Mark McNabola | Youtube screenshot
CHICAGO – An Illinois appeals panel has reversed a Cook County judge who ruled an insurer had to cover Chicago lawyer Mark McNabola's fight to collect fees from a clouded $25 million settlement.
Saying the lawyer's insurance policy pays to fend off damages, not obtain fees, Justice Sheldon Harris of the Illinois First District Appellate Court wrote the decision with concurrence from justices Mathias Delort and Joy Cunningham. The decision favored Illinois State Bar Mutual Insurance Co. in its dispute with McNabola. The company provides legal liability coverage to the lawyer.
McNabola represented Scot and Patricia Vandenberg in a 2010 suit alleging yacht maker Brunswick was to blame for Scot's fall from a Brunswick yacht, which left him paralyzed from the neck down. The case went to trial in 2015. While the jury was deliberating, the jury gave a note to the judge, asking a question that suggested it may not find Brunswick at fault. The judge told his clerk to contact the lawyers for both sides to come to her chambers. When the clerk called McNabola, he allegedly told the clerk to hold off contacting Brunswick because the case was about to be settled.
Illinois Appellate Justice Sheldon Harris | Illinoiscourts.gov
McNabola persuaded Brunswick to settle for $25 million, allegedly without telling Brunswick about the note. Less than one hour later, the jury returned a verdict in favor of Brunswick.
The yacht company struggled in court to vacate the settlement, winning at the circuit level, before an appellate court reinstated the settlement.
The Vandenbergs filed a motion in 2018 to bar McNabola from collecting his $8 million fee and costs, saying he "engaged in misdeeds" that caused the initial loss of their settlement money. The couple stated it would be "unfair" to "reward" him with fees, because he placed the settlement in "jeopardy through service toward his own self-interest." The Vandenbergs further said they eventually secured the settlement, despite McNabola's "fraudulent and unethical conduct," through the effort of their present attorneys, Power Rogers & Smith of Chicago. If fees must be handed over, the Vandenbergs want the amount reduced by the amount they give their new counsel.
McNabola asked ISBA Mutual to cover his legal costs to collect the fees, but the insurer refused. The company said, among other things, the insurance policy required it defend against damages, but by its lights, the fees sought by McNabola were not damages.
Cook County Associate Judge Sanjay Tailor disagreed, siding with McNabola.
Justice Harris reversed Tailor, concluding ISBA Mutual is in the right.
"The motion" did not "seek to impose liability on McNabola for damages due to his misconduct," Harris concluded. "In fact, the Vandenbergs filed a separate malpractice action against him for such damages, which ISBA Mutual is defending pursuant to its policy. The underlying motion did not seek damages arising from wrongful conduct as defined in the malpractice policy and contemplated by the parties. Accordingly, ISBA Mutual had no duty to defend McNabola."
The legal fallout from the Vandenberg matter includes a pending complaint against McNabola by the Illinois Attorney Registration and Disciplinary Commission, which alleges McNabola was "dishonest" in the case. The ARDC is also pursuing action against McNabola in connection with his alleged misconduct in two other matters.
Brunswick has also sued McNabola and Cook County.