Appeal from the Circuit Court of Cook County. No. 08 CH 25568 Honorable Stuart E. Palmer,Judge Presiding.
The opinion of the court was delivered by: Justice Rochford
JUSTICE ROCHFORD delivered the judgment of the court, with opinion. Presiding Justice Hall and Justice Hoffman concurred in the judgment and opinion.
¶ 1 Defendants-appellants, Howard Hoffman & Associates, a law firm, Howard Hoffman and Gerald H. Cohen, lawyers (collectively, the Hoffman defendants), and the estate of Thomas Goldston, Darlene Waters, administrator (Goldston Estate), have appealed from an order entering summary judgment in favor of the Hoffman defendants' legal professional liability insurer, plaintiffappellee Continental Casualty Company (Continental). In this action for declaratory judgment, Continental sought a determination that it's indemnity obligation to the Hoffman defendants with respect to a number of underlying claims and lawsuits was limited to a $100,000 policy limit for multiple claims that are considered "related" under the liability policy rather than a $300,000 aggregate policy limit for multiple claims that are unrelated.
¶ 2 In appeal No. 1--10--0957, the Hoffman defendants assert that the circuit court improperly found that their Continental insurance policy provided only $100,000 in coverage for the underlying claims and lawsuits. In appeal No. 1--10--1080, the Goldston Estate makes similar arguments while also maintaining that Continental's declaratory judgment action was improperly premature because liability had not yet been determined in its underlying suit against the Hoffman defendants. These two appeals have now been consolidated, and for the following reasons we affirm.
¶ 4 Continental filed its initial complaint for declaratory judgment in July of 2008. In an amended complaint filed in March of 2009, Continental generally alleged that it had issued a lawyer's professional liability policy insuring the Hoffman defendants and covering the period from December 30, 2005, to December 30, 2006. In a letter dated February 1, 2006, the Hoffman defendants informed Continental that one of the non-lawyer employees of the Howard Hoffman & Associates law firm, Ms. Judith Stachura, had "embezzled significant funds" from at least 16 probate estates that were represented by the firm. Continental further alleged that claims for losses resulting from this embezzlement had been asserted against the Hoffman defendants by 12 of these estates, including claims made by 3 estates in the circuit court of Cook County. These included claims made in the following actions: (1) Estate of Fannie McAllister v. Law Offices of Howard Hoffman & Associates, et al., No. 2007--L--013531 (Cir. Ct. Cook Co.) (McAllister estate); (2) Estate of Darnell Chaney, No. 2005--P--3453 (Cir. Ct. Cook Co.) (Chaney estate); and (3) Estate of Thomas Goldston v. Law Offices of Howard Hoffman & Associates, et al., No. 2008--CH--03280 (Cir. Ct. Cook Co.) (Goldston estate).
¶ 5 The amended complaint also asserted that the Hoffman defendants had informed Continental that total losses from Ms. Stachura's embezzlement were expected to exceed $300,000. Furthermore, a dispute had arisen between Continental and the Hoffman defendants regarding the parties' respective rights and obligations under the liability policy issued by Continental, which contained a "per claim" liability limit of $100,000 and an "aggregate" limit of $300,000. Continental contended that a single $100,000 limit applied to all claims arising out of Ms. Stachura's embezzlement scheme, while the Hoffman defendants contended that it faced multiple, unrelated claims and that the $300,000 aggregate policy limit therefore applied.
¶ 6 Finally, Continental's complaint alleged that its claim expenses would reduce the amount of insurance coverage available to pay damages to the estate claimants under the terms of its policy. Therefore, the Hoffman defendants assumed their own defense pursuant to an agreement under which Continental would pay a single, per-claim limit of $100,000, less previously incurred claim expenses, and both Continental and the Hoffman defendants would reserve their right to seek a judicial determination as to the actual amount of coverage available under the policy. Pursuant to that agreement, Continental's complaint sought a declaration that it only had $100,000 of liability under its policy and had therefore fulfilled its obligations and exhausted its liability under the policy by paying the single, per-claim limit of $100,000 to the Hoffman defendants. The 12 estate claimants were made defendants in this suit "to ensure that the Court can provide complete relief to all affected parties."
¶ 7 A copy of the insurance policy Continental issued to the Hoffman defendants was attached to the amended complaint. The policy provides lawyer's liability coverage to Howard Hoffman & Associates, Howard Hoffman, and Gerald H. Cohen, and the declarations page indicates the policy contains a limit of liability, inclusive of claim expenses, of $100,000 for "Each Claim" and $300,000 in the "Aggregate." The policy also contains the following relevant provisions:*fn1
The Company agrees to pay on behalf of the Insured all sums in excess of the deductible that the Insured shall become legally obligated to pay as damages and claim expenses because of a claim that is both first made against the Insured and reported in writing to the Company during the policy period by reason of an act or omission in the performance of legal services by the Insured or by any person for whom the Insured is legally liable, ****
The Company is not obligated to investigate, defend, pay or settle, or continue to investigate, defend, pay or settle a claim after the applicable limit of the Company's liability has been exhausted by payment of damages orclaim expenses or by any combination thereof or after the Company has deposited the remaining available limits of liability into a court of competent jurisdiction. ***
II. LIMITS OF LIABILITY AND DEDUCTIBLE
A. Limit of liability--each claim
Subject to paragraph B. below, the limit of liability of the Company for damages and claim expenses for each claim first made against the Insured and reported to the Company during the policy period shall not exceed the amount in the Declarations for each claim.
