Beale v. American National Lawyers Insurance Reciprocal

• Decision Date: 19 February 2004
• Docket Number: No. 87,87
• Parties: Eric BEALE, a minor, etc., et al. v. AMERICAN NATIONAL LAWYERS INSURANCE RECIPROCAL (Risk Retention Group).
• Court: Maryland Court of Appeals

843 A.2d 78

379 Md. 643

Eric BEALE, a minor, etc., et al. v. AMERICAN NATIONAL LAWYERS INSURANCE RECIPROCAL (Risk Retention Group).

No. 87, Sept. Term, 2002.

Court of Appeals of Maryland.

February 19, 2004.

Saul E. Kerpelman (Saul E. Kerpelman & Associates, P.A., on brief), Baltimore, for appellants.

J. Jonathan Schraub (Danny M. Howell, Schraub & Co., Chtd., on brief), McLean, VA, for appellee.

Argued before BELL, C.J., ELDRIDGE,¹ RAKER, WILNER, CATHELL, HARRELL and BATTAGLIA, JJ.

BELL, C.J.

This appeal from an order entering declaratory judgment presents the question whether, as a matter of law, in a legal malpractice action, the claims of each of five children allegedly injured as a result of the negligence of the same defendants, when consolidated for trial and, therefore, where all five of the claims are totally neglected, constitute a single claim under an insurance policy limiting the malpractice carrier's liability for damages to those "arising out of the same, related or continuing Professional Services without regard to the number of claims made, demands, suits proceedings, claimants, or Persons Insured involved."² The Circuit Court for Baltimore City concluded that they do. We shall reverse.

Between 1988 and 1990, Eric, Michael, Antoine, Dustin and Cynthia Beale (the Beale Children), the appellants, resided at premises, 1705 Holbrook Street in Baltimore City, in which, it was alleged, there was loose and flaking paint and which was cited for lead paint violations. During that time, and as a result of the alleged negligence of the landlord, each child was exposed to, and ingested, lead paint, sustaining an elevated blood lead level, as a result. The Beale Children's grandmother retained Mark E. Herman, Esq. and the firm with which he was associated, William G. Kolodner, P.A. (hereinafter, collectively, Kolodner, P.A.), to represent them in their attempt to recover for their injuries.

Kolodner, P.A. filed suit against Northern Brokerage Co. and Brokerage I., Inc., the owners and operators of 1705 Holbrook, the landlords, on behalf of the Beale children and their parents. The complaint, consisting of eighteen (18) counts, alleged in separate counts applicable to the Beale children, their mother and their father, negligence, breach of warranty, negligent misrepresentation, nuisance, unfair and deceptive trade practices and breach of contract. Thus, there were six counts relating to the Beale children, the claim of each Beale child being consolidated with the claims of all of the other Beale children. The claims of each individual child, as alleged was identical to the claims of all of the other children. Subsequently, noting the lack of any evidence as to the landlord's notice of the lead paint condition in the leased premises and on the issue of the causal connection between the alleged presence of lead-based paint in the dwelling and the alleged injury to the children, the trial court granted the landlords' motion for summary judgment and entered judgment in their favor.³ That judgment was affirmed by the Court of Special Appeals in an unreported opinion.

Subsequently, now represented by new counsel, the Beale children, by their grandmother and next friend, brought a malpractice action against Kolodner P.A. Although consolidated in one complaint, having a total of ten (10) counts, the claim of each of the children against the law firm and Herman was set forth in separate counts. In each count, the subject child alleged that, as a result of the total neglect of his or her attorney, as appropriate, Kolodner, P.A. and Herman, he or she was injured. More specifically, each count alleged that Kolodner, P.A. was negligent in:

"a. Failing to properly investigate, prepare, handle, prosecute, pursue and litigate the claims of the Plaintiff;

"b. Failing to adequately research the law as to lead paint poisoning actions;

"c. Agreeing to handle a legal matter which they knew or should have known they were not competent to handle;

"d. Failing to properly retain, hire and name expert witnesses, and to provide the opinions and reports of these expert witnesses pursuant to a Circuit Court Scheduling Order;

"e. Failing to properly respond to motions for summary judgment filed by the landlord;

"f. Failing to have Plaintiff evaluated psychometrically for the presence of brain damage resulting from his lead poisoning prior to recommending the said grossly inadequate settlement;

"g. Failing to conduct even the most rudimentary research in the medical literature to determine future consequences of the level of lead poisoning sustained by the Plaintiff."

