Justia Professional Malpractice & Ethics Opinion Summaries

In 2004 the law firm was engaged to bring a medical malpractice action on behalf of a 14-year-old girl who had become paralyzed after surgery. The firm filed two complaints in Virginia state court. Each was dismissed: the first without prejudice for failure to correctly caption a pleading; the second with prejudice for filing outside the statute of limitations. Shortly thereafter, the firm applied for and obtained a new professional liability insurance policy. Asked whether there were “any circumstances which may result in a claim being made,” the firm responded “no.” The firm informed the insurer of the incident in 2009, but represented that it had occurred in 2008. In 2011, the insurance company noticed that the firm had made the caption error in 2006, before the policy period. In 2012, it notified the firm that it reserved its rights to deny coverage under the known risk exclusion. The girl filed a legal malpractice action in 2012, and was awarded $1,750,000 in 2013. The court found, as a matter of law and without expert testimony, that the firm was on notice of the potential malpractice claim and rejected arguments that the insurer had forfeited or waived its right to deny coverage. The D.C. Circuit affirmed. View "Chicago Ins. Co. v. Paulson & Nace, PLLC" on Justia Law

Client retained Attorney to handle various legal claims pertaining to the management of a trust. Attorney later came to represent Client and his wife in matters of their own estate planning and administration. Upon Attorney’s advice, Client made loans to both the Attorney’s law firm and to a business from which Attorney received a commission for the referral. Attorney did not make a written disclosure or advise Client to seek independent legal advice regarding these transactions. The loans were never repaid. Client filed a malpractice action against Attorney for breach of fiduciary duty. Judgment was entered in favor of Client. Client subsequently filed an equitable garnishment action against Attorney’s malpractice insurer (Insurer) seeking to recover the judgment under the policy. The trial court granted summary judgment for Insurer, concluding that coverage was excluded under the policy’s “legal representative of investors” exclusionary clause. The Supreme Court affirmed, holding that, under the facts of this case, the trial court was correct in holding that the exclusionary clause unambiguously excluded coverage for Attorney’s injurious acts and omissions. View "Taylor v. Bar Plan Mut. Ins. Co." on Justia Law

Tuzzolino and his law firm represented Coletta. Coletta alleged that, in litigation, Tuzzolino failed to timely disclose expert witnesses; failed to retain needed expert witnesses; advised Coletta to settle for an amount far less than Coletta’s losses; told Coletta that negotiations were continuing after dismissal; and signed settlement documents without informing Coletta. According to Coletta, Tuzzolino offered to pay $670,000 to settle any potential malpractice claim, but never paid. Three months later, shortly before the expiration of the firm’s 2007-08 malpractice policy with ISBA Mutual, Tuzzolino completed a renewal application. In response to: “Has any member of the firm become aware of a past or present circumstance(s), act(s), error(s) or omission(s), which may give rise to a claim that has not been reported?” Tuzzolino checked “no.” Mutual issued the policy. Tuzzolino’s partner, Terpinas, learned of Tuzzolino’s malfeasance a month later, when he received a lien letter from Coletta’s attorney. Terpinas reported the claim to Mutual, which sought rescission and other relief. The circuit court entered summary judgment against Tuzzolino and rescinded the policy, finding that Mutual had no duty to defend Terpinas or the firm against Coletta’s action. The appellate court reversed as to Terpinas, citing the common law “innocent insured doctrine.” The Illinois Supreme Court reinstated the rescission, citing 215 ILCS 5/154, which allows rescission in cases involving misrepresentations “made by the insured or in his behalf,” with an actual intent to deceive or that “materially affect the acceptance of the risk or hazard assumed by the insurer.” View "Ill. State Bar Ass'n Mut. Ins. Co. v. Law Office of Tuzzolino & Terpinas" on Justia Law

Plambeck owned two Kentucky chiropractic clinics that treated patients injured in car accidents, including some State Farm customers. All of the treating chiropractors were licensed to practice in Kentucky. Plambeck was not, although he was licensed elsewhere, and did not treat any patients in Kentucky. State Farm assumed that Plambeck had a license because Kentucky law requires chiropractic practitioners and owners of chiropractic clinics to hold one. When State Farm discovered that Plambeck lacked a state license, it stopped paying the clinics and sued Plambeck to recover all payments since 2000. The district court granted summary judgment to State Farm and awarded $557,124.78 in damages. The Sixth Circuit reversed. Kentucky common law claims for recovery of funds mistakenly paid are based on unjust enrichment. Because State Farm and the clinics never had a contractual relationship, the only applicable theory would require State Farm to show that it paid money to the clinics not due “either in law or conscience.” State Farm did not offer such proof.View "State Farm Auto. Ins. Co. v. Newburg Chiropractic" on Justia Law

Steidl and Whitlock were convicted of 1987 murders, largely based on testimony by two supposed eyewitnesses. Long after the convictions, an investigation revealed that much of the testimony was perjured and that exculpatory evidence had been withheld. The revelations led to the release of the men and dismissal of all charges. Steidl had spent almost 17 years in prison; Whitlock had spent close to 21 years. They sued. By 2013, both had settled with all defendants. Because the defendants were public officials and public entities, disputes arose over responsibility for defense costs. National Casualty sought a declaratory judgment that it was not liable for the defense of former State’s Attorney, McFatridge, or Edgar County, agreeing to pay their costs under a reservation of rights until the issue was resolved. The Seventh Circuit ruled in favor of National Casualty. In another case McFatridge sought a state court order that the Illinois Attorney General approve his reasonable expenses and fees; the Illinois Supreme Court rejected the claim. In a third case, National Casualty sought a declaratory judgment that another insurer was liable for costs it had advanced. The Seventh Circuit affirmed that the other company is liable. It would be inequitable for that company to benefit from National’s attempt to do the right thing, especially since it did not do the right thing and contribute to the defense costs under a reservation of rights. View "Nat'l Cas. Co. v. White Mountains Reinsurance Co." on Justia Law

