Goodman Secures Appellate Victory in Coverage Case Arising from Legal Malpractice Claims

Notice of a Claim

The case arose when the insured law firm was retained to pursue a wrongful death claim arising out of the tragic passing of two high school students who perished in a motor vehicle accident while traveling to a school-sponsored basketball tournament. The jury in the underlying wrongful death case awarded damages of $5 million but none of the damages were recoverable because the jury assigned 100% of the fault to a non-party. Following the verdict the decedents’ family retained new counsel, moved for a new trial and sent correspondence alerting our client’s insured to a potential malpractice action in 2019.

Our client issued a claims-made-and-reported insurance policy that conditioned coverage on the insured reporting a claim during the same policy year in which the claim was deemed made. Under the policy, a claim was deemed made when the insured either receives a demand for damages or becomes aware of an act or omission that could lead to a claim for damages.

Despite being alerted to a potential malpractice claim in 2019, the insured did not report the claim to our client until three years later. Accordingly, our client denied coverage and after an action for declaratory relief, the district court granted summary judgment in our client’s favor. 

Analysis

On appeal, the insured argued the deemed-made language in the policy was ambiguous, that it was free to report the claim either when it received a demand or when it became aware of an act or omission that could lead to a claim for damages, and that our client needed to show it was prejudiced by the later notice to defeat coverage.

In a unanimous decision that establishes precedent, the Court of Appeals affirmed the grant of summary judgment for our client, agreeing with the defense that the insurance policy was not ambiguous, that the malpractice claim was deemed made when the law firm was alerted to the potential malpractice action in 2019, and that our client was not required to show prejudice because notice was a condition precedent to coverage under the policy.