A recent Law 360 story by Jack Queen, “Insurer Says NJ School’s $147K McCarter Fee Isn’t Covered,” reports that an insurer told a New Jersey state court it shouldn’t be on the hook for most of a $147,000 McCarter & English bill because the special-needs school it covers left the insurer in the dark when it hired the powerhouse firm to defend it in a routine trademark dispute.

Philadelphia Indemnity Insurance Co., or PIIC, told the court that The Lewis School of Princeton waited months to tell the insurer it was being sued by a competitor over a trademarked slogan and neglected to tell PIIC when it retained one of the state’s priciest law firms to fend off the routine dispute, which was settled in a few months without damages.

The fight over who will pay the bill has been more protracted, stretching back to The Lewis School’s April lawsuit drawing a clutch of law firms and PIIC into the scrum over who should pay.  PIIC said it had already met its obligations under the policy by paying $13,500 for fees The Lewis School racked up in the weeks after the insurer had been noticed, arguing that this was all the school was entitled to under the terms of the policy and New Jersey law.  The insurer said it would have defended the trademark suit at lower cost if it had been informed of it before the school retained McCarter.

The fees are at the heart of the school’s legal malpractice claim against McCarter, which it said charged an unreasonably high $147,189 fee for defending it in a lawsuit brought by the Cambridge School and negligently failed to give timely notice of the suit to PIIC.

McCarter countered that the engagement letter it signed with the school explicitly stated the firm would not advise on insurance-related matters.  The firm claimed another Lewis School attorney, Patricia Lawrence-Kolaras, had been responsible for noticing PIIC but dropped the ball, bringing her into the suit as a third-party defendant.  Lawrence-Kolaras denied that claim, submitting a certification from The Lewis School’s founder and director indicating the school never expected her to advise on insurance matters.

The Lewis School told the court earlier this month that PIIC couldn’t avoid paying the full tab by citing the timely notice provision in the school’s policy, arguing that the late notice was immaterial to the insurer’s ability to defend the case, which was resolved without litigation anyway.

PIIC said this argument was irrelevant because the insurer wasn’t entitled to pay pre-notice costs under the terms of the policy, regardless of the impact of the late notice.  The insurer said the arguments advanced by the school would only apply if PIIC had denied coverage outright, which the insurer said is not the case.

“PIIC has never asserted that The Lewis [School] forfeited coverage under the PIIC policy,” the insurer said.  “This is a red herring designed to create confusion.  The fact that PIIC never denied coverage or asserted forfeiture of the policy is underscored by the fact that PIIC has already paid the Lewis [School] for its reasonable, pre-tender defense costs.”