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Certain Underwriters At Lloyd's, London v. Johnson & Bell

May 24, 2011

CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, PLAINTIFF,
v.
JOHNSON & BELL, LTD., GLENN F. FENCL, AND RICHARD R. GORDON, DEFENDANTS.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:

MEMORANDUM OPINION AND ORDER

Plaintiff Certain Underwriters at Lloyd's, London has sued defendant law firm Johnson & Bell, Ltd. and two Johnson & Bell attorneys, alleging state law claims for malpractice relating to two underlying insurance cases. Defendants have moved to dismiss plaintiff's complaint on the basis of Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons stated below, the Court grants defendants' motion in part, denies it in part, and defers determination of two aspects of the motion.

Background

The Court takes the following facts from the allegations in plaintiff's complaint. The Court accepts those allegations as true for purposes of the motion to dismiss. See Hallinan v. Fraternal Order of Police of Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009).

Plaintiff is an insurance syndicate consisting of members who are authorized to underwrite and insure risks with Lloyd's, London. Plaintiff subscribed to an insurance policy issued to "Franklin Construction Company" (FCC) for a one year term beginning on March 8, 2007. Phillip Koerner executed the application on behalf of FCC. In April 2008, plaintiff received notice of a civil lawsuit filed in the Circuit Court of Cook County, Illinois by Paul Lewis against Koerner and Franklin Construction and Development, Inc. (the Lewis lawsuit). In February 2009, plaintiff received notice of a civil suit filed in the same court by Christine Zarndt against Koerner and Franklin 1631 Milwaukee, LLC (the Zarndt lawsuit). Plaintiff retained the services of the law firm of Johnson & Bell to analyze plaintiff's coverage responsibilities in the Lewis and Zarndt lawsuits and to prepare and file complaints for declaratory judgment as necessary in connection with both suits.

Plaintiff asserts state law malpractice claims against defendants relating to their representation of plaintiff in connection with the Lewis and Zarndt lawsuits. With respect to the Lewis lawsuit, plaintiff alleges that:

- defendants negligently advised plaintiff that it had a duty to provide representation in the lawsuit;

- plaintiff undertook the representation as a result of that legal advice; - defendants recommended approximately eight months later that plaintiff instead deny coverage and file a declaratory judgment action; - defendants included inaccurate and detrimental factual allegations in the Lewis declaratory judgment action;

- defendants negligently failed to include FCC as a defendant in the Lewis declaratory judgment action; and

- defendants' conduct forced plaintiff to hire replacement counsel and incur unnecessary attorney's fees.

Compl. ¶¶ 19-38, 51. With respect to the Zarndt lawsuit, plaintiff alleges that:

- defendants negligently advised plaintiff that it had a duty to provide representation in the lawsuit;

- plaintiff undertook the representation as a result of that legal advice; - defendants included inaccurate and detrimental factual allegations in the

Zarndt declaratory judgment action; - defendants negligently failed to include FCC as a defendant in the Zarndt declaratory judgment action; and - defendants' conduct forced plaintiff to retain replacement counsel and incur unnecessary attorney's fees.

Id. ΒΆΒΆ ...


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