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March 2, 2004.


The opinion of the court was delivered by: NEAL McCURN, Senior District Judge


In this action, plaintiffs Cade & Saunders, P.C. and William J. Cade, Esq.*fn1 are seeking a declaratory judgment that defendant, Chicago Insurance Company ("CIC"), has a duty to defend and indemnify them in the underlying legal Page 2 malpractice action, Nigro v. Cade & Saunders. P.C., et al., currently pending in the Supreme Court of New York, Albany County. CIC moves for summary judgment pursuant to Fed.R.Civ.P. 56, seeking (1) dismissal of the complaint with prejudice; and (2) a declaration that it does not have a duty to defend or indemnify plaintiffs (CIC's insureds) in the underlying malpractice action. The plaintiffs cross-move for summary judgment seeking a declaration to the contrary.


  As Local Rule 7.1(3) requires, the parties submitted Statements of Material Facts. The following factual recitation is based upon the undisputed parts of those Statements.

  I. The Policy

  On January 15, 2001, CIC issued a "claims-made policy" providing coverage to the plaintiff law firm from February 12, 2001 through February 12, 2002. Defendant's Statement of Material Facts ("Def. Statement") at ¶ 1; see also Affidavit of William J. Cade (Sept. 26, 2003), exh. 2 thereto at 1. Prior to that policy, the plaintiff law firm "was continuously insured by [CIC], from February 12, 1996[.]" Cade Aff. at 2, ¶ 7. In fact, the plaintiff firm continued to be insured by CIC through February 12, 2003. Id. Among others, plaintiff Cade and Kyran D. Nigro, an attorney with the plaintiff law firm, were listed as additional insureds on the firm's policy. See Cade Aff., exh. 2 thereto. That policy's notice provision, which is at the heart of the present motions, is set forth below.

  II. The Nigros' Personal Injury Action

  On June 7, 1994, Joseph Nigro*fn2 was involved in an automobile accident. Def. Statement at ¶ 3 (citing Affidavit of James Klein (Aug. 29, 2003), exh. B Page 3 thereto at 1). Apparently the automobile Mr. Nigro was driving was rear-ended while he was making a left hand turn onto a multi-lane highway. Klein Aff., exh. B thereto at 1. Joseph Nigro sustained personal injuries from that accident, including "a closed head injury for which [he] underwent significant neuropsychological treatment." Id.

  Nearly a year later Mr. and Mrs. Nigro commenced a personal injury action against the driver/owner of the other car. Id. at 1 and 2. At that time the Nigros were being represented by the DeGraff, Foy, Holt-Harris & Kunz law firm, who had retained an accident reconstruction expert. Klein Aff., exh. B thereto at 2. However, "[s]hortly before Labor Day 1998," Mr. Nigro's wife contacted their nephew, Kyran D. Nigro, who at the time was an associate at the plaintiff law firm, regarding litigation of that personal injury action. See id. Sometime in September, 1998, the plaintiff law firm became trial counsel for the Nigros, with the DeGraff firm remaining as attorney of record. Through their new trial counsel, the Nigros elected not to use the expert who had previously been retained by the DeGraff firm. Def. Statement at ¶ 8 (citation omitted); and Plaintiffs' Response to Statement of Material Facts ("Pl. Response") at ¶ 8. Instead, plaintiffs opted to "hire [their] own reconstruction expert, Dr. Raymond Hagglund." Klein Aff., exh. B thereto at 2.

  In the meantime, plaintiffs sought an adjournment. They did so after obtaining the DeGraff firm's file and also realizing that plaintiff Cade had a conflict with the scheduled trial date of October 19, 1998. See Id. Defense counsel refused to consent to an adjournment however, and the court declined to grant such relief. Id. The trial judge denied an adjournment even though "the scheduling conflict as well as the size and complexity of the case, together with Page 4 [plaintiffs'] recent involvement[]" were explained to him. Id.

  The court declined to grant that adjournment at a conference which occurred n approximately September 23, 1998. See id. In a December 5, 2001 letter to CIC, attorney Nigro stated that while he did "not remember the specifics of the conversations" at that conference "regarding expert disclosure[,]" to his "knowledge" there was "no order in the case indicating any deadlines for the completion of discovery, including expert disclosure." Id. at 1-2. During this September time frame attorney Nigro recollects that the DeGraff firm did fax a proposed expert response to the plaintiff firm. See Id. at 2. Attorney Nigro reiterated that the plaintiff firm was "uncomfortable with [the DeGraff firm's chosen] expert and w[as] taking steps to retain [its] own accident reconstruction expert for trial purposes." Id. at 3. According to attorney Nigro, "[a]t no time during this conversation did [the DeGraff attorney] mention any discovery deadlines with respect to expert disclosure, nor did he express to [Nigro] any concern about the timeliness of an expert response." Id.

  Attorney Nigro proceeded to contact Dr. Hagglund directly, but was advised that Hagglund would not be available to view the accident scene until "the first week of October 1999 [sic]*fn3, approximately . . . 3 . . . weeks before trial." Id. Dr. Hagglund was able to view the scene in that short time, but because he was subpoenaed for another trial out of state, he was "unable to provide [attorney Nigro] with his opinions until the weekend before trial." Id.; see also Def. Statement at ¶ 11 (citation omitted); and Plaintiffs' Response to Statement of Material Facts ("Pl. Response") at ¶ 8. During a telephone conversation between Page 5

  Hagglund and attorney Nigro, which took place over that weekend, Nigro "draft[ed] an expert response which [he] served on defense counsel on the morning of trial." Klein Aff., exh. B thereto at 3; see also Def. Statement at ¶ 12; and Pl. Response at ¶ 12. Defendants then made an oral motion to preclude Dr. Hagglund's testimony. The trial court granted that motion reasoning that the expert disclosure was untimely. Id. at 4; see also Klein Aff., exh. G thereto at 1.

  Prior to trial, because plaintiff Cade could not try the Nigros' case due to other work commitments, the plaintiff firm contacted yet another law firm to act as trial counsel and they agreed to do so. Id. at 2 and 3. In addition to the unavailability of plaintiff Cade, different trial counsel was obtained because, according to attorney Nigro, he and Cade "thought it best that [Nigro] not try [the case] given [his] relationship with the [Nigros.]" Id. at 2. The trial proceeded as scheduled with the Nigros being represented by the law firm of Pennock & Breedlove. "The jury quickly returned a defense verdict." Def. Statement at ¶ 16 (citing Klein Aff., exh. B thereto at 5); and Pl. Resp. at ¶ 16.

  On appeal, the Nigros again retained different counsel and the Appellate Division affirmed the trial court's preclusion order. In so doing, the Third Department "agreed with Supreme Court that plaintiffs made no showing of good cause for having retained their reconstruction expert more than three years after commencement of the action and a matter of just a few weeks prior to trial." Klein Aff., exh. G thereto at 2; and Pl. Resp. at ¶ 21. Based upon that reasoning, the Appellate Division found that the trial court did not abuse ...

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