Jerome S. Cardin's malpractice insurer does not have to pay $1 million in legal fees to a Washington law firm that Cardin picked to represent him in a negligence and malpractice case involving his role in allegedly improper investments made by Old Court Savings and Loan, a federal judge ruled.
Rejecting Cardin's claim, the court said the insurance company was responsible only for paying the attorney it provided to represent Cardin in a multimillion-dollar civil suit filed by Maryland Deposit Insurance Fund, Old Court's conservator. Cardin and other Old Court officials were named in the lawsuit.
The summary judgment decision, issued by Judge Marvin J. Garbis in U.S. District Court in Baltimore, supported the Pacific Employers Insurance Co.
Cardin, a former part owner of Old Court, filed his suit last year in an attempt to force Pacific to pay $1 million in legal fees to Williams & Connolly, a Washington law firm. Williams & Connolly represented Cardin in the Old Court civil actions, which resulted in an $11 million settlement with the state.
Pacific paid the fees of Paul Krause, the attorney it hired, but refused to pay Williams & Connolly's, claiming that it had fulfilled its obligation under Cardin's malpractice policy.
Williams & Connolly also represented Cardin in an Old Court criminal case, in which he was convicted. Pacific also refused to pay those fees, but that was not an issue in the federal suit.
Cardin claimed that Pacific should have allowed him to select his own "independent" counsel in the civil case. He accused the insurer of creating a potential conflict of interest by appointing Krause to represent him because Krause does other legal work for the company.
Cardin agreed last year to settle the civil suit for about $11 million. Pacific paid $5 million of the settlement under Cardin's policy.
Garbis ruled that "no conflict was created requiring separate counsel for Cardin" because Krause "devoted himself to Cardin," had an ethical responsibility to do so and "at no time" represented Pacific "in any aspect of the case."
"Maryland law does not require that Pacific pay Williams & Connolly's fees since it provided an attorney to represent Cardin and took every step to ensure that attorney's fidelity to Cardin [as well as] independence from the insurer," Garbis ruled.
Garbis noted in his decision that Cardin did not claim Krause failed to fulfill his legal obligations, and that Krause worked side-by-side with the Williams & Connolly lawyers throughout the MDIF lawsuit and its settlement.
In fact, the judge said, Cardin hired Krause to handle other legal matters for him after the civil suit was settled.
Cardin, who was convicted in 1986 of stealing $385,000 from Old Court, was sentenced to 15 years in state prison. He was paroled for medical reasons in February 1989 after serving one year and 46 days.