Cancellation notice not ambiguous -- Missouri law

In Hatfield v. Barton Mutual Insurance Company, the insured, Hatfield, had several properties insured with Defendant Barton.  The trial court entered summary judgment for plaintiff on a fire insurance claim, finding defendant’s cancellation notice “ambiguous in that it failed to specify which of the plaintiff’s multiple properties, insured with defendant, was intended by defendant to be cancelled.” That notice specified, by policy number, a single policy covering only the house that burned and no others.  The cancellation notice was not ambiguous simply because it did not identify the property by address.  Thus, summary judgment to the insured was reversed. 

Duty to Defend -- internet check scam -- professional liability policy

In Lombardi v. American Guarantee, the plaintiff lawyers fell for an email scam where it was contacted to deposit a check  and then remit it to other parties less their fees.  After the check cleared, it was determined to be a counterfeit and the plaintiff lawyers were required to make it good to the bank.  The lawyer's insurer did not participate in the settlement of the claims between the insureds lawyers and the bank, claiming there was no coverage.

The insurance policy issued by defendant provided coverage for any claim "based on an act or omission in [plaintiff's] rendering or failing to render Legal Services for others." "Legal Services" is defined by the policy as "those services performed by an Insured as a licensed lawyer in good standing . . . or in any other fiduciary capacity but only where the act or omission was in the rendition of services ordinarily performed as a lawyer." The terms of this policy encompass more than what would traditionally be considered "legal malpractice" (see United States Fid. & Guar. Co. v U.S. Underwriters Ins. Co., 194 AD2d at 1029).

  The court found that when dealing with the Bank, the lawyers were performing legal services as defined by the policy.  The policy did not require that the lawyers perform services for a client (who in this case was an impostor); only that the lawyer perform legal services for others.  Holding money for others and paying it on demand is part of legal services that attorneys provide routinely.   

The only remaining element under the policy's coverage definition is whether the claim was "based on" plaintiff's actions in rendering legal services to others.  The phrases "based on" and "arising out of" are practically synonymous in the insurance coverage context (see Mount Vernon Fire Ins. Co. v Creative Hous., 88 NY2d 347, 352 [1996]). The latter phrase "requires only that there be some causal relationship between the injury and the risk for which coverage is provided" (Maroney v New York Cent. Mut. Fire Ins. Co., 5 NY3d 467, 472 [2005]).  Of course, since the court used such a broad definition, this element was found to be met.

The contractual liability exclusion did not apply, and the insurer had a duty to defend.  The case was remanded to determine if there was also a duty to indemnify.


New Law Requires Insurers to Help State Collect Child Support

Beginning November 1, 2007, insurance companies must check with the Oklahoma Department of Human Services before paying any claim of $500.00 or more.  If the claimant owes child support, any amounts owed must be subtracted from any amounts paid to the claimant.  The child support lien is inferior to any lien or claim for 1.  Services and expenses documented and related to the claim, such as attorney fees or health care expenses;  2. Damage to or a loss of real property; or 3. Damage to or a loss of a motor vehicle to the extent that it would be exempt from claims of general creditors pursuant to Section 1 of Title 31 of the Oklahoma Statutes.

Failure to clear the payment with the State of Oklahoma can result in both fines and imprisonment.  The statute is 56 O.S. § 237B