Ohio Bar Liab. Ins. Co. v. Wallace

• Decision Date: 20 January 2022
• Docket Number: 110038
• Citation: 183 N.E.3d 638
• Parties: OHIO BAR LIABILITY INSURANCE COMPANY, Plaintiff-Appellee, v. Jason D. WALLACE, et al., Defendants-Appellants.
• Court: Ohio Court of Appeals

183 N.E.3d 638

OHIO BAR LIABILITY INSURANCE COMPANY, Plaintiff-Appellee,

v.Jason D. WALLACE, et al., Defendants-Appellants.

No. 110038

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

RELEASED AND JOURNALIZED: January 20, 2022

Cavitch, Familo & Durkin Co., LPA, and Gregory E. O'Brien, Cleveland, for appellee.

Daniel R. Bache, Akron, for appellants.

JOURNAL ENTRY AND OPINION

FRANK D. CELEBREZZE, JR., P.J.:

{¶ 1} Appellants Jason D. Wallace ("Wallace"), Daniel Bache ("Bache"), and Wallace and Bache, L.L.C. (collectively "appellants") challenge the trial court's judgment entry granting judgment on the pleadings and summary judgment in favor of appellee Ohio Bar Liability Insurance Company ("OBLIC") on OBLIC's complaint and appellants’ counterclaim, respectively. After a thorough review of the law and facts, we affirm the judgment of the trial court.

I. Factual and Procedural History

{¶ 2} Appellants are two individual Ohio attorneys and their limited liability company law firm, Wallace and Bache, L.L.C. Appellants’ legal practice involves representing students and their families in administrative law proceedings brought against the students’ schools under the Individuals with Disabilities Education Act, 20 U.S.C. 1400 et seq. ("IDEA").

{¶ 3} Between December 2014 and November 2016, appellants filed due process complaints under IDEA on behalf of certain students and their parents against the school boards of the schools the students attended ("the school board defendants"). Each of the school board defendants ultimately prevailed in the underlying IDEA due process suits brought against them by appellants and their clients.

{¶ 4} After prevailing in their respective IDEA suits brought against them by the appellants and their clients, each school board defendant filed a separate lawsuit in federal court against appellants (collectively the "suits"). The only relief sought in each of the suits is an award of reasonable attorney fees under IDEA, and each suit alleges that appellants’ underlying due process complaints were "frivolous, unreasonable, or without foundation," and/or that appellants continued to litigate their underlying cases after they had clearly become "frivolous, unreasonable, or without foundation," and/or that their cases were brought for an "improper purpose."

{¶ 5} The particular suits were brought by the Akron Board of Education, Cleveland Heights-University Heights School District Board of Education, Solon City School District Board of Education, Liberty Mutual Insurance Company, Nordonia Hills City School District Board of Education, Hylant Administrative Services, L.L.C. d.b.a. HAS Claims Service, Chippewa Local School District Board of Education, and Wadsworth City School District Board of Education. There was an additional federal lawsuit filed by Wesco Insurance Company that sought a declaratory judgment on a professional liability policy issued to Wallace and Bache's prior law firm, Roderick, Linton & Belfance L.L.P.

{¶ 6} Appellants presented each suit to OBLIC for defense and indemnity. OBLIC had issued a professional liability insurance policy to Wallace and Bache L.L.C. on August 9, 2016, and renewed it one year later. Bache and Wallace were each named as additional insureds on an endorsement to the policy. The policy provided the law firm and those qualifying as "insureds" under it with $100,000 of professional liability insurance coverage for all claims arising out of the same "Professional Services," subject to a $300,000 aggregate limit per policy year and a $1,000 deductible. Coverage under the policy was provided on a "claims made and reported" basis.

{¶ 7} The policy provides, in pertinent part:

I. Coverage

To pay on behalf of the Insured all sums which the Insured shall be legally obligated to pay as money damages because of any "Claim" first made against the Insured and reported in writing to the Company during the "Policy Period," pursuant to Condition VI of this policy, and caused by:

(a) an act, error, or omission of the Insured or any person for whose acts, errors or omissions the Insured is legally liable, in rendering or failing to render "Professional Services" for others in the Insured's capacity as a lawyer or Notary Public;

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and except as otherwise excluded or limited by the other terms, conditions and exclusions of this policy;

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VI. Notice of Claim or Suit or Potential Claim

Upon the Insured's becoming aware of any acts, errors, or omissions which would reasonably be expected to be the basis of a "Claim" or suit covered hereby, written notice shall be given by or on behalf of the Insured to the Company or any of its authorized agents as soon as practicable, together with the fullest information obtainable

{¶ 8} The policy defines certain terms as follows, under the section labeled "Definitions":

(b) "Claim" means "a demand received by the Insured for money damages, including the service of suit or institution of arbitration or other alternative dispute resolution proceedings, against the Insured. A "Claim" shall be considered first made and reported when the Company receives written notice of the "Claim" or of any event which could reasonably be expected to give rise to a "Claim" in accordance with Condition VI.