Kolodner P.A. was insured, under a lawyers professional liability policy, by American National Lawyers Insurance Reciprocal (Risk Retention Group) (ANLIR), the appellee. That policy provided coverage of $ 1,000,000 per claim and $ 2,000,000 aggregate per policy period and that ANLIR would pay on behalf of its insured "all sums [the insured] shall become legally obligated to pay as Damages because of any [timely made] Claim to which this policy applies." With respect to the policy limits, it provided:

"The Per claim Limit of Liability stated in the Declarations Page is the limit of the Company's liability for all Damages arising out of the same, related or continuing Professional Services without regard to the number of claims made, demands, suits proceedings, claimants, or Persons Insured involved. If additional Claims are subsequently made and reported to the company and arise out of the same, related or continuing⁴ Professional Services as a claim already made and reported to the Company, all such claims, whenever made, shall be considered first made and reported within the Policy Period or Extended Reporting Period in which the earliest claim arising out of such Professional Services was first made and reported. All such Claims shall be subject to the Per Claim Limit of Liability applicable at the time the first Claim or act, error or omission was first reported to the Company.

"The Aggregate Limit stated in the Declarations Page is the limit of the Company's liability for all Damages arising out of Claims first made and reported to the Company during each Policy Period, or in the case of an Extended Reporting Period, the entire applicable Extended Reporting Period. The Aggregate Limit of Liability does not increase the Per Claim Limit of Liability for Claims arising out of the same, related or continuing Professional Services."

"Professional Services" were defined as

"Legal services which the Insured renders or fails to render, in his or her capacity as a lawyer, for or on behalf of one or more clients, arising from or within an attorney-client relationship."

A "claim," the policy states, is "a demand received by the insured for money, other than fines, penal sums or any other amount or item not otherwise included within the definition of Damage in this policy, including the service of suit or the institution of other proceedings against the insured."

Maintaining that, under its policy, the five Beale claims constituted but "one claim," ANLIR offered the appellants its per claim limit of $ 1,000,000.00. When the appellants rejected the offer, it filed this declaratory judgment action to resolve which limit of liability applied, the per claim or the aggregate. The legal malpractice action was stayed pending the result of the declaratory judgment action.

The Circuit Court entered summary judgment in favor of ANLIR.⁵ Agreeing with ANLIR that the claims of each one of the Beale Children and, therefore, the damages each claimed due to their attorneys' alleged malpractice, "arose out of the `same, related or continuing Professional Services, without regard to the number of Claims made, demands, suits, proceedings, claimants or Persons Insured involved,'" it declared, "[b]ased upon the undisputed material facts, and in accordance with caselaw cited by the parties, the Per Claim Limit of Liability of the Policy applies to all damages claimed by the Beales' claims against the Attorneys."

The Petitioner timely noted an appeal to the Court of Special Appeals. We granted certiorari, on the Court's own motion, before any proceedings in the intermediate appellate court. Beale v. Am. Nat'l, 371 Md. 613, 810 A.2d 961 (2002). We shall reverse the judgment of the Circuit Court for Baltimore City.

I.

In granting summary judgment, the trial court, noting that "[t]he alleged negligence [is] identical in all ten counts of the [malpractice] Complaint," and that the Beale children alleged their attorneys, "had[, and breached,] the same, identical duties as to the Beales," concluded that "the damages claimed by the Beales due to the Attorneys' alleged malpractice arose out of the `same, related or continuing Professional Services, without regard to the number of Claims made, demands, suits, proceedings, claimants or Persons Insured involved.'" It accordingly held that the per claim limit of liability applied to all damages claimed by the Beale children in the malpractice action. The court characterized as hypothetical and missing the point, the appellants' argument that the aggregate limit applied because the attorneys need not have been negligent as to all of their clients; they could have been negligent as to one or more, but not all. More relevant to the court was

"The Beales have not identified any professional service which the attorneys should have performed as to one or more of the Beales[, b]ut which they were not required to perform as to the others. In other words, the Beales have failed to show how the Attorneys' duty to render professional service to them differed in any [respect] whatsoever."

The Circuit Court relied on cases from our sister states, there being neither Maryland nor Tennessee⁶ cases on point. Atlantic Permanent Federal Savings and Loan Association v. American Casualty Co. of Reading, Pa., 839 F.2d 212 (4th Cir.1988); Gregory v. Home Ins....