By Mary Pat Gallagher

An in-house lawyer for Camden County, N.J., can't be held personally liable to its insurers for a $19.3 million judgment in a case she allegedly botched.

U.S. District Judge Noel Hillman on Wednesday tossed the carriers' claims, saying that no matter what Assistant County Counsel Donna Whiteside did, they could not show that her conduct caused them any injury.

If the carriers proved she was negligent in defending a tort claim against the county and thus breached the policies, they would not have to pay anything, and if the policies had to be honored, it would be because her actions did not cause a breach, Hillman said in State National Insurance Co. v. County of Camden, 08-cv- 5128.

Camden, self-insured for $300,000, has a $10 million policy with State National Insurance Co. and another $5 million policy with the Insurance Company of the State of Pennsylvania, or ICSOP. Both carriers are trying to get out from under a $19.3 personal injury judgment entered last June by Superior Court Judge John Fratto.

State National filed a coverage action on Oct. 20, 2008, just three days after the jury awarded $31.3 million in the underlying personal injury case, though Fratto remitted the damages.

State National alleged Camden delayed telling it about the case, did a poor job investigating and defending it, and kept telling it the case was within the $300,000 self-insured retention until four days into trial when it upped the estimated exposure into the millions.

ICSOP subsequently intervened, alleging Camden did not notify it about the tort claim action until seven weeks after the verdict.

The case grew to include other parties, including Whiteside, who faced claims by both carriers and Camden's claims administrator, Scibal Associates, a third-party defendant, which sought indemnification or contribution for any liability it might have. Hillman dismissed Scibal's claim against Whiteside last October. With Wednesday's ruling, she is totally out of the case.

The coverage action will decide who has to pay a judgment for Nicholas Anderson, who lost a leg and almost lost an arm in a Dec. 23, 2004, crash on a county road. Anderson claimed he tried to avoid an oncoming driver who swerved into his lane, but lost control and hit a guard rail. The other driver was never located and the county blamed the accident on Anderson, claiming he was speeding or otherwise at fault.

Anderson argued the accident was due to a roughly six-inch drop between the roadway and shoulder and by a guard rail that was not designed to absorb the impact, contrary to state requirements. On Oct. 17, 2008, he was awarded $31 million, including $15 million each for future medical costs and for pain and suffering. The remitted final judgment of $19,374,424 in Anderson v. Camden is on appeal and has not been paid.

Whiteside's alleged mistakes in defending the case include failing to hire outside counsel and missing the expert-report deadline, leaving her unable to present expert testimony at trial. Also, she did not examine Anderson's car until shortly before trial and did not adequately investigate its accelerometer, which might have provided evidence Anderson was speeding, State National claims.

State National also contends it should not have to pay because it was not notified of the suit until Aug. 4, 2008, a few days before the end of discovery and about a month before the trial date, and was not given an accurate picture of what the claim was worth until too late.

In tossing the claims against Whiteside, Hillman pointed out that if Whiteside's actions breached the contract, it would be Camden County that would pay for her negligence by losing its insurance coverage. "Despite any alleged malpractice by Whiteside that the insurers wish she atone for, it is the County, and not State National or ICSOP, that has to pay for that negligence," Hillman wrote.

He rejected ICSOP's claim that it would be inequitable to shield an in-house lawyer from a malpractice claim when an outside, retained lawyer would not be protected. The argument was true in a technical sense because the county was vicariously liable for acts of its employees but retained lawyers were often similarly protected by their firms, said Hillman. Law firms maintain malpractice insurance, as does Camden County, he added.

Whiteside's attorney, Michael Canning of Giordano Halleran & Ciesla in Middletown, N.J., says the decision is well-reasoned and Hillman "properly concluded that no matter what Ms. Whiteside did or didn't do, she didn't cause any damage to either of the two insurers."

State National's lawyer, Peter Mueller of Harwood Lloyd in Hackensack, N.J., declines comment, as does ICSOP's lawyer, Jeffrey Beyer of Drinker Biddle & Reath in Florham Park, N.J.

The county's lawyers, William Tambussi and Joseph Carney of Brown & Connery in Westmont, N.J., did not return a call.

Anderson's lawyer, John Dodig, of Feldman, Shepherd, Wohlgelernter, Tanner, Weinstock & Dodig in Philadelphia, says he is confident the judgment will be upheld. The appeal is briefed and awaiting oral argument.