Lawyers for Northwestern Mutual Life Insurance Co. have tried and seemingly failed to dodge a bullet that could potentially cost hundreds of millions of dollars.

After two years of litigation in state court, Reserve Judge Dennis Flynn found the company guilty of breaching contracts with thousands of annuity holders when it changed how dividents were paid on some annuities sold before 1985.

Seventeen days after the ruling, Northwestern Mutual lawyers petitioned and were heard on what they termed a “sensitive matter.” They claimed to have recently discovered that Flynn himself had owned two policies with the firm, including one that was like the annuity at issue. Arguing that this should have been revealed before the case came to trial, they asked to have his ruling thrown out.

Flynn fought back with several pertinent points of defense, claiming he had no memory of the policies and asking why lawyers had failed to illuminate this point when they discovered it in 2009, instead of after receiving an unfavorable ruling.

Despite Flynn’s detailed rebuttal, Northwestern Mutual lawyers maintain that his personal experience colored his ruling. The case now moves to the federal court.

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