The Fairfax County law firm of Bettius & Sanderson has been awarded $7 million in damages by a federal jury in Alexandria that found that its insurance company had breached its contract and acted in bad faith.

Court officials said the judgment, returned Friday against the New York-based National Union Fire Insurance Co., which included $5 million in punitive damages, was the largest ever awarded in the Eastern District of Virginia.

"I think the verdict is something of a vindication," Marc E. Bettius, a partner in the law firm, said yesterday.

Bettius' firm sued National Union, which held the law firm's malpractice policy, in December at a time that the insurance company was delaying payment of $350,000 that had been levied against the law firm by an Alexandria Circuit Court judge as part of a settlement in a complex real estate case.

As a result of National Union's delay, Bettius was found in contempt of court and ordered to pay $5,000 a day until the $350,000 was paid, according to court papers. Because of this, the reputation of Bettius' firm was damaged and "client confidence" in it diminished, leaving "serious business impacts," the court papers said.

National Union representatives could not be reached for comment.