Bernstein Liebhard, the plaintiffs firm that sued its insurer for more than $21 million in 2015 after a fire devastated its mass torts practice, is arguing that an adverse appellate court decision wasn’t as bad as it seemed. The New York firm claims the appellate ruling actually allows the firm to seek more than $13 million.
Bernstein Liebhard’s lawsuit argues Sentinel Insurance Co. was obligated to compensate it for the fees it would have earned on cases it could have brought on behalf of victims of the medication Risperdal, defective vaginal mesh and other medical torts.
The law firm’s case against Sentinel seemed headed for trial after Manhattan Supreme Court Justice Andrea Masley rejected Sentinel’s summary judgment motion in January 2018.
But the Appellate Division, First Department, reversed that decision last year. The court said “fee amounts that eventually result from settlements and judgments in cases [that would have been brought, if not for the fire] would not have been ‘earned’ by plaintiff” within the 12-month cutoff period in its business-interruption insurance policy.
The appellate court called for judgment to be entered, but Bernstein Liebhard is now seeking to file a newly amended complaint.
In papers filed April 15, the law firm revealed that it submitted a new, $13.3 million claim to Sentinel that it believes comports with the appellate court’s decision. That figure is a far cry from the $27.2 million the firm sought in a 2017 claim submission that was filed in court records, but Sentinel has indicated that it still plans to fight it.
“In accordance with the First Department’s holding, Bernstein Liebhard is writing to formally amend its claim,” founding partner Stanley Bernstein wrote in a letter dated April 12. “Bernstein now claims damages in the sum of at least $13,275,000, representing approximately 75 percent of Bernstein’s fees it would have earned (on a quantum meruit basis) during the 12 months following the loss.”
Bernstein Liebhard said it missed out on the opportunity to file hundreds of profitable cases in the aftermath of the fire that swept through its offices on 40th Street in Manhattan in August 2013, destroying its computer system, phone system and main file room. Even files stored elsewhere were damaged or destroyed and had to be found and scanned, the firm has said.
Sentinel wouldn’t even let Bernstein Liebhard enter the file room until November 2013 so the insurer could conduct an investigation into the possibility of suing a computer manufacturer that may have played a role in sparking the blaze, the firm has said. Its mass torts practice experienced issues with remote backups and was simply “overloaded,” according to a proposed complaint.
In claim paperwork from 2017, it said it lost $18.7 million in fees from vaginal mesh cases and $7 million on Risperdal cases, each of which was estimated to net $60,000, and another $1.9 million on cases labeled “metal-on-metal hip revision surgery,” each of which was good for $75,000 in fees.
Sentinel has opposed Bernstein Liebhard’s effort to amend its complaint, contending the appellate decision gave the trial judge, Masley, no choice but to enter judgment in its favor and close the case. In a March brief, after Bernstein Liebhard revealed its intent to file a new complaint, Sentinel accused the firm of seeking “a second (or third) bite at the apple.”
“This case is over,” the insurer argued. “Under controlling First Department authority, this court may not properly conduct any further proceedings in this case, other than with respect to an award of costs to Sentinel, and potentially an award of attorney’s fees to Sentinel with respect to this frivolous motion.”
Stanley Bernstein and his firm’s lawyer, Jonathan Lerner of Lerner, Arnold & Winston, didn’t respond to requests for comment. Gerald Dwyer Jr., a lawyer at Robinson & Cole who represents Sentinel, declined to comment.