Company claims insurer failed to provide acceptable defense lawyer

Kelly Holleran Jul. 9, 2010, 4:00am

A St. Clair County company claims its insurance company did not provide it with an acceptable defense lawyer and is seeking to reclaim the more than $300,000 it spent on its own lawyer.

717 HB Minneapolis claims it was forced to hire a defense lawyer after DeStefano and Partners filed a mechanic's lien in Cook County Circuit Court on Oct. 6, 2008.

In the lien, DeStefano alleged 717 owed it $710,952.18 for architectural and engineering fees, costs and expenses 717 incurred in building its $38.16 million St. Clair County building.

717 sent a letter to defendant Chicago Title Insurance Company in February informing it of the lien and asking for its help in defending the suit, according to the complaint filed June 11 in St. Clair County Circuit Court. In response to the letter, Chicago Title recommended that 717 take any steps necessary to protect its property, the suit states.

Following Chicago Title's advice, 717 hired Thomas I. Matyas of Wildman, Harrold, Allen and Dixon to defend it, the complaint says. Later, 717 claims Chicago Title hired its own defense attorney, James Roth, to defend the lien.

"At the time Defendant Chicago Title appointed its own in-house counsel and employee, Roth, to defend the Lien Claim asserted by DeStefano against Plaintiff 717 HB in the Lawsuit, a conflict of interest existed between Defendant Chicago Title and Plaintiff 717 HB in that both DeStefano and Defendant Chicago Title had the same interest in attempting to prove that Plaintiff 717 HB had actual knowledge of and permitted DeStefano to perform its services with respect to the property so that DeStefano could prevail on its Lien Claim and Defendant Chicago Title would not have pay Plaintiff 717 HB under its Policy," the suit states.

Chicago Title failed to inform 717 of the conflict of interest. Still, 717 continued to retain its own lawyer to defend it, and Roth failed to provide a vigorous defense and had little or no involvement in the defense of the claim, according to the complaint.
717 claims it was forced to incur defense costs of $324,695.09 and has asked Chicago Title to reimburse it for its costs. However, the insurance company refuses to do so, the complaint says.

In its complaint, 717 is seeking a judgment of more than $75,000, plus pre- and post-judgment interest at the highest legal rate, costs and other relief the court deems just.

Edward M. Goldenhersh, Joshua Stevens and Michelle L. Rousseau of Greensfelder, Hemker and Gale in St. Louis will be representing it.

St. Clair County Circuit Court case number: 10-L-296.

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