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PHILADELPHIA — A federal appeals court has revived an abuse of process suit against a law firm and lawyer that allegedly used unfair tactics in litigation — including hiding documents, obstructing discovery and fabricating privilege claims — after finding that a lower court improperly determined that such conduct was immune from suit under the doctrine of judicial privilege. In General Refractories Co. v. Fireman’s Fund Insurance Co., a unanimous three-judge panel of the Third Circuit U.S. Court of Appeals found that U.S. District Judge John Padova of the Eastern District of Pennsylvania had “interpreted the judicial privilege too broadly” when he dismissed claims against the law firm of Gilberg & Kiernan in Washington, D.C., and one of its attorneys, Andrew Butz. “The mere existence of the abuse of process tort is evidence that judicial privilege applies to a much narrower range of activity than the attorney appellees urge. Where judicial process is being perverted, immunity would impede, not further, the interests protected by the judicial privilege,” Third Circuit Judge Marjorie Rendell wrote. The plaintiff in the suit, General Refractories Co., a manufacturer of heat-resistant materials that contained asbestos, was named in a number of asbestos-related personal injury suits. As the asbestos litigation wore on, GRC and its excess insurer, Fireman’s Fund, developed a dispute over the amount of coverage it was entitled to under its policy. Fireman’s Fund said the policy had a total coverage limit of $5 million, but GRC insisted that the policy had three annual coverage limits of $5 million per year, or $15 million in total excess coverage. Gilberg & Kiernan and Butz initially represented Fireman’s Fund in the Philadelphia Court of Common Pleas. The litigation was especially contentious, and GRC ultimately moved for sanctions, accusing the insurer and Butz of an array of discovery and other litigation abuses. Philadelphia Common Pleas Judge Mark Bernstein held a four-day hearing on the sanctions motion and later issued a blistering opinion that was harshly critical of the conduct of both the defendant and its lawyers. “The sad history of defendant’s discovery responses in this case,” Bernstein wrote, “reveals a clear pattern of delay, stonewalling, deception, obfuscation and pretense. Defendant intentionally withheld critical documents, ignored court orders, permitted false testimony at depositions and misrepresented facts to opposing counsel and the court.” Bernstein faulted Fireman’s Fund, its employees, its in-house lawyer and Butz, finding that they “participated in an intentional campaign to hide critical facts and documents.” At every stage of discovery, Bernstein found, “reasonable and relevant requests have been met by incomplete responses, unreasonable objections, unfounded claims of privilege and intentionally incomplete privilege logs.” Whenever GRC turned to the court for help, Bernstein said, “additional documents were ‘found,’ ‘voluntarily produced’ and the privilege log expanded.” Finding the conduct “inexcusable,” Bernstein imposed heavy sanctions, including a fine of more than $125,000, to be paid to the city, and revocation of Gilberg & Kiernan and Butz’s pro hac vice admission, effectively kicking them off the case. Bernstein also awarded GRC $125,000 for its costs and attorneys fees for bringing the sanctions motion and extended the discovery period by 120 days. “While we agree that some of the alleged uses of legal process, such as failing to comply with court orders, failing to seek a stay and failing to provide copies of subpoenaed documents, as well as contacting the asbestos litigation counsel, do not constitute ‘use’ of a legal process for purposes of an abuse of process claim, we disagree that the complaint does not contain any of the necessary allegations,” Rendell wrote in an opinion joined by Third Circuit Judge Thomas Ambro and visiting Ninth Circuit Senior Judge Frank Magill. Rendell found that “most of the allegations clearly involve the use of the legal process.” Under Pennsylvania law, Rendell said, the term “use” in the context of an abuse of process claim “requires that a party actively seek and employ a legal process.” GRC’s allegations satisfied that requirement, Rendell found, by alleging that Butz had “filed various motions in an effort to obstruct discovery, knowingly made bogus claims of privilege in response to discovery requests, hid documents and made misrepresentations to opposing counsel and the court.” Rendell concluded that the suit “clearly contains allegations that the attorney appellees actively sought and employed legal processes.” As a result, Rendell found that Padova had abused his discretion when he denied GRC leave to amend its allegations of an abuse of process. Shannon P. Duffy is a reporter for The Legal Intelligencer , a Recorder affiliate based in Philadelphia.

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