The 7th Circuit U.S. Court of Appeals on Monday ordered a retail service management company to respond within 14 days to a sanctions award in a contractual dispute with American Zurich Insurance Co. over workers compensation policy language.
The court said Dallas-based Sun Holdings Inc. must address why it continues to ignore an order to pay Zurich attorneys fees following an arbitration decision that found Sun Holdings failed to live up to its end of a contract that requires the policyholder to pay the first $250,000 of each workers comp claim.
Zurich asserted that Sun Holdings violated the policy’s contractual dispute-resolution clause by disregarding an arbitrator’s order to pay Zurich $1.1 million, 9% in interest and $175,000 in legal fees as a sanction for “defending frivolously” its position, according to the appellate ruling American Zurich Insurance Company v. Sun Holdings Inc.
Although Sun Holdings has still not paid the claims costs and interest, the appeal centered around the company’s failure to pay attorneys fees. Sun Holdings invoked policy language that it contends requires each side to pay its own legal fees.
“Sun has followed up a frivolous defense during the arbitration with a frivolous strategy in court,” the ruling states.