B. Limit of liability--in the aggregate The limit of liability of the Company for damages and claim expenses for all claims first made against the Insured and reported to the Company during the policy period shall not exceed the amount stated in the Declarations as the aggregate.
D. Multiple insureds, claims and claimants The limits of liability shown in the Declarations and subject to the provisions of this Policy is the amount the Company will pay as damages and claim expenses regardless of the number of Insureds, claims made or persons or entities making claims. If related claims are subsequently made against the Insured and reported to the Company, all such related claims, whenever made, shall be considered a single claim first made and reported to the Company within the policy period in which the earliest of the related claims was first made and reported to the Company.
Wherever used in this Policy:
B. 'Claim' means a demand received by the Insured for money or services arising out of an act or omission, including personal injury, in the rendering of or failing to render legal services. A demand shall include the service of suit or the institution of an arbitration proceeding against the Insured.
O. 'Related acts or omissions' mean all acts or omissions in the rendering of legal services that are temporally, logically, or causally connected by any common fact, circumstance, situation, transaction, event, advice or decision.
P. 'Related claims' mean all claims arising out of a single act or omission or arising out of related acts or omissions in the rendering of legal services."
¶ 8 The amended complaint was served upon each of the defendants, but appearances and answers to the complaint were filed only by the Hoffman defendants and representatives of the McAllister and Goldston estates. Ultimately, Continental filed a summary judgment motion and the Hoffman defendants filed a cross-motion for summary judgment. Attached to these motions were a number of documents supportive of the parties' arguments.
¶ 9 For example, attached to Continental's motion for summary judgment was a copy of the February 1, 2006, letter in which the Hoffman defendants informed Continental about Ms. Stachura's embezzlement scheme. In turn, attached to that letter was a notarized statement completed by Ms. Stachura on January 27, 2006. In that statement, Ms. Stachura indicated that she was a probate paralegal for the Hoffman defendants' law firm and her duties included managing the firm's probate and estate files and accounts. Ms. Stachura also stated:
"I acknowledge that in the course of handling these various probate/estate matters, I forged the Administrator's or Executor's name to certain checks made out to my order and caused the monthly bank statements as received to be destroyed so that my actions would not appear when an attorney worked on a file. The ledger sheet in each file appeared correct since I did not list the forged checks thereon and same would always reflect a balance consistent with legitimate checks as shown."
¶ 10 Ms. Stachura also indicated that "[n]o other person in my office, the attorneys or my family, had any knowledge of my criminal acts" and that she "used the money for gambling purposes or to cover forgeries on estates which were closed and distributions made prior."
¶ 11 Continental's motion also contained documents related to the McAllister, Chaney, and Goldston estates, including copies of pleadings filed in those actions. Pleadings filed in the McAllister and Chaney estates generally alleged that one or more of the Hoffman defendants were retained to represent the respective estates. The pleadings further sought to recover for the losses allegedly incurred as a result of the Hoffman defendants' improper failure to manage estate litigation or to supervise the actions of Ms. Stachura. The claims made by the McAllister estate were ultimately settled, with the Hoffman defendants contributing $15,000 and agreeing that the McAllister estate would be entitled to up to $10,180 in additional funds obtained as a result of any declaratory judgment action involving the Hoffman defendants and their liability insurer. The claims made by the Chaney estate were settled in a similar fashion, with Howard Hoffman contributing $54,313.47 and agreeing that the estate would be paid up to $42,561.79 if any additional funds were obtained as a result of the instant litigation. Both matters were subsequently dismissed pursuant to these settlement agreements.
¶ 12 The Goldston estate's complaint against the Hoffman defendants
also generally asserted that
their losses resulted
from the Hoffman defendants' failure to properly manage the estate's
litigation or to supervise the actions of Ms. Stachura, but the estate
made other additional allegations. Specifically, the complaint
asserted that the Hoffman defendants represented both the Goldston
estate and the estate of Benjamin Rogers (Rogers estate). The Goldston
estate was a beneficiary of the Rogers estate, and Malcolm Goldston
was the prior administrator of the Goldston estate. The complaint
further alleged that while certain distributions had been made from
the Goldston and Rogers estates, including distributions to Malcolm
Goldston, full distributions from those estates were never made.
Nevertheless, a "Final Account" was presented to the circuit court
indicating that full distributions had in fact been made in both
estates. The Goldston estate asserted that the Hoffman defendants
acted improperly by making payment of Goldston estate proceeds to only
certain estate beneficiaries (including Malcolm Goldston), presenting
an incorrect "Final Account" to the circuit court, and failing to
advise the Goldston estate of possible conflicts of interest and the
need to obtain substitute counsel. The Goldston estate's claims remain
pending in the circuit court.
¶ 13 The Goldston estate filed a response to Continental's motion. In that response, the Goldston defendants also attached a number of documents. These documents established that Ms. Stachura pled guilty to 11 separate charges of theft in 11 separate criminal cases involving her embezzlement of estate funds. With respect to each conviction, a judgment for restitution was entered in favor of each of the 11 different ...