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(e) "Effective Date" means "the date on which coverage became effective under the first policy issued by the Company, provided the same or substantially similar coverage has been in force continuously without interruption under this or any prior policies issued by the Company."

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(g) "Policy Period" means, "the period of time between the inception time and date shown in the Declarations and the time and date of termination, expiration or cancellation of coverage for the Named Insured, or the date that any other Insured is deleted from the policy, and specifically excludes any "Extended Reporting Period."

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(i) "Professional Services," include "all services or activities performed by or on behalf of the Insured in a lawyer-client capacity."

{¶ 9} The policy provides as follows with regard to defense rights and responsibilities between the insurer and the insured:

III. Defense and Settlement

With respect to such insurance as is afforded by this policy, the Company shall defend any "Claim" or suit against the Insured alleging such act, error, or omission and seeking money damages which are payable under the terms of this policy, and defend any "Claim" or suit seeking money damages arising out of "Advertiser's Liability" in connection with the Insured's advertising of legal services. However, the Company shall not be required to defend any such "Claim" or suit arising solely out of an alleged act, error, or omission for which coverage is excluded by the terms, conditions and exclusions of this Policy.

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{¶ 10} With regard to exclusions, the policy states:

This policy does not apply:

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(i) to any "Claim":

1. arising out of any act, error, or omission occurring prior to the "Effective Date" of this policy if the Insured knew or could have reasonably foreseen prior to the "Effective Date" that such act, error, or omission might result in any "Claim" or suit; or

* * *

(n) to any "Claim" for money damages for:

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2. restitution, fines, penalties, sanctions or any award of attorney's fees imposed against any Insured, and/or any other person or entity under any one or more of the following: Rule 11 of the Federal Rules of Civil Procedure, Rule 11 of the Ohio Rules of Civil Procedure, Ohio Revised Code Section 2323.51 (the "frivolous conduct" statute), or under any other federal, state or local statute or rules of procedure or common law designed to deter frivolous conduct by any party or attorney engaged in litigation.

{¶ 11} In addition, the policy contains an "Exclusion of Prior Acts Endorsement," which specifically excludes coverage for any "act error or omission" involving Wallace and/or Bache that occurred prior to April 30, 2016. Further, the policy also includes an endorsement captioned, "Exclusion of Coverage for Specific Claims or Incidents" that specifically excludes the Akron School Board suit from coverage.

{¶ 12} OBLIC reviewed the suits and denied coverage for each. During one of the suits by the Cleveland Heights-University Heights School Board, the federal judge assigned to the matter sent a letter to OBLIC, stating that it may have a duty to defend appellants and ordered it to appear at a case-management conference. As a result of this letter and order, OBLIC filed suit against appellants, seeking the following declarations:

1. The Policy provides no professional liability coverage to Bache, for the claims alleged against him in the Akron Suit, or that such claims are excluded, or barred due to the failure to fulfill a policy condition, and that OBLIC owes no duty to defend or indemnify Bache against any claims asserted against him by Akron in the Akron Suit.

2. The Policy provides no professional liability coverage to Bache, Wallace or the Law Firm for the claims alleged in the Nordonia Suit, or that such claims are excluded, or barred due to the failure to fulfill a policy condition, and that OBLIC owes no duty to defend or indemnify the Law Firm Defendants against any claims asserted against them by Nordonia or Liberty in the Nordonia Suit.

3. The Policy provides no professional liability coverage to Bache, Wallace or the Law Firm for the claims alleged in the Solon Suit, or that such claims are excluded, or barred due to the failure to fulfill a policy condition, and that OBLIC owes no duty to defend or indemnify the Law Firm Defendants against any claims asserted against them by Solon or Hylant in the Solon Suit.

4. The Policy provides no professional liability coverage to Bache, Wallace or the Law Firm for the claims alleged in the First Heights Suit, or that such claims are excluded, or barred due to the failure to fulfill a policy condition, and that OBLIC owes no duty to defend or indemnify the Law Firm Defendants against any claims

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