Insurer not liable for $1M law firm judgment for turning over child's passport, federal judge rules
A New Jersey law firm’s malpractice insurance carrier doesn’t have to pay a state-court judgment of nearly $1 million that is linked to a parental-kidnapping case, a federal judge has ruled.
Granting a summary judgment motion in the declaratory judgment action, U.S. District Judge Esther Salas found that the law firm conduct at issue occurred outside the policy period.
The state-court judgment against the law firm revolves around a child’s passport which—by agreement between counsel for Peter Innes and the law firm representing his former wife, Maria Jose Carrascosa—was to be held in trust by her counsel. However, when Lesnevich & Marzano-Lesnevich took over the divorce case, the firm, unaware of the agreement, turned the passport over to Carrascosa. She used it to transport the couple’s daughter to her home country of Spain, where the girl now lives with her maternal grandparents.
Innes sued Lesnevich & Marzano-Lesnevich for breaching its duty by turning over the passport and won a $1.4 million judgment at a 2011 jury trial, which was subsequently reduced on appeal to $700,000 plus attorney’s fees of nearly $300,000. It appears that a state supreme court appeal, limited to the issue of appropriate attorney’s fees in the case, is still ongoing.
A January 2006 letter from counsel for Innes put Lesnevich & Marzano-Lesnevich on notice—months before a malpractice insurance policy took effect in October 2006—of the underlying litigation that led to the $1 million judgment, Salas found. Because the insurance covered only claims made during the October 2006 to October 2007 policy period, it didn’t apply to the judgment.
Plus, even if the letter didn’t constitute notice, the judge said, an exclusion in the law firm’s policy precluded coverage for acts that occurred prior to the policy period if the policyholder had “knowledge of any suit, or any act or error or omission, which might reasonably be expected to result in a claim or suit as of the date of signing the application for this insurance.”
It isn’t clear from the federal court opinion or news coverage about the case why litigation seeking to force Lesnevich & Marzano-Lesnevich’s insurer to pay the $1 million judgment didn’t focus on an earlier malpractice policy, if one existed.
The opinion says partner Walter Lesnevich called the state court suit “frivolous” in a January 2006 letter responding to Innes’ counsel. He later described the litigation as “ridiculous” and “likely to be dismissed” in a November 2007 letter to the firm’s insurance carrier.
Lesnevich also wrote that his firm would “defend it ourselves, execute any waiver the carrier wishes, and will be liable for judgment, if any.” In the declaratory judgment case, Innes argued that the firm couldn’t disclaim its malpractice insurance. But Salas did not reach that issue because she found the policy didn’t apply.
The case is Peter Innes v. Saint Paul Fire and Marine Insurance Company and Travelers Companies, Inc., No. 12-234.
Related coverage:
New Jersey Advance Media: “Insurance doesn’t have to pay $1.4M over law firm’s mistake in custody dispute”
New Jersey Law Journal (sub. req.): “Insurer Off Hook for $1.4M Judgment Against NJ Firm”
The Record : “Mother in bitter Bergen County child-custody case is freed after 8 years in jail”