Reifer suffered a worker’s compensation injury at IU-20 where she provided special education. Her injuries prevented her from returning to work. She retained Attorney Russo. Russo carried legal malpractice insurance with Westport in compliance with the Pennsylvania Rules of Professional Conduct. When IU-20 initiated disciplinary proceedings against Reifer, Russo failed to appear at the hearing. When IU-20 terminated her, Russo failed to appeal. Russo filed suit alleging violation of Reifer’s employment rights, which he lost for failure to exhaust state remedies. When Reifer sought alternate employment, Russo advised her to answer an application question as to whether she had ever been terminated in the negative. Reifer was terminated and disciplined for the false answer. Reifer commenced a malpractice claim against Russo. Russo’s “claims-made” policy only covered losses claimed during the policy period or within 60 days of the policy’s expiration. Russo failed to inform Westport of the action until several months after the policy lapsed and he failed to secure a replacement policy. Westport refused to defend Russo. Russo admitted liability. A jury awarded Reifer $4,251,516. Russo assigned to Reifer his rights under the Westport policy. Reifer sought a declaratory judgment that Westport was required to show it was prejudiced by Russo’s failure to notify and, failing to do so, owed a duty to defend and indemnify. The federal district court, sua sponte declined to exercise jurisdiction and remanded to state court. The Third Circuit affirmed. View "Reifer v. Westport Ins. Corp." on Justia Law

In the underlying litigation, the attorney represented a contractor being sued for job-site injuries and was later sued by the contractor’s insurance company for signing settlement agreements without authority. Section 13-214.3 of the Code of Civil Procedure, 735 ILCS 5/13-214.3, sets forth a six-year statute of repose for “action[s] for damages based on tort, contract, or otherwise … against an attorney arising out of an act or omission in the performance of professional services.” The trial court held that the provision barred claims for breach of implied warranty of authority, fraudulent misrepresentation, and negligent misrepresentation against the attorney. The appellate court reversed, finding that the statute of repose did not apply to an action brought by a non-client of the defendant-lawyer for a cause of action other than legal malpractice. The Illinois Supreme Court reversed and reinstated the dismissal, stating that under the plain, unambiguous language of the statute, the claims “arose out of” the attorney’s actions “in the performance of professional services.” View "Evanston Ins. Co. v. Riseborough" on Justia Law

Plaintiffs brought legal malpractice claims against Jeffrey Daniels, American Guarantee & Liability Insurance Company’s insured. American Guarantee wrongly refused to defend the claims. A default judgment was entered against Daniels, who assigned his rights against American Guarantee to Plaintiffs. Plaintiffs then brought the present action seeking to enforce American Guarantee’s duty to indemnify Daniels for the judgment. Summary judgment was awarded in favor of Plaintiffs. The Appellate Division affirmed. The Court of Appeals affirmed, concluding that American Guarantee’s breach of its duty to defend barred it from relying on policy exclusions as a defense to the present lawsuit. The Court later granted reargument, vacated its prior decision, and reversed the Appellate Division’s order, holding (1) under controlling precedent, American Guarantee was not barred from relying on policy exclusions as a defense; and (2) the applicability of the exclusions American Guarantee relied on presented an issue of fact sufficient to defeat summary judgment. View "K2 Inv. Group, LLC v. Am. Guar. & Liab. Ins. Co." on Justia Law

Paul Dyer held licenses as an insurance producer and consultant. Because of Dyer's alleged misconduct, the Bureau of Insurance filed a petition for enforcement against Dyer alleging that Dyer violated the Maine Insurance Code and seeking the revocation of his licenses and requesting civil penalties and restitution. After a hearing, the Superintendent of Insurance concluded that Dyer violated the identified provisions of the Insurance Code, revoked Dyer's licenses, and ordered him to pay civil penalties and restitution. Dyer appealed the judgment entered in the business and consumer docket affirming the Superintendent's decision. The Supreme Court affirmed, holding that the Superintendent did not err in interpreting the Insurance Code or in making factual findings and did not abuse his discretion by imposing penalties permitted in the statute.View "Dyer v. Superintendent of Ins." on Justia Law

The law firm represented a potential buyer in the purchase of a drugstore. Buyer and Seller executed the sales contract separately. The firm misfiled the contract executed by Buyer, however, and Seller subsequently attempted to rescind the contract, which it characterized as an offer, because it had not timely received a copy of the contract executed by Buyer. When Seller’s efforts to avoid the purported contract were successful, Buyer sent a “formal notice of claim” to the firm, which sought coverage from its professional liability insurer. That insurer concluded that the firm was not entitled to coverage because it failed to properly notify the insurer of the mistake that ultimately led to the malpractice claim. The firm sought a declaratory judgment. The district court granted the insurer summary judgment. The Seventh Circuit affirmed, finding that the firm’s knowledge of the email exchange with Seller’s counsel and of an Alabama declaratory-judgment action constituted knowledge of “any circumstance, act or omission that might reasonably be expected to be the basis of” a malpractice claim. View "Koransky, Bouwer & Poracky, P. C. v. Bar Plan Mut. Ins. Co." on Justia Law