‘Vague’ insurance policy requires insurer to defend attorney in criminal case, New York judge rules | Polsinelli

After a recent decision by Judge Joan Azrack of the Eastern District of New York, Fireman’s Fund Insurance Co. will have to defend Jason Kurland, also known as “Lottery Lawyer”, in the criminal action against him. Kurland is currently facing charges of fraud and illegal money transactions after he allegedly defrauded lottery winners of tens of millions of dollars and participated in an extortion conspiracy.

Why is this important for legitimate business owners?

Initially, the insurance company refused to cover Kurland’s defense, stating that the attorney’s legal liability policy only provided for defense in civil cases. The policy provided coverage to defend against any lawsuit for damages, and the company denied the claim for defense cost coverage in Kurland’s criminal case because the criminal proceeding did not constitute a claim for damages. The company also said that the lawyer’s “criminal conduct [was] for his own benefit,” thereby disqualifying him from insurance coverage.

Kurland filed a lawsuit against the insurance company in November 2021, arguing that the policy did not apply only to civil lawsuits and should cover his criminal defense because prosecutors were seeking restitution from victims, making it an “action in damages”.

Justice Azrack agreed with Kurland, finding the policy vague and finding that the policy did not define “suit” as applying only to civil proceedings. Additionally, under New York law, the insurance company has a duty to defend Kurland until its conduct is found to be dishonest, fraudulent, criminal, or malicious by a jury or a judge’s verdict. The decision is significant because, depending on the wording of the policy, it may encourage insurers to provide coverage in investigations with both criminal and civil ramifications.

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Justin D. O'Neill