Law Firm Loses Battle Over Malpractice Settlement Coverage: Insurance Company Cleared of Wrongdoing


USA Herald journalist, Samuel Adam Lopez, brings us an update on a legal dispute between Ryan Law Firm LLP and New York Marine & General Insurance Co. In the case, the Texas-based law firm sued the insurer, claiming that they acted in bad faith by not funding any part of a $2.75 million legal malpractice settlement. The dispute concluded last week when a Texas federal jury found that the insurance company did not breach the lawyers’ professional liability policy issued to Ryan Law Firm LLP.

The case centered around a legal malpractice lawsuit filed by sneaker store chain Finish Line Inc. against Ryan Law Firm LLP in June 2016. The store accused the firm of not submitting loss claims on its behalf after the 2010 Deepwater Horizon oil rig explosion in the Gulf of Mexico. As a result, the chain claimed it was unable to recover approximately $1.1 million, and accused the firm of negligence, fraud, and civil conspiracy.

Ryan Law Firm LLP was insured by New York Marine & General Insurance Co. under a $5 million lawyers professional liability policy. Initially, the insurer agreed to defend the firm in the underlying suit, but in March 2018, it said the fraud claims were not covered and reserved the right to deny coverage for any damages arising out of a fraud claim. The firm sued NYM in March 2019, claiming that the insurer breached the insurance contract and acted in bad faith by not fully funding the settlement.

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U.S. District Judge Robert Pitman tossed out the bad faith claim in November 2020, but allowed the breach of contract claim to proceed. The judge held that NYM “was never presented with a proper settlement demand” and that the insurer’s coverage duty was not triggered because there was no judgment in the underlying action.

In the end, the Texas federal jury’s ruling clears New York Marine & General Insurance Co. of any wrongdoing in the case. The law firm was represented by Ernest Martin Jr., Natalie DuBose, and Andrew W. Guthrie of Haynes and Boone LLP, while NYM was represented by Blair Dancy and Zachary H. Bowman of Cain & Skarnulis PLLC.

As supporters of policyholders and opponents of insurer bad faith, it is important to note that bad faith conduct and malpractice from attorneys is equally unacceptable. Samuel Adam Lopez, an experienced legal professional with two decades of experience in the legal field, reminds us to hold all parties accountable for their actions.