a ruling that a law firm did not act negligently when defending a Pennsylvania-based insurance agency in a fight over a broker’s noncompete agreement.

The three-justice panel in GMG Insurance Agency v. Margolis Edelstein found the trial court erred in finding a last-minute conflicting affidavit submitted by Howard Wilson superseded the law firm’s alleged negligence.

 The justices also said the lower court did not address GMG’s argument that it would have prevailed on all its claims had it not been for the firm’s failure to produce relevant records during discovery.

Mr. Wilson left USI Insurance Services in July 2014 to join Lyons Insurance Agency and left Lyons in August 2016 to join GMG. Lyons sued GMG and Mr. Wilson in Delaware’s Court of Chancery in February 2017, seeking injunctive and monetary relief based on claims for breach of contract, unjust enrichment, aiding and abetting, and tortious interference with contract and prospective economic relations, and civil conspiracy. Margolis Edelstein represented GMG and Mr. Wilson.

GMG terminated its relationship with Margolis in April 2019, after mediation failed and the chancellor’s September 2018 ruling granting the majority of GMG’s motion for summary judgment except for Lyons’ claims for breach of contract and tortious interference. GMG also informed Mr. Wilson he would need to retain his own counsel.

GMG learned after retaining new counsel that Margolis failed to produce records that supported its arguments against Lyons’ tortious interference claim. Mr. Wilson also submitted an affidavit the day before trial in which he recanted earlier testimony and made statements that contravened his prior testimony.

GMG eventually reached a settlement agreement with Lyons. The agency then sued Margolis in Delaware state court in July 2021 for professional negligence. Margolis moved for summary judgment, arguing that GMG was unable to show that it deviated from the standard of care expected of lawyers in Delaware. The trial judge granted the motion, finding that GMG was successful on the majority of its summary judgment bid and that Mr. Wilson’s affidavit broke any causal chain related to the firm’s alleged negligence.  

Representatives for the parties did not respond to requests for comment.