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Hartford Casualty Insurance Co. v. Moore

August 10, 2010

HARTFORD CASUALTY INSURANCE COMPANY, PLAINTIFF/COUNTER-DEFENDANT,
v.
FRED MOORE, AN INDIVIDUAL, HELEN OGAR, AN INDIVIDUAL, KEVIN JACOBS, AN INDIVIDUAL, BETTY POTASNAK, AN INDIVIDUAL, VICKI COOK MUHS, AN INDIVIDUAL, PK MANAGEMENT CO. INC., AN ILLINOIS CORPORATION, LAWRENCE MOORE & OGAR, SUCCESSOR IN INTEREST TO LAWRENCE MOORE OGAR & JACOBS, AND PAUL LAWRENCE, AS SPECIAL ADMINISTRATOR OF THE ESTATE OF WILLIAM LAWRENCE, DECEASED, DEFENDANTS/COUNTER-PLAINTIFFS, AND LAWRENCE MOORE & OGAR, SUCCESSOR IN INTEREST TO LAWRENCE MOORE OGAR & JACOBS, FRED MOORE, AN INDIVIDUAL, HELEN OGAR, AN INDIVIDUAL, KEVIN JACOBS, AN INDIVIDUAL, THIRD-PARTY PLAINTIFFS,
v.
TARA CONKLIN AND SNYDER & SNYDER AGENCY, INC., THIRD-PARTY DEFENDANTS.



The opinion of the court was delivered by: Joe Billy McDADE United States Senior District Judge

ORDER & OPINION

This matter is before the Court on Hartford Casualty Insurance Company's ("Hartford") Motion for Summary Judgment as to Count I of its Amended Complaint for Declaratory Judgment (Doc. 48). For the reasons stated below, Hartford's Motion for Summary Judgment is granted.

LEGAL STANDARD

Summary judgment should be granted where "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). In ruling on a motion for summary judgment, the Court must view the evidence on record in the light most favorable to the non-moving party. SMS Demag Aktiengesellschaft v. Material Sciences Corp., 565 F.3d 365, 368 (7th Cir. 2009). All inferences drawn from the facts must be construed in favor of the non-movant; however, the Court is not required to draw every conceivable inference from the record. Smith v. Hope School, 560 F.3d 694, 699 (7th Cir. 2009). The Court draws only reasonable inferences. Id.

It is not the Court's function to scour the record in search of evidence to defeat a motion for summary judgment. Cracco v. Vitran Exp., Inc., 559 F.3d 625, 632 (7th Cir. 2009) (quoting Greer v. Bd. of Educ., 267 F.3d 723, 727 (7th Cir. 2001)). Once the movant has met its burden of showing the Court that there are no genuine issues of material fact, to survive summary judgment the "non-movant must show through specific evidence that a triable issue of fact remains on issues on which [s]he bears the burden of proof at trial." Warsco v. Preferred Tech. Group, 258 F.3d 557, 563 (7th Cir. 2001) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). If the evidence on record could not lead a reasonable jury to find for the non-movant, then no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law. McClendon v. Indiana Sugars, Inc., 108 F.3d 789, 796 (7th Cir. 1997). At the summary judgment stage, however, the court may not resolve issues of fact; disputed material facts must be left for resolution at trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986).

BACKGROUND

I. Factual Background

From January 1, 2005 to November 1, 2008, Lawrence, Moore, Ogar & Jacobs ("LMOJ"),*fn1 was a partnership of attorneys in Bloomington, Illinois; Fred Moore, Helen Ogar, and Kevin Jacobs were partners in the firm, and William Lawrence, now deceased and represented here by Paul Lawrence, the special administrator of his estate, was of counsel (LMOJ and these attorneys referred to collectively as the "LMOJ parties"). (Ogar Aff. at ¶ 2).

Hartford, through Snyder & Snyder Agency, Inc., and its employee Tara Conklin (Snyder & Snyder Agency, Inc. and Tara Conklin referred to collectively as the "Snyder parties"), issued a liability insurance policy, number 83 SBA UP6298, to LMOJ with a retroactive date of December 21, 2006 and extending to December 21, 2007, which was renewed on December 21, 2007, to extend to December 21, 2008. (Doc. 71 at ¶ 8). This policy provides that Hartford shall pay on behalf of the "insured" all sums in excess of the deductible which the "insured" shall become legally obligated to pay as "damages" by reason of any act, error, or omission, including "claims" arising out of "personal injury", committed or alleged to have been committed prior to the end of the 'policy period' and subsequent to the "retroactive date." (Pltf's Ex. B. at Professional Liability Coverage Form § I(A)). "Retroactive date," in turn, is defined as "the date specified in the Declarations.on or after which an act, error, omission, or 'personal injury' must have occurred in order for any 'claim' or any notification given to [Hartford].arising from such act, error, omission, or 'personal injury' to be covered under this Coverage Form." (Pltf's Ex. B at Professional Liability Coverage Form § I(B)). The retroactive date provided in the Declarations is December 21, 2006. (Pltf's Ex. B at Lawyers' Professional Liability Declarations).

