The insurance carrier for the firm of well-reputed New Jersey lawyer John Fahy, who committed suicide in July, is seeking a declaration that it need not cover a malpractice suit alleging he blew the statute of limitations in a sex discrimination case and lied to the client about it until his death.
The complaint in Darwin National Assurance Co. v. Fahy Choi LLC, filed on Nov. 27 in federal court in Newark, alleges that the malpractice claims are not covered because the policy’s prior knowledge condition was not satisfied.
The $1 million claims-made policy, which took effect on Aug. 1, 2012, said that the insurance extended to “wrongful acts” committed before that date if prior to the inception, none of those insured under it had any basis to believe any of them had breached a professional duty or to foresee that a claim might be brought.
The underlying malpractice suit, filed Nov. 4 against the Rutherford firm of Fahy Choi, alleges that Fahy led client Vivien Thorsen to believe he had filed a timely action on her behalf even though the statute of limitations had expired in January 2012.
Thorsen claims he asked for her help with interrogatory answers, informed her of pending depositions that were repeatedly postponed and advised her of nonexistent settlement conferences with the judge and opposing counsel.
Last January, Fahy allegedly told her he had settled the matter for $1.2 million and kept her abreast of his efforts over the next six months to collect the sum. On July 11, he allegedly informed her the check was en route to his office.
Thorsen last heard from Fahy on July 12, when he left her a voicemail saying that he had “good news.”
Five days later, on July 17, he was found dead under a railroad trestle along Route 17 in East Rutherford, with a handgun nearby.
It was only afterward, Thorsen claims, that she learned from the firm’s managing partner, Benjamin Choi, that no action had ever been filed.
Her suit, filed in Passaic County Superior Court, names Fahy’s estate, Choi, the firm, a legal assistant and another lawyer no longer with the firm, Dongho Song, now a Fort Lee solo.
The coverage suit came as a surprise to Thorsen’s lawyer, Bennett Wasserman, of Davis Saperstein & Salomon in Teaneck, and Choi’s attorney, Robert Hille of McElroy Deutsch Mulvaney & Carpenter in Morristown.
They say Darwin National had agreed to defend the malpractice claims subject to a reservation of rights and even took part in settlement talks mediated by retired judge James Clyne in October, though no resolution was reached.
A lawyer provided by the carrier, Maxwell Billek of Wilson, Elser, Moskowitz, Edelman & Dicker in Florham Park, accepted service of Thorsen’s malpractice complaint for the Fahy Choi defendants and appeared for them at the mediation.
Despite the coverage suit, Billek says he will continue to defend them subject to the reservation and will file an answer to the malpractice complaint on their behalf.
Hille says Choi retained him earlier to deal with Darwin and now he will defend him in the coverage case.
Wasserman says of Darwin’s coverage suit, “They seized upon the tragedy of Mr. Fahy’s failure to file a claim and his cover-up of his failure but they completely overlooked our most viable claim.” That, he says, is Choi’s and Song’s alleged negligence in not making sure Fahy filed the suit on time. Both lawyers allegedly were identified as managing attorneys on the firm’s website and were thus obliged to keep tabs on the work done by the firm’s lawyers. “Where was the docketing system? Where was the calendaring system?” he asks.
Wasserman says he plans to rely on the New Jersey Supreme Court precedent of Lawson v. First American Title Ins. Co., 177 N.J. 125 (2003), holding that a misrepresentation that voided an insurance policy with respect to the firm and the partner who lied did not strip an innocent partner of protection.
He says he has expert opinions valuing Thorsen’s employment claims at nearly $7 million and as high as almost $10 million.
Darwin’s lawyer in the coverage case, Gerald Ford of Newark’s Landman Corsi Ballaine & Ford, did not return a call. Neither did Song.
Thorsen’s suit includes counts of fraudulent concealment, spoliation and civil conspiracy against James Perconti, a Totowa solo, who allegedly represented Thorsen’s former employer, The MacCormack Agency, and met with Fahy in May 2010 to discuss her claims for sexual harassment and retaliation.
Thorsen alleges Perconti failed to secure a copy of her employment records and informed her three years after that meeting, when her new lawyer asked for them, that none existed, even though his client stated just weeks earlier that he would make them available.
Perconti, who is the municipal judge in Ringwood, Prospect Park and New Milford, did not return a call.
Fahy, a former assistant U.S. attorney and Bergen County prosecutor, was known for prosecuting government corruption as well as defending those accused of it.
Shortly before he died, the Supreme Court ordered that he be temporarily suspended starting on July 29 and pay a $500 sanction for failure to comply with a fee arbitration award.
In light of his death, the court vacated the order on July 19.