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Carolina Casualty Insurance Co. v. Robert S. Forbes PC

United States District Court, S.D. Illinois

January 10, 2017

CAROLINA CASUALTY INSURANCE COMPANY, Plaintiff,
v.
ROBERT S. FORBES PC, ROBERT S FORBES, EARNEST BATES and JESSICA BATES, Defendants.

          MEMORANDUM AND ORDER

          J. PHIL GILBERT DISTRICT JUDGE

         This matter comes before the Court on plaintiff Carolina Casualty Insurance Company's (“Carolina Casualty”) motion for summary judgment (Doc. 23). Defendants Robert S. Forbes PC and Robert S. Forbes have responded to the motion (Doc. 28), and defendants Earnest Bates and Jessica Bates have adopted that response (Doc. 29). Carolina Casualty has replied to that response (Doc. 30).

         I. Summary Judgment

         Summary judgment must be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Spath v. Hayes Wheels Int'l-Ind., Inc., 211 F.3d 392, 396 (7th Cir. 2000). The reviewing court must construe the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Chelios v. Heavener, 520 F.3d 678, 685 (7th Cir. 2008); Spath, 211 F.3d at 396.

         II. Facts

         The material facts in this case are essentially undisputed.

         A. Application for Policy

         In the period of April-May 2014[1], Forbes applied to Carolina Casualty for lawyers professional liability insurance. He requested that the insurance policy be issued to the firm of “Robert S. Forbes, P.C., Attorney At Law.” Forbes was the only attorney practicing law at Forbes PC.

         In the application, Forbes represented that neither the applicant firm nor any lawyer in the firm was “aware of any fact, circumstance or situation that might reasonably be expected to result in any professional liability claim or suit” against the firm or any lawyer in the firm. Carolina Casualty Incorporated Proposal Form 1, ¶ 1 (Doc. 1-1 at 2, 7). He also represented that no attorney in the firm was aware of “an actual or alleged act, omission, circumstance, or breach of duty that a reasonable attorney would recognize might reasonably be expected to result in a claim” against the firm or any lawyer in the firm. CNA Application for Lawyers Professional Liability Insurance 4, ¶ 35(b) (Doc. 1-2 at 5).

         In reality, Forbes was aware at the time that the Illinois Appellate Court for the Fifth District had rendered a decision in October 2013 in the workers' compensation case of Earnest Bates, who was represented by Forbes, adverse to Bates. Winchester v. Illinois Workers' Comp. Comm'n, 2013 IL App. (5th) 120421WC-U, 2013 WL 5594469, at *1 (Ill.App.Ct. Oct. 9, 2013). The reason for the adverse decision was that Forbes had failed to timely file a document necessary to give the circuit court jurisdiction to hear the appeal of an adverse decision by the Illinois Workers' Compensation Commission in favor of Bates's employer. Id. at *4. As a result, the Commission's decision adverse to Bates was allowed to stand. Id.

         Forbes also represented in the application for professional liability insurance that no attorney in the firm had “been subject to any disciplinary inquiry, complaint or proceeding for any reason other than non-payment of dues” within the five years preceding the application. CNA Application for Lawyers Professional Liability Insurance 4, ¶ 36(a) (Doc. 1-2 at 5).

         In reality, Forbes was in the middle of proceedings in front of the Illinois Attorney Registration and Disciplinary Commission (“ARDC”) stemming from allegations of professional misconduct beginning in 2006. The ARDC began its investigation in or around June 2012. Shortly before submitting his completed application for lawyers professional liability insurance from Carolina Casualty, Forbes had provided a written, sworn statement to the ARDC (February 20, 2014) and testified before the ARDC Inquiry Board (May 1, 2014) concerning the alleged misconduct. The ARDC proceeding was ultimately resolved by Forbes's November 2014 removal from the roll of attorneys authorized to practice law in Illinois. See, generally, In re: Robert Scott Forbes, No. M.R. 26897 (Ill. 2014) (Doc. 1-5 at 2-5; Doc. 1-4).

         In the application for insurance, Forbes represented that his statements in the application were true and made after due diligence and that he was aware Carolina Casualty would rely on the truth of his statements in issuing insurance. Carolina Casualty Incorporated Proposal Form 2 (Doc. 1-1 at 3, 8); CNA Application for Lawyers Professional Liability Insurance 5 (Doc. 1-2 at 6).

         In May 2014, in reliance on the application completed by Forbes, Carolina Casualty's insurance underwriter issued a Carolina Casualty lawyers professional liability insurance policy number 1301292 (“Policy”) naming “Robert S. Forbes, P.C., Attorney At Law” as the named insured. Policy 1 (Doc. 1-3 at 4) The Policy covered May 13, 2014, to May 13, 2015. If the underwriter had known of the circumstances surrounding the final denial of Bates's workers' compensation claim or the ...


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