At the time the policy was issued, Snyder & Snyder Agency was under an agency agreement with Hartford.*fn2 (Doc. 71 at ¶ 10). In or before December 2006, Hartford initiated a marketing campaign that entailed developing a number of "leads" for possible professional liability coverage clients in the central Illinois area, including LMOJ. (Doc. 57 at 16 ¶¶ 9-10). Around July 2006, Hartford provided a lead regarding LMOJ to Snyder & Snyder Agency, and around September 2006, Hartford prepared a "prospecting letter" to be mailed by Snyder & Snyder Agency to LMOJ to attempt to sell LMOJ professional liability coverage; Snyder & Snyder Agency mailed this letter to LMOJ. (Doc. 57 at ¶¶ 11-13). Conklin advised Ogar that a retroactive date of December 21, 2006, would provide legal malpractice coverage for the attorneys in the firm back to the time they became licensed to practice law and for the firm since its inception, as requested by the LMOJ parties. (Ogar Aff. at ¶ 7). Ogar relied on Conklin's representation in accepting the policy with December 21, 2006 as the retroactive date. (Ogar Aff. at ¶ 8). LMOJ paid its insurance premium directly to Hartford. (Ogar Aff. at ¶ 9).

On March 17, 2008, Betty L. Potasnak, Vicki Cook Muhs, and PK Management Co., Inc. ("Potasnak plaintiffs") filed a legal malpractice suit ("Potasnak suit") against the LMOJ parties in the Seventh Judicial Circuit of Sangamon County, Illinois, alleging that Jacobs and LMOJ had failed to properly prosecute three appeals on behalf of the Potasnak plaintiffs, and that they had been damaged in excess of $50,000 by the resulting adverse judgment. (Pltf's Ex. A). The actions by the LMOJ parties surrounding these appeals took place in 2005 and 2006, ending July 27, 2006. (Pltf's Exs. H-K). On April 11, 2008, the LMOJ parties tendered their defense in the Potasnak malpractice suit to Hartford, and, on May 15, 2008, Hartford denied defense and indemnity. (Doc. 55 at ¶¶ 21-22; Doc. 62 at ¶¶ 21-22).

II. Procedural Background

Hartford filed its Complaint for Declaratory Judgment against Fred Moore, Helen Ogar, Kevin Jacobs, Paul Lawrence, as Special Administrator of the Estate of William Lawrence, Lawrence Moore & Ogar, successor in interest to Lawrence Moore Ogar & Jacobs, Betty Potasnak, Vicki Cook Muhs, and PK Management Co., Inc., in this Court on December 1, 2008; it filed its Second Amended Complaint on February 12, 2010.*fn3 (Docs. 1 & 55). Hartford sought a declaration that it had no duty to defend or indemnify the LMOJ parties in the Potasnak suit. In each of its Complaints, Hartford alleged that it has no duty to defend or indemnify the LMOJ parties (1) because the conduct of which the Potasnak plaintiffs complained occurred prior to the policy's retroactive date, (2) because the LMOJ parties knew or could have foreseen, as of the policy's effective date, that the conduct of which the Potasnak plaintiffs complained could result in the basis of a claim, and (3) because the LMOJ parties made misrepresentations in their application to Hartford by failing to disclose the facts out of which the Potasnak suit arose. (Doc. 55). It is this first argument that is the subject of Hartford's instant Motion for Summary Judgment. (Doc. 48).

On July 16, 2009, the LMOJ parties filed a Counterclaim against Hartford, alleging that the policy, as issued, is the product of a mutual mistake of fact between the parties, and should be reformed; in response to Hartford's Second Amended Complaint, they repled the Counterclaim with the same allegations on February 26, 2010. (Docs. 40 & 62). Specifically, the Counterclaim alleges that LMOJ informed the Snyder parties, who were acting as Hartford's agents, that they needed an insurance policy to cover any acts of legal malpractice since the time the firm's partners were licensed to practice law, as well as for the firm since its inception, and that Hartford, acting through the Snyder parties, informed LMOJ that both of these requirements would be met by a December 21, 2006 retroactive date. (Doc. 62 at ΒΆΒΆ 2-6, 10). On January 20, 2010, the Court denied Hartford's Motion to Strike and Dismiss the Counterclaim. (Doc. 47). Hartford had argued that it was not pled sufficiently under Rule ...


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