by Mark Bauman | Jul 3, 2013 | Insurance Coverage, Other Venues, Successes
Judge Eduardo C. Robreno of the United States District Court for the Eastern District of Pennsylvania recently ruled for an insurance company represented by Dan Ryan in a breach of contract and bad faith action. The insurance company had previously denied coverage to a lawyer after he failed to timely report a claim under his claims-made insurance policy.
The lawyer had represented a woman whose son drowned while swimming near an unsupervised beach. The lawyer timely filed a wrongful death action but failed to comply with the notice requirements of the New Jersey Tort Claims Act. The action was dismissed and an appeal was unsuccessful, also for procedural reasons.
Meanwhile, the lawyer renewed his insurance policy and verified that he was aware of no circumstance which could “reasonably support” a claim against him. By that time, the action he filed had been dismissed. The lawyer alleged that his client said that she did not intend to sue him.
The client did file a legal malpractice action against the lawyer. He reported the claim to the insurance company which denied coverage on the basis that the claim arose before the policy period in which it was reported. The lawyer defended the legal malpractice action at his own expense and prevailed. He then initiated an action against the insurance company seeking reimbursement of his defense costs as well as damages under the Pennsylvania bad faith statute, including costs, fees, and punitive damages. At the end of discovery, both sides moved for summary judgment.
The insurance company’s motion for summary judgment was granted and the lawyer’s motion for summary judgment was denied. Judge Robreno held that the phrase “reasonably support” was not ambiguous. Next, Judge Robreno applied the hybrid subjective/objective test advocated by Mr. Ryan and Mr. Brien and found that the lawyer was aware that the underlying action was dismissed on procedural grounds and that a reasonable attorney would believe that failure to comply with a statute of limitations could be grounds for a legal malpractice claim. Therefore, the lawyer should have reported the claim when he renewed the insurance policy. Judge Robreno further held that the insurance company was not required to prove prejudice.
Finally, Judge Robreno found that the lawyer’s claim for bad faith failed as a matter of law because he produced no evidence rebutting the denial letter from the insurance company which noted specific provisions of the insurance policy and how the lawyer’s actions constituted a violation of the policy.
Judge Robreno’s ruling was a complete victory for the insurance company represented by Mr. Ryan and Mr. Brien.
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by Mark Bauman | Aug 20, 2012 | ADR, Insurance Coverage, Successes
Anthony P. DeMichele obtained summary judgment for an insurance company in a coverage dispute involving one of its insureds. The insured, an attorney, was sued in two separate state court actions based upon his involvement in several real estate investments.
In the underlying litigation, two individuals had filed separate actions against the insured claiming he misrepresented information about the investment opportunities. After the investments were made, the individuals alleged that the insured misappropriated the money for his personal gain. The insured alleged that he provided legal services for the real estate holding company that was involved in the investments, and therefore, his malpractice insurance covered the claims. As a result, the insured submitted the claims to his insurance company for coverage.
Mr. DeMichele, on behalf of the insurance company, initiated a declaratory judgment action in the United States District Court for the Eastern District of Pennsylvania seeking a declaration from the court as to the parties’ rights under the insurance policy at issue. At the conclusion of extensive discovery, Mr. DeMichele moved for summary judgment arguing, among other things, that exclusions in the insurance policy precluded coverage of the claims. Based upon the language of the exclusions, Mr. DeMichele argued that the insurance company did not have a duty to defend or a duty to indemnify its insured with regard to the claims that were asserted in the underlying state court actions.
The insured responded by filing a motion for summary judgment and argued that the policy exclusions did not apply, and therefore, a duty to defend and a duty to indemnify existed.
The district court agreed with Mr. DeMichele’s position and granted the insurance company’s motion for summary judgment while at the same time denying the insured’s motion for summary judgment. Based upon the court’s decision, the insurance company did not owe a duty to defend or indemnify its insured for the claims that were asserted in the state court actions.
by Mark Bauman | Aug 20, 2012 | ADR, Insurance Coverage, Successes
Anthony P. DeMichele obtained a declaratory judgment for an insurance company in a coverage dispute involving its insureds. The insureds, an attorney and his law firm, were sued in two separate state court actions based upon their involvement in gold futures investments. In the underlying litigation, ten plaintiffs filed two separate actions against the insureds claiming that the insureds were professionally negligent, that the insureds misrepresented information, and that the insureds breached their fiduciary duty to the plaintiffs. The plaintiffs’ claims stemmed from the insureds’ solicitation of the plaintiffs to investment money with a third party. Each of the plaintiffs claimed to have been represented by the insureds prior to the solicitation of the investments, and therefore, the plaintiffs alleged that the insureds represented them in the investment transactions that formed the basis of their claims. The plaintiffs invested approximately $9,000,000 through the insureds to a third party. The plaintiffs argued that the money was not used for investments but rather the money was used for loans, which were secured by notes and mortgages prepared by the insureds. The insureds also argued that the money was used for loans. Based upon the allegations of professional negligence, the insureds submitted the claims to their insurance company for coverage.
Mr. DeMichele initiated a declaratory judgment action in the United States District Court for the Middle District of Pennsylvania seeking a declaration from the court as to the parties’ rights under the insurance policy at issue. In the declaratory judgment complaint, Mr. DeMichele asserted that certain exclusions in the insurance policy did not provide coverage for the plaintiffs’ claims, and therefore, the insurance company did not have a duty to defend its insureds or a duty to indemnify its insureds with regard to the claims that were asserted in the underlying state court actions. At the close of the pleadings phase of the litigation, the plaintiffs moved for judgment on the pleadings arguing, among other things, that the exclusions in the insurance policy did not preclude coverage of the claims. Mr. DeMichele responded to the plaintiffs’ motions and argued that the policy exclusions did apply, and based upon the allegations in the plaintiffs’ complaints in the underlying litigation, there was no coverage under the insurance policy. The court agreed with Mr. DeMichele’s position and denied the plaintiffs’ motions for judgment on the pleadings. At the same time, the court declared that the insurance company did not have a duty to defend or a duty to indemnify its insureds in the plaintiffs’ underlying state court actions.
