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Lawsuit Filed After Expiration of Policy Period for Lawyer’s Negligent Drafting of His Own Trust Agreement Not Covered Under Claims-Made Professional Liability Policy

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By Jessica N. Gallinaro on April 9, 2021
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Applying the law of Mississippi, a federal district court held that coverage was unavailable under a claims-made policy for an underlying lawsuit because the lawsuit, which was filed after the expiration of the policy period, did not allege that the insured had provided legal services “for others” as required by the policy.  Blackburn Law Firm, PLLC v. Allied World Ins. Co., 2021 WL 817882 (N.D. Miss. Mar. 3, 2021).

The insured, a law firm, and an attorney employed by the insured drafted a trust agreement to distribute the attorney’s assets.  On July 12, 2019, beneficiaries of the trust filed suit against the insured firm and the attorney’s estate for negligently drafting the agreement.  The firm sought coverage for the lawsuit under its professional liability policy, which provided certain coverage for claims first made during the policy period of February 28, 2014 to February 28, 2015, and arising from any actual or alleged act, error, or omission committed by an Insured solely in the performance of or failure to perform Legal Services.  The policy defined the term “Legal Services” to mean “those services performed on behalf of the Named Insured for others by an Insured . . . as a licensed lawyer in good standing . . . but only where such services were performed in the ordinary course of the Insured’s actives [sic] as a lawyer.”  The insurer denied coverage because the claim was not first made during the policy period, and also because the attorney had provided legal services for himself and not “for others.”

The insured filed suit, alleging breach of contract and seeking a declaratory judgment that the insurer had a duty to defend and indemnify.  The insurer moved to dismiss.

The court granted the insurer’s motion to dismiss.  First, the court observed that the complaint alleged that the law firm and the attorney were negligent in drafting a trust agreement for the attorney himself, and not for a client.  The court concluded that the policy only provided coverage for services performed on behalf of the insured law firm when the recipient of such services was someone other than an employee of the insured.  Because the underlying action did not allege that the insured or the attorney were negligent in performing legal services “for others,” coverage was unavailable under the policy.  Second, the court determined that, even if the allegations of the complaint otherwise triggered coverage, the policy would not be implicated because the underlying lawsuit was filed after the expiration of the policy period and, so, was not a claim made during the policy period.

  • Posted in:
    Corporate & Commercial, Insurance
  • Blog:
    Wiley Executive Summary
  • Organization:
    Wiley Rein LLP
  • Article: View Original Source

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