MANHATTAN (CN) - A law firm created a conflict of interest when it agreed to assess a "Big Dig" indemnity claim related to a fatal tunnel accident, an insurer claims in court.
National Union Fire Insurance Co. of Pittsburgh, Pa., contends it would have been better off ignoring the advice of Edwards Wildman Palmer LLP and attorney John Hughes since the law firm also represented competitor Travelers Cos. in litigation involving a contractor on the Boston highway-tunnel project known as the Big Dig.
"Rather than provide competent, zealous representation as required by law and the rules of ethics, these lawyers gave incompetent advice that substantially damaged National Union," the insurer claims in New York County Supreme Court.
While organized in Pennsylvania, National Union is headquartered in New York City. The property-casualty insurer is part of American International Group.
In 2007 it hired Edwards Wildman, a 600-lawyer firm with offices in the United States, Japan, Britain and Turkey, to evaluate whether it owed a defense to Modern Continental Construction, which faced multiple claims for its work on the Big Dig, according to the complaint.
The massive highway project, which spanned 15 years and cost about $24 billion, buried a city arterial and ultimately connected the Massachusetts Turnpike - Interstate 90 - to Logan International Airport via a tunnel under Boston Harbor.
Tiles fell from the tunnel ceiling in 2006 - about a decade after it was completed - crushing the passenger side of a passing car and killing a woman in the front seat. The National Transportation Safety Board later blamed the collapse - which rained down 26 tons of concrete - on faulty epoxy.
Modern Continental was responsible for "tunnel finishes" on the project, which included installation of the ceiling tiles, according to the complaint. National Union provided commercial liability policies for the company.
Massachusetts and Boston separately sued Modern Continental and others - including sureties that provided performance bonds for its work - for the cost of replacing ceiling tiles throughout the tunnel and other damages.
National Union allegedly turned to Edwards Wildman and attorney Hughes for analysis and advice on Modern Continental's coverage, including who bore financial responsibility for claims raised in the lawsuits.
The contractor had performance bonds for its work on the ceiling tiles from several sureties, including United States Fidelity & Guaranty Co., which, through The St. Paul Cos., was part of The Travelers Cos. Inc.
It was that connection to Travelers - a company Edwards Wildman also represented - that should have raised a red flag, National Union claims.
"Edwards Wildman and Hughes could not provide competent, zealous representation in accordance with their fiduciary duties and ethical obligations if they did not, or were unable to, diligently investigate and pursue whether sureties and/or insurers (including Travelers/USF&G) other than National Union bore responsibility for Modern's alleged damages," the complaint states.
National Union claims it was not until mid-2012 that the law firm owned up to the potential of a conflict of interest, even though Hughes, an attorney in the firm's Boston office, had recognized it two years earlier.
"Notwithstanding Hughes' admitted recognition of the existence of a conflict in February 2010, until early summer 2012, neither Hughes nor anyone at Edwards Wildman ever informed National Union about an actual or potential conflict involving Travelers in connection with the coverage representation, nor did Edwards Wildman consult with National Union, nor did Edwards Wildman ever seek or obtain a written waiver in writing from National Union of the conflict," according to the complaint.
Just days before a trial was to begin, the law firm allegedly filed an emergency motion to withdraw as counsel, citing its representation of Travelers in other matters.
That action cost National Union millions of dollars in additional attorneys' fees and court costs as it sought a continuance and engaged new counsel, the insurer claims.
National Union accuses Edwards Wildman and Hughes of breach of fiduciary duty; legal malpractice and professional negligence; breach of contract; fraudulent concealment; negligent misrepresentation; and violation of New York judiciary law and Massachusetts general law.
The insurer asks for $10 million in damages; attorneys' fees and costs; punitive damages; and disgorgement of the legal fees - about $3 million - paid to Edwards Wildman. It also seeks treble damages, or $30 million, under Section 487 of New York judiciary law, which penalizes attorneys found guilty of deceit or collusion.
William Rome of Hoffman & Pollok in Manhattan represents National Union.
Edwards Wildman's Boston office issued a brief statement Tuesday on the complaint.
"We believe the allegations in the complaint have no merit and we will vigorously defend against them," spokeswoman Heather Fontaine Merton said in an email. "Because the allegations are in litigation, we will make any further responses only in the court proceedings."
Hughes also did not answer an email seeking comment sent to his Boston office.