The Fourth Circuit has held that an insurer correctly denied coverage for costs that the insured law firm and one of its attorneys incurred when the government investigated the attorney because neither a search warrant executed at the firm’s office nor letters the government sent to the attorney were “Claims,” as that term is defined in the subject professional liability policy. See Brown Goldstein Levy LLP v. Federal Insurance Co., No. 22-1023, 2023 U.S. App. LEXIS 12217 (4th Cir. May 18, 2023).
The policy defined the term Claim to mean, in relevant part, “a written demand or written request… for nonmonetary relief… against an Insured for a Wrongful Act.” The court found that the government’s application for the search warrant was not a Claim because it was not a written request for non-monetary relief against an insured, but rather the government’s request that a court permit law enforcement to execute a search. The court similarly found that the search warrant itself is not a Claim. The court reasoned that a search warrant is not a written demand or request against an insured because it authorizes law enforcement to carry out the search and seizure without regard to any response by the target of the warrant. The court distinguished a search warrant from a subpoena, which some courts have found to be written demands or requests for relief because a subpoena commands the recipient to comply. The court expressly declined to decide whether compliance with a subpoena would be “relief” required for the subpoena to be a Claim.
The court also considered letters the government sent to the insured attorney to advise him that he was a target of the investigation and that his representation of certain clients related to the investigation might be a conflict of interest. The court determined that the letters were not Claims against the insured, finding that they merely advised him of his status and potential conflicts of interest, but did not demand or request withdrawal from the representations.