Policy Rescinded – No Coverage for Two Legal Malpractice Claims
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Policy Rescinded – No Coverage for Two Legal Malpractice Claims

In applying for a claims made professional liability policy, an attorney denied knowledge he and his firm were aware of any “legal work or incidents that might reasonably be expected to lead to a claim or suit against them.” Later that year, former clients filed two legal malpractice suits against them based on the firm’s failure to appear at hearings and missing critical deadlines. The insurer denied coverage based on the policy’s prior-knowledge exclusion or, alternatively, argued the policy may be rescinded due to material misrepresentations made in the application for insurance coverage. The attorneys argued their knowledge of the facts would not lead a reasonable attorney to expect a malpractice claim. Affirming summary judgment for the insurer, the Fifth Circuit held “every reasonable attorney aware of these facts” would expect a claim and rescinded the policy which had a cascading effect voiding coverage on the second malpractice claim.

IMPERIUM INSURANCE CO v SHELTON