A Pennsylvania appeals court has turned down an attempt by Gallagher Bassett risk management firm to vacate a jury award for more than $2 million in favor of a Catholic Diocese in a case involving a school collapse.
An attorney in the case said the award could mushroom to over $4 million in legal fees and other costs.
The Pennsylvania Superior Court sitting in Pittsburgh ruled the Gallagher Bassett appeal was frivolous and ordered the case remanded to the lower court in Greensburg, Pa., to decide appropriate attorneys fees and costs.
In its decision the court said Gallagher Bassett's, the risk management subsidiary of Itasca, Ill.-based insurance broker Arthur J. Gallagher, failure to accept the court's verdict "exceeds any license of zealous advocacy, imposing upon the time and resources of this Court, and undermining the integrity of the judicial process.
"In similar fashion, it has compelled the opposing party to expend significant time, effort, and money to defend claims that are not only devoid of merit, but wholly lacking in substance, without basis in law or fact."
A spokeswoman for Arthur J. Gallagher said the firm does not comment on ongoing litigation.
At the time of the judgment in 2003, Judge Daniel J. Ackerman, sitting in Court of Common Pleas in Greensburg, Pa., awarded the Roman Catholic Diocese of Greensburg $2.43 million. On appeal, the award was raised to $2.9 million and Timothy P. Law, an attorney with Anderson Kill & Olick in Philadelphia representing the Diocese, said that amount has since risen to between $3.5 million and $4 million.
The case concerns the 1999 loss of the Queen of Angels School building. A structural engineer found that the school's structural integrity failed because the earth moved under its foundation because of the presence and expansion of pyrite in the soil. The school was torn down.
The Diocese settled with five insurers, but did not settle with Gallagher Bassett over claims the administrator did not provide adequate risk control services and that it failed in its duty to ensure the school had full coverage.
Mr. Law said that Gallagher Bassett's next step would be to either to settle the case or seek another appeal.
He said attorneys for Gallagher Bassett already indicated they would appeal the court's decision back to the court. The appeals court usually decides whether it will rehear a case quickly. Mr. Law said he felt the court was inclined not to rehear the case. The next step could be an appeal to the state's Supreme Court, which could take over a year.
In the mean time, the legal costs and interest fees the court is imposing upon Gallagher Bassett continue to climb, said Mr. Law.
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