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ADAMS v. CHICAGO INSURANCE COMPANY

January 22, 2002

ERIC R. ADAMS, PLAINTIFF
V.
CHICAGO INSURANCE COMPANY, PATRICIA E. NOVAK, AND RANDOLPH P. ZICKL, DEFENDANTS.



The opinion of the court was delivered by: Charles J. Siragusa, United States District Judge.

DECISION and ORDER

Both Adams and Chicago have moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Adams seeks an order that Chicago is required to defend and indemnify him under the terms of his professional liability insurance contract and Chicago seeks an order dismissing the complaint, alleging that Adams failed to meet a prerequisite, thus, Chicago properly disclaimed coverage. For the reasons that follow, the Court denies Chicago's motion and grants Adams' application, holding that Chicago is estopped from declining its duty to defend and indemnify.

Factual Background

The following facts are undisputed. On or about September 11, 1997, Chicago issued a lawyers professional liability policy, number LWB-3008198-1 ("policy"), effective for claims made during the period from December 12, 1997 to December 12, 1999. Section I of that policy, entitled "Coverage," states in pertinent part (emphasis in original),

The Company shall have the right and duty to defend any suit against the Insured seeking Damages to which this insurance applies even if any of the allegations of the suit are groundless, false or fraudulent. The Company, at its option, shall select and assign defense counsel. . . . The Company shall also have the right to investigate any Claim and/or negotiate the settlement thereof, as it deems expedient . . . .

Paragraph B of Section IX of that policy, entitled "Conditions," contains the following pertinent provisions:

B. Assistance and Cooperation of Insured in the Event of Claim or Suit:
Upon the Insured becoming aware of any negligent act, error, omission or Personal Injury in the rendering of or failure to render Professional Services which could reasonably be expected to be the basis of a Claim covered hereby, written notice shall be given by the Insured, or its representative to the Company together with the fullest information obtainable. If Claim is made or suit is brought against the Insured, the Insured or its representative shall immediately forward to the Company every demand, notice, summons or other process received by the Insured or the Insured's representative.

Professional Liability Ins. Policy No. LWB-3008198-1 at 6 (attached as Exhibit A to Copoloff aff.) (emphasis in original). This provision creates two notification duties on the insured. One is to notify Chicago of a potential claim, and the second is to notify Chicago of an actual claim and forward the papers "immediately." The contract does not explicitly state a time requirement regarding the potential claim notification.

The policy has a definitions section and the word "Claim" is defined as:

Professional Liability Ins. Policy No. LWB-3008198-1 at 4 (attached as Exhibit A to Copoloff aff.) (emphasis in original).

On September 24, 1993, Patricia Novak ("Novak") was injured in a motor vehicle collision in Rochester, New York. The collision was allegedly caused by the negligence of Carolyn Calcagno ("Calcagno"). On or about March 10, 1994, Novak retained Adams to represent her with regard to a workers compensation claim related to the collision. Adams made a notation on his file of the statute of limitations time for a third-party personal injury claim on behalf of Novak against Calcagno. Adams corresponded with Calcagno and her insurance carrier on Novak's behalf, and advised Calcagno that he represented Novak in connection with a claim for damages resulting from the motor vehicle collision. All ...


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