Notice of Claim in Application Supplement Constitutes Sufficient Reporting
A group of investors hired an attorney to help close a real estate deal. After the deal turned out to be a scam, the investors sued their attorney for legal malpractice. They won a judgment against the attorney. The attorney’s insurer had agreed to defend and indemnify her under its “claims-made and reported” professional liability policy provided that a “Claim” was made against her during the “Policy Period.” While the state court suit was pending, the carrier sought a declaration it did not have to defend or indemnify because the attorney had failed to report the claim to it during the policy period. The investors, with judgment in hand, argued the attorney timely reported the claim in a claim supplement as part of her application to renew her insurance policy; but the court ruled in favor of the insurer. Not so fast, after receiving a petition for an en banc rehearing, the court withdrew its initial opinion and agreed with the investors. However, the court declined to reach the issue of whether the attorney breached the policy notice conditions or whether any such breach may have prejudiced the insurer.