Policy Exclusion on Damages Also Gets Carrier Off the Hook
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Policy Exclusion on Damages Also Gets Carrier Off the Hook

After a jury awarded a former client damages of nearly $1.5 million for conversion, civil theft, and prejudgment interest against her attorney, his professional liability insurer filed a declaratory judgment action seeking a ruling it was not obligated to defend or indemnify him. The Second Circuit affirmed the district court’s determination the carrier had no duty to defend and the damages awarded in the underlying action were not covered by the policy. The client’s lawsuit sought to recover disputed legal fees the attorney had transferred from an escrow account to a personal account in his and his wife’s names while the dispute over the legal fees was on appeal in state court. Thus the client was not seeking damages in connection with the performance of legal services. Another wrinkle, the claim was subject to a policy exclusion providing that damages do not include “punitive or exemplary amounts” or the “multiplied portion of multiplied awards.”

Continental Casualty Company v Parnoff