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Stiefel v. Illinois Union Insurance Co.

OPINION FILED JULY 5, 1983.

JOHN STIEFEL, PLAINTIFF-APPELLANT,

v.

ILLINOIS UNION INSURANCE COMPANY, DEFENDANT-APPELLEE AND CROSS-APPELLEE — (FEDERAL KEMPER INSURANCE COMPANY, DEFENDANT AND CROSS-APPELLANT; COROON & BLACK OF ILLINOIS, INC., ET AL., DEFENDANTS).



Appeal from the Circuit Court of Cook County; the Hon. James C. Murray, Judge, presiding.

JUSTICE GOLDBERG DELIVERED THE OPINION OF THE COURT:

John Stiefel (plaintiff) brought this action against Illinois Union Insurance Company as successor in interest to GATX Insurance Company (defendant), Federal Kemper Insurance Company (Kemper), Coroon & Black of Illinois, Inc., Myers Beatty & Company and Holly Myers, alleging wrongful refusal to defend plaintiff in an attorney malpractice lawsuit. Defendant and Kemper moved for judgment on the pleadings. (Ill. Rev. Stat. 1981, ch. 110, par. 2-619.) Defendant's motion was granted. The trial court did not formally resolve Kemper's motion. Plaintiff filed a notice of appeal from the judgment for defendant. Kemper filed a cross-appeal. In this court, defendant's motion to dismiss Kemper's cross-appeal was denied. However, Kemper has failed to file a brief, and did not pursue its cross-appeal in any manner.

The pleadings show plaintiff is an attorney. He received a letter from attorney Richard Price, in behalf of several claimants, dated December 22, 1976, which stated in part:

"We have been retained by Larry LaCroix, Donna LaCroix, James York and Janis York to prosecute their claim for damages arising out of your advice, action and inaction surrounding the demise of Countryside Porsch & Audi, Inc.

Please refer this matter to your errors and omissions carrier. Unless I hear from them, suit will be filed on January 20, 1977."

On January 19, 1977, plaintiff responded to this letter. Plaintiff offered a detailed explanation of his activities regarding the transaction. Plaintiff concluded the losses "were not of his making" and he resented the "attempt to recoup the losses by making untrue allegations of professional malpractice." No lawsuit was filed against plaintiff on January 20, 1977. However, a malpractice suit was filed on February 3, 1978.

Plaintiff was covered by a professional malpractice insurance policy which was issued by GATX Insurance Company. The policy period was August 23, 1977, to August 23, 1978. The policy provided in part:

"This Policy applies to negligent acts, errors, omissions or offenses which occur anywhere in the world:

(a) during the policy period and then only if claim is first made during the policy period in which the negligent act, error, omission or offense occurred, or

(b) prior to the effective date of the Policy if claim is first made during the Policy period and providing no insured had knowledge nor could have reasonably foreseen any circumstance which might result in a claim at the effective date of the Policy and where there is no other valid and collectible insurance available to the insured for any such prior negligent act, error, omission or offense."

In addition the application for insurance made by plaintiff's law firm reveals the following question and negative response:

"Is the applicant after proper inquiry of each party proposed for insurance AWARE OF ANY CIRCUMSTANCE, ERROR, OMISSION OR OFFENSE WHICH MAY RESULT IN ANY CLAIM BEING MADE against the applicant, their/his predecessors in business or any of the present, past partners or employed lawyers? [] Yes [x] No If answered `yes,' give full details."

According to plaintiff's amended complaint, "as of 8-23-77 [plaintiff] was of the reasonable belief that the claim of Larry LaCroix, Donna LaCroix, James York, and Janis York [claimants], and their attorney * * * had been long forsaken and abandoned. The first knowledge by [plaintiff] that a claim was being pursued for malpractice was by the service of summons and complaint upon him in March, 1978." Plaintiff's amended complaint also alleged a judgment had been entered against plaintiff for $25,000 and that another suit was pending.

Plaintiff first argues the malpractice claim was clearly within the policy. Plaintiff contends the policy is a "discovery" or "claims made policy" as distinguished from an "occurrence policy." The former covers all allegedly negligent acts which are discovered and brought to the attention of the insurer during the policy period, no matter when the act occurred. The latter pertains only to acts which took place during the policy period. In this context, plaintiff argues the letter of December 22, 1976, was not a ...


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