PROVIDENCE, R.I.—A Rhode Island Superior Court judge has ruled that an insurance company is not required to defend the owners of The Station nightclub against involuntary manslaughter charges.

The June 25 ruling clears Essex Insurance Co., a surplus lines unit of Markel Corp., of providing a legal defense of nightclub owners Jeffrey and Michael Derderian, who are accused in a February 2003 fire at the West Warwick, R.I., nightclub in which 100 people were killed and 300 injured when a pyrotechnics display for the rock band Great White went awry.

The Derderians demanded that Glen Allen, Va.-based Essex provide them a defense against criminal prosecution arising from the incident, but Essex refused, arguing the Derderians were not entitled to a defense under the terms of their commercial general liability policy.

The Derderians sued Essex in June 2004, alleging that a criminal verdict against them would result in the imposition of civil judgment for liability and damages. The Derderians also argued that the policy language was ambiguous.

Essex countersued in August 2004, arguing that no criminal defense was offered under the terms of their CGL policy, which covered damages due to bodily injury or property damage only from civil proceedings. Essex also maintained that providing a defense would violate public policy.

Rhode Island Superior Court Judge Alice Gibney ruled in favor of Essex. According to court documents, Ms. Gibney ruled the policy language “unambiguously provides for a defense of the insured only in civil proceedings in which damages are alleged.”

In September 2008, insurers, brokers and the Derderians agreed to a $176 million settlement with the fire victims. According to attorney Anthony F. DeMarco, who represents the nightclub owners in the civil case, the settlement has yet to be approved by a federal court, but he noted there are several “loose ends” that need to be tied up before that can move forward. He had no timetable on when the settlement would be approved, but said he hoped it would be finalized by the end of the year. Further, Ms. Gibney wrote in her decision that the indictments against the Derderians alleging involuntary manslaughter did not initiate a civil proceeding or allege damages, concurring with previous court rulings that a criminal case is not a “suit for damages” as defined in an insurance policy.

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