A Clear and Present Danger to the Legal Malpractice Defendant

Coverage under a legal malpractice insurance policy, is the sole reason for paying premiums, and probably one good reason that litigating attorneys fall asleep at night. They are handling multi-million dollar cases, earning big fees and (hopefully) helping their clients.  If it all goes wrong, and in the field of human events there are always mistakes, then the insurance is there to cushion the blow.  However, in legal malpractice policies there is the reporting clause.  In Property & Cas. Ins. Co. of Hartford v Levitsky   2013 NY Slip Op 30273(U)  January 25, 2013  Supreme Court, New York County  Docket Number: 109550/11  Judge: Lucy Billings  the attorneys did not timely report a problem, and lost their coverage.

"Defendants represented Paul Rowland as a plaintiff in an action in Monroe County for personal  injuries sustained on October 24, 2003, while Rowland was performing construction work
at a mall. On August 29, 2006, less than two months before the statute of limitations of three years expired, C.P.L.R. § 214(5), defendants commenced an action on Rowland's behalf against
Wllmorite, Inc. Defendant Levitsky believed that Wilmorite owned the Eastview Mall where Rowland was injured, based On a sign at the premises and on common knowledge that Wilmorite owns all the large malls in the Rochester area, including Eastview." Steven Levitsky (Nov. 30, 2011) Ex. 8, at 1. On October 19, 2006, five days before the statute of limitations expired, Wilmorite answered Rowland's complaint, Aff. of denying ownership of the mall where Rowland was injured. Almost 14 months later, at a deposition December 12, 2007, a witness on behalf of Wilmorite again denied that it owned the mall and claimed Great Eastern Mall, LP, was the owner. That same witness, however, testified that Great Eastern Mall and Wilmorite worked closely together and shared an office address.

Wilmorite was the construction manager on the site when Rowland was injured under a contract with Great Eastern Mall. Only then did defendants undertake any investigation and eventually learn that that contract required Great Eastern Mall to maintain insurance for Wilmorite covering persona1 injuries arising from employees' operations at the site. Based on that relationship between Great Eastern and Wilmorite, defendants believed Rowland still would be entitled to recover from Wilmorite, e.q., N.Y. Labor Law §§ 200, 240(1); Walls v. Turner Constr. Co., 4 N.Y.3d 861, 864 (2005); Rizzuto v. Wenqer Contr. CO., 91 N.Y.2d 343, 352-53 (1998), or, despite the expiration of the statute of limitations, . to join Great Eastern Mall under the relation back doctrine. C.P.L.R. § 203(b). e.g.., Buran v Cural, 87 N.Y.2d 173, 178 (1995); Cooley v. Urban, 6 A.D.3d 1077, 1078 (4th Dep't 2004 ) .

On February 5, 2008, Wilmorite moved to dismiss Rowland's claims against it. On May 28, 2008, defendants opposed Wilmorite's motion and cross-moved to join Great Eastern Mall as
a defendant. On July 30, 2008, the Supreme Court, Monroe County, granted Wilmorite's motion and denied Rowland's cross-motion,

On August 19, 2008, Rowland's new attorney informed defendants that he had been retained for purposes of a possible malpractice claim against defendants. On May 4, 2009, Rowland  commenced, through his new attorney, a malpractice action against defendants.Defendants first notified plaintiff of a possible malpractice claim . August 29, 2008. Levitsky Aff. Ex. 8, at 2. From defendants'


From defendants' vantage point, defendants thus notified plaintiff of the potential claim 30 days after the Supreme Court granted Wilmorite's motion to dismiss Rowland's action and denied his cross-motion to join Great Eastern Mall, 10 days after Rowland's new attorney informed defendants Rowland was pursuing a possible malpractice claim, and several months before he commenced an actual malpractice action. Nevertheless, defendants' notice came more than one year and 10 months after Wilmorite's answer informed defendants that, with less than a week remaining before the statute of limitations expired, defendants had not sued the premises' owner and more than eight months after deposition testimony confirmed that fact, then more than a year after the statute of limitations expired.

The notice provisions are not ambiguous. Nothing in their plain language suggests that 2(b) supersedes 2(a) or that 2(a) applies only to a claim after the policy period has expired.
Although 1 provides that "claims subsequently made against an insured arising out of that circumstance will be considered to have been made and reported during the policy period nothing in 1 suggests that the requirement to report circumstances that may give rise to a claim is limited to post-policy period claims. Coploff Aff. Ex. D § III(A) , at 8 (emphases omitted). Nor do  1's terms indicate any modification of  2(a).

Once they became aware of circumstances that might produce a claim, however, it is irrelevant whether eventually they learned of evidence regarding Wilmorite's relationship with the owner of Rowland's injury site that led to a reasonable, good faith belief in his right to recover from Wilmorite or to join the owner. between Wilmorite and the owner until the December 2007 deposition, 14 months after defendants became aware of a potential claim, obligating them to notify plaintiff within 60 days. By the time of the deposition, defendants already had  breached that policy requirement and lost entitlement to coverage."

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