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A Philadelphia jury last week awarded $3 million to a real estate broker who claimed she was hit with a massive verdict in a defamation case because her insurer and the lawyer it provided refused to offer enough to settle it. Marie Miller’s company, Century 21/Marie Miller & Associates, was saddled with an $11.4 million verdict in a defamation case in 1999. Three other defendants in the same case had settled prior to trial for sums ranging from $100,000 to $225,000. Miller, who had a $1 million policy, claimed that she, too, wanted to settle but that her insurer, the Continental Casualty Insurance Co. (also known as CNA) refused to offer enough. After the verdict, CNA agreed to guarantee the judgment and later settled the case for $8.5 million. Miller later filed suit against CNA and attorney Jonathan D. Herbst of Margolis Edelstein, alleging that the massive verdict — and the publicity it caused — had harmed her business. The suit alleged that the insurer had breached its contract with her and engaged in bad faith and that the lawyer it provided to defend her had committed malpractice. In a verdict handed up on Thursday after a 42-day trial, a Philadelphia Common Pleas Court jury sided with Miller and found that CNA had breached its contract and that Herbst and his firm were negligent in representing her. The jury awarded Miller’s company $3 million and said that CNA should pay 70 percent of the damages and Herbst and his firm should pay 30 percent. Miller’s lawyers, Michael O. Pansini and Steven Mezrow of Pansini & Mezrow, said the verdict could swell considerably because Miller also has a bad faith claim under Section 8371 against CNA that will be decided by Judge Allan L. Tereshko. (Under Pennsylvania law, a Section 8371 claim is tried non-jury and judges who find for the plaintiff have the power to award interest and punitive damages as well as attorney fees.) Miller’s case stemmed from the verdict in a defamation suit brought by attorney Neil A. Morris on behalf of American Financial Mortgage Corp. which claimed it was falsely branded a financially unsound business on the brink of folding due to a single bounced check that it had covered within hours by wire transfer. Morris argued that AFMC’s business was devastated when that minor clerical error set off a rumor mill in which title agents and Realtors faxed memos to each other suggesting that AFMC was unstable and possibly on the verge of dissolving. Prior to trial, AFMC settled with three title companies — Commonwealth Land Title Insurance Co., First American Title Insurance Co. and T.A. Title Insurance Co. But the case against Marie Miller’s company went to trial, and Morris argued that a memo from the Miller company that said AFMC was “in the process of closing” was “the kiss of death” because Miller’s company refused to retract it as the others had. In its $15 million verdict, the jury hit Miller’s company the hardest. After awarding $12 million in compensatory damages, the jury found that each of the three title companies was responsible for 10 percent of the damages, while Miller’s company and one of her employees were responsible for the remaining 70 percent, or $8.4 million. And the $3 million in punitive damages was assessed only against the Century 21 defendants — $2 million against Marie Miller & Associates, which operates three Century 21 offices; and $1 million against employee Murray Shore, the author of the memo. In her suit against CNA and Herbst, Miller claimed that the massive verdict against her could have been avoided if the case had been handled properly and settled before trial. In court papers, Pansini said that Miller was “actually begging Jonathan Herbst and CNA to settle the case,” but that “she was continuously advised that she had nothing to worry about.” Pansini said in his trial brief that Morris was demanding the policy limit of $1 million, but that the settlements with the three other defendants showed that he would have been willing to settle for less. Prior to the trial, CNA was offering just $25,000 to settle with Morris, Pansini said in the trial brief, and it raised the offer only to $35,000 on the eve of trial. During the trial, Pansini said, CNA raised its offer to $75,000. All three of the other defendants had filed a motion for summary judgment to have the punitive damage claim of AFMC struck and the motion was granted, Pansini said in the trial brief, but Herbst failed to file a similar motion. In his brief, Pansini said there was “evidence that Jonathan Herbst would attend depositions and read golf magazines, not paying attention to the proceedings,” and that Herbst “sent inexperienced attorneys or attorneys with no familiarity with this case to attend depositions, conferences, and settlement meditations.” CNA’s lawyer, Ronald Schiller of Piper Rudnick, said in an interview Friday that he intends to file post-trial motions asking for the verdict to be set aside on the grounds that Miller’s company did not suffer any damages. The evidence, Schiller said, showed that Miller’s company earned $1.5 million in 1999, before the verdict against her, and that profits had grown considerably since then, to $4.1 million in 2002. “Our position is that the plaintiff did not sustain any injury,” Schiller said. Schiller said Tereshko also granted a defense motion to dismiss all of Marie Miller’s individual claims for economic and emotional damages before the case went to the jury. Herbst’s lawyer, George M. Vinci Jr. of Spector Gadon & Rosen, could not be reached for comment on Friday. But Margolis Edelstein partner Peter A. Dunn said he was “terribly disappointed” with the jury’s verdict and considered it an “unjust result.” Dunn said Herbst is a “highly skilled and experienced lawyer” who had handled Miller’s case properly but was the unfortunate victim of a “runaway verdict” that shocked everyone involved in the case.

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