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Litigation over deceased New Jersey lawyer John Fahy’s alleged bungling of a client matter in the years leading up to his untimely death has been resolved.

The client’s legal malpractice suit against Fahy Choi of Rutherford—as well as a suit by Darwin National Assurance Co., which sought to disclaim coverage for the claim—were settled during mediation on Feb. 26, according to court documents and attorneys involved in the matter.

The litigation began with a claim by a one-time client of Fahy, Vivien Thorsen, alleging that she was lied to about the status of her case, which never was filed.

Fahy, the firm’s founder and a former state and federal prosecutor, was found dead in what police deemed a suicide in July 2013.

The documents do not reveal the terms of the settlement, and the attorneys declined to reveal them, citing a confidentiality provision, though one confirmed that Thorsen is receiving money in the deal.

“I think Darwin really stepped up to the plate,” said her lawyer, Bennett Wasserman of Davis, Saperstein & Salomon in Teaneck, referring to the carrier as “the heavy lifter here.”

“The plaintiff was very pleased to have it all over with,” Wasserman added.

Also pleased was Benjamin Choi, Fahy’s former partner at Fahy Choi, according to his lawyer, Robert Hille.

“‘Happy,’ in a situation like this, is not the word that comes to mind—but ‘relief’ is,” said Hille, of McElroy, Deutsch, Mulvaney & Carpenter in Morristown.

Thorsen’s malpractice suit was filed in November 2013.

According to the complaint, she sought out Fahy in January 2010 to file a discrimination suit on her behalf after she was fired from her job as an insurance broker at the MacCormack Agency in Secaucus.

Fahy allegedly notified Thorsen that he’d filed a Superior Court suit on her behalf after negotiations with the company failed.

In the years that followed, according to the complaint, Fahy repeatedly asked her for help drafting interrogatories, told her about pending depositions that he said were postponed time and again, and advised her of settlement conferences.

In January 2013, Fahy allegedly notified Thorsen that the defendants had agreed to a $1.2 million settlement that would be finalized in a matter of weeks.

He thereafter kept her abreast of efforts to secure payment, and on July 11, 2013, advised her that a check was en route to his office, the suit claimed.

Thorsen alleged she last heard from Fahy on July 12, when he left a voicemail saying that he had “good news.”

Five days later, he was found dead under a New Jersey Transit railroad trestle along Route 17 in East Rutherford, not far from his office, with a single gunshot wound to the head and a handgun nearby.

After learning of Fahy’s death, Thorsen contacted the firm and was advised by Choi that no suit had ever been filed, according to the suit. The two-year limitations period had ended in January 2012.

Thorsen alleged that experts had valued her wrongful termination claims, including punitive damages, at $6.98 million to $9.98 million.

Named as defendants were Fahy’s estate, the firm, Choi—who has since launched the Choi Law Group Ridgefield Park—and others.

It also included counts of fraudulent concealment, spoliation and civil conspiracy against James Perconti, a Totowa solo, who represented the MacCormack Agency and met with Fahy in May 2010 to discuss her claims.

Thorsen alleged 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, though they had previously been promised.

Perconti—who is the municipal judge in Ringwood, Prospect Park and New Milford—previously told the Law Journal that he never heard from Fahy after the meeting. He called the allegations against him “absurd, ludicrous, unprofessional and without merit,” and threatened to pursue sanctions.

At the time the complaint was filed, Wasserman said he and counsel for Darwin National, Maxwell Billek of Wilson Elser Moskowitz Edelman & Dicker in Florham Park, had engaged in settlement talks weeks before, but to no avail.

Darwin National’s declaratory judgment action was filed in Newark federal court soon after Thorsen’s complaint, in December 2013. It alleged that the malpractice claims were not covered by the $1 million claims-made policy because the policy’s prior knowledge condition was not satisfied; that provision mandated coverage of pre-policy issues only if the insurer was made aware of them.

In a summary judgment motion, Thorsen, Fahy Choi and other defendants sought a coverage mandate.

But in an opinion last Dec. 18, U.S. District Judge Esther Salas for the District of New Jersey rejected the defendants’ arguments.

Among them was an argument that state law prohibited policy voiding when it would adversely affect an innocent party—in this case, Thorsen.

When “taken to its logical end, the rule advocated by defendants…would result in the prohibition of most contract-based denials of coverage,” the judge said.

“Indeed, almost all legal malpractice victims are ‘innocent’ in the sense that they have nothing to do with the wrongful rendering of legal services giving rise to the legal malpractice action,” she added. “The ultimate effect would be a requirement that legal malpractice insurers cover all claims, despite the presence of express language excluding particular claims, which would make insuring the risk of malpractice economically impossible.”

The matter settled Feb. 26 during mediation with retired Ocean County Superior Court Judge James Clyne of Benchmark Resolution Services in New Eqypt.

The agreement resolves all claims by all parties, and at least three defendants are paying into the settlement, according to Wasserman: Darwin National, Fahy Choi and Perconti.

“It was a tragic case on every level,” Wasserman told the Law Journal. “It’s not even a case where you can point a finger at anyone for doing anything horrible…You just can’t fathom what was going through Mr. Fahy’s mind at the time.”

Billek, who continued to represent Fahy Choi and Choi in the malpractice action and helped reach the settlement, declined to comment.

Counsel to Darwin National, Gerald Ford of Landman Corsi Ballaine & Ford in Newark, didn’t return a call seeking comment on the settlement.

Neither did Joseph Donahue of Brickfield & Donahue in River Edge, for Fahy Choi; Dennis Smith and Brendan Walsh of Pashman Stein in Hackensack, for Fahy’s estate; or Diana Manning of Bressler, Amery & Ross in Florham Park, for Perconti.

As a prosecutor, Fahy earned a reputation for taking on government corruption and, as a private attorney, for defending those accused of it. He spent three years as an assistant Hudson County prosecutor and in 1984 became an assistant U.S. attorney in Newark, eventually supervising political-corruption and other units. He served a five-year term as Bergen County prosecutor from 1990 to 1995, when he went into private practice.

Shortly before he died, the Supreme Court ordered that he be temporarily suspended and pay a $500 sanction for failure to comply with a fee arbitration award.

His death shocked colleagues, friends and those who knew him.

The court vacated the disciplinary order shortly after his death.

Contact the reporter at dgialanella@alm.com.