Contract Law

Lawyers who didn't notify insurance carrier of 'nuisance case' lose coverage appeal

Husband-and-wife West Virginia lawyers who practiced together in the same Charleston firm initially didn’t report to their insurance carrier what they subsequently described as a pro se “nuisance case” over a $290,000 check that the plaintiff said was wrongfully issued to one of the firm’s attorneys.

But after the plaintiff, who was a former client, got a lawyer and filed an amended complaint against law firm Tabor Lindsay and Associates later in 2008, the firm hired defense counsel on its own. Not until 2010 did Dr. Richard D. Lindsay, his wife Pamela Tabor Lindsay notify their insurance carrier of the claim, however, and that omission eliminated any obligation that their carrier, Attorney Liability Protection Services Inc., could otherwise have had to indemnify them and their law firm for the cost of the malpractice case, the West Virginia Record reports.

Notification of the insurer within the same policy year was mandated by “plainly worded policy requirements” of the claims-made-and-reported policy, the state supreme court pointed out in an April 25 opinion.

The Lindsays had argued that they did promptly notify the carrier soon after a second amended complaint in the malpractice case was filed in 2010. However, the court found that ALPS correctly denied coverage because the facts on which the amended complaint was based were the same facts on which the two prior complaints were based.

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