As the criminal trial of a New York lawyer charged with bilking lottery winners out of millions of dollars got underway this week in a federal court in Brooklyn, one insurer was likely watching closely as it will be picking up the defense costs.
A few weeks ago on June 29, U.S. District Judge Joan Azrack ruled that Fireman’s Fund’s must provide defense coverage for “lottery lawyer” Jason Kurland under a professional liability policy it issued to his former law firm.
Fireman’s Fund had tried to get out of paying for the defense, arguing that the policy did not cover criminal cases and that it precluded coverage for “proceedings seeking injunctive or other non-pecuniary relief.”
Kurland insisted that the policy did cover his defense because the prosecutors were seeking “damages” in the form of restitution for the victims of the alleged scam.
The judge shot down the insurer’s arguments, noting that an insurer’s duty to defend is “distinctly different” from its duty to indemnify. She found the policy was unclear on whether it applied only to civil suits and on whether it precluded suits seeking both monetary damages and imprisonment—a form of non-pecuniary relief.
Fireman’s Fund also argued that it would be against public policy to grant Kurland insurance coverage for alleged criminal behavior because that would “arguably incentivize the bad behavior that the criminal justice system in this country seeks to prevent.” The policy…
