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Kleyman v. Continental Casualty Co.

January 4, 2007

ALEXANDER KLEYMAN, C.P.A., PLAINTIFF,
v.
CONTINENTAL CASUALTY COMPANY, D/B/A/ CNA, DEFENDANT.



The opinion of the court was delivered by: Sifton, Senior Judge.

MEMORANDUM OPINION AND ORDER

Plaintiff Alexander Kleyman, C.P.A. ("Kleyman"), commenced this action against Continental Casualty Co. ("CCC"), Paul Krohn ("Trustee"), as Chapter 7 Trustee of Drake Business Schools Corporation, The Bronx School for Quality Education, Inc., and New York School for Quality Education (collectively, "Debtors"), and Spielman, Koenigsberg & Parker, LLP ("SK&P"), alleging that CCC had failed to meet its responsibilities for professional liability coverage under the terms of Kleyman's insurance and seeking declaratory judgment and damages.*fn1 Now before the Court is CCC's motion for summary judgment. For the reasons set forth below, the motion is granted.

Background

The following facts are drawn from Kleyman's Complaint and the submissions of the parties in connection with this motion. Disputes are noted.

Procedural History

In June 2006, Trustee filed a Complaint ("Trustee Complaint") against Kleyman and SK&P in the United States Bankruptcy Court for the Eastern District of New York. The Trustee Complaint alleged accounting malpractice and professional negligence, beginning in 1999 and lasting into 2004, causing injury to the Debtