Dubovich v. Travelers Cas. & Sur. Co. of Am.
| Decision Date | 30 March 2016 |
| Docket Number | CAUSE NO: 2:15-CV-278 |
| Parties | LEVY & DUBOVICH, DEBRA LYNCH DUBOVICH, and JUDY LEVY ADLER Plaintiffs, v. TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA Defendant. |
| Court | U.S. District Court — Northern District of Indiana |
Plaintiffs, the law firm of Levy & Dubovich ("the Firm") and individual attorneys, Debra Lynch Dubovich, and Judy Levy Adler (collectively, "the Plaintiffs") filed the present declaratory judgment suit after their professional liability insurance carrier, Defendant Travelers Casualty and Surety Company of America ("Travelers"), refused to defend and provide coverage for matters the Plaintiffs contend fall within the professional liability policy provisions.
Before the Court are Cross-Motions for Summary Judgment by the parties. For the following reasons, the Plaintiffs' Motion for Summary Judgment [DE 7] will be DENIED. Travelers' Cross-Motion for Summary Judgment [DE 11] will be GRANTED.
The underlying facts leading to this action are largely undisputed. The Firm is a legal partnership located in Lake County, Indiana. Judith Levy Adler ("Adler") and Debra Lynch Dubovich ("Dubovich") were partners in the Firm. Travelers is an insurance company licensed to do business in Indiana.
Travelers issued a policy of insurance to the Plaintiffs that provided Professional Liability Coverage ("the Policy") to the Plaintiffs from February 1, 2014 through February 1, 2015. Subject to all of its terms, conditions, and exclusions, the Policy's Insuring Agreement states, in relevant part, 1 (Policy at p. 1). The Policy defines Claim as "a civil proceeding commenced by service of a complaint or similar pleading" against any Insured for a Wrongful Act. A Claim is deemed made "on the earliest date such notice thereof is received by any Principal Insured." (Id. at 2).
The term Wrongful Act is defined in the Policy as follows:
The Policy defines Professional Services to include various legal services performed by or with the consent of the named insureds by lawyers, law clerks, paralegals, legal secretaries, involving legal, arbitration, mediation, lobbying services, etc. More specifically, the term Professional Services means:
The controverted issue in this case, involves the portion of the Policy that provides for an Automatic Extended Reporting Period ("AERP") to take effect, in certain circumstances, at the termination of the Policy Period. The Policy states as follows, in relevant part, with respect to the AERP:
If this policy is cancelled or not renewed, the [AERP] applies without additional premium effective the date such policy is cancelled or not renewed. The [AERP] applies to Claims made and reported to the Company during the [AERP], but only for Wrongful Acts committed wholly prior to the effective date this policy is cancelled or not renewed, and which otherwise would be covered. A Claim made during the [AERP] will be deemed to have been made on the last day of the Policy Period.
(Policy at p. 5). AERP is defined to mean "the period of time beginning with the effective date [the Policy] is cancelled or not renewed" and ending the earlier of "(1) 60 days after such cancellation or nonrenewal takes effect; or (2) the date any other policy obtained by the Named Insured that provides similar coverage for Professional Services takes effect." (Policy at p. 5)
On January 16, 2015, the Firm filed a collection action in Indiana state court against Cathy M. Djuric ("Djuric"), seeking to recover attorney fees and costs Djuric allegedly owed it. Shortly thereafter, on January 19, 2015, Travelers advised the Plaintiffs that the Policy would not be renewed due to "excessive fee suit activity." (Complaint, Exh. B).
Following that notice, the Plaintiffs sought and obtained professional liability insurance from Hanover Insurance Group, under policy no. LHC A54081600 (the "Hanover Policy"). The Hanover Policy was effective for the policy period of February 1, 2015 to February 1, 2016, and insured the Firm for wrongful acts in the rendering of or failure to render professional services. There is no dispute that the definition of "professional services" in the Hanover Policy and the Policy issued by Travelers is similar. However, the Hanover Policy, contained an exclusion endorsement for any suits arising out of or related to claims for fees brought by the Firm. This exclusion did not exist in the Travelers' Policy. It is this exclusion that creates the central issue presented in this case, that is, whether the Hanover Policy can be considered "similar coverage" for purposes of the AERP when it contains such an exclusion.
On February 24, 2015, after the effective date of the Hanover Policy, but before the AERP would have expired under the Policy, Djuric filed a counterclaim ("the Djuric Counterclaim") against the Firm alleging, among other things, that the Firm committed legal malpractice.
On March 4, 2015, the Firm first reported the Djuric Counterclaim to Travelers and requested coverage under the Policy. On March 13, 2015, Travelers advised the Firm by letter that the Policy does not provide coverage for the Djuric Counterclaim because the claim was not made during the policy period or made and reported to Travelers during any applicable AERP. Traveler's position is that the acquisition of the Hanover Policy was similar coverage sufficient to terminate the AERP.
Rule 56(a) authorizes the court to grant summary judgment when there is "no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The court is required to enter summary judgment "after adequate time fordiscovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
The above notions apply equally where, as here, opposing parties each move for summary judgment in their favor pursuant to Rule 56. I.A.E., Inc. v. Shaver, 74 F.3d 768, 774 (7th Cir.1996). Indeed, the existence of cross-motions for summary judgment does not necessarily mean that there are no genuine issues of material fact. R.J. Corman Derailment Serv., Inc. v. Int'l Union of Operating Eng'rs., 335 F.3d 643, 647 (7th Cir.2003). Rather, the process of taking the facts in the light most favorable to the non-movant, first for one side and then for the other, may reveal that neither side has enough to prevail without a trial. Id. at 648. "With cross-motions, [the court's] review of the record requires that [the court] construe all inferences in favor of the party against whom the motion under consideration is made." O'Regan v. Arbitration Forums, Ins., 246 F.3d 975, 983 (7th Cir.2001) (quoting Hendricks-Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir.1998)). The court may not make credibility determinations, weigh the evidence, or decide which inferences to draw from the facts. Payne v. Pauley, 337 F.3d 767, 770 (7th Cir.2003) (); Hemsworth, 476 F.3d at 490. Instead, when ruling on a summary judgment motion, a court's responsibility is to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial. Id.
Insurance policies typically impose dual obligations on the insurer: the duty to indemnify the insured against damages or losses, and the duty to defend against claims for damages. Because an insurance policy is a contract for insurance, it is governed by the same rules of construction as other contracts. Briles v. Wausau Ins. Cos., 858 N.E.2d 208, 213 (Ind.Ct.App.2006) (citing Gregg v. Cooper, 812 N.E.2d 210, 215 (Ind.Ct.App.2004).2 As with other contracts, their interpretation is a question of law. Briles, 858 N.E.2d at 213.
When interpreting an insurance policy, the goal is to ascertain and enforce the parties' intent as manifested in the insurance contract. Id. In reviewing policy terms, the court construes them from the perspective of an ordinary policyholder of average intelligence. Allgood v. Meridian Sec.Ins.Co., 836 N.E.2d 243, 246-47 (quoting Burkett v. Am. Family Ins. Group, 737 N.E.2d 447, 452 (Ind.Ct.App.2000)). Where an...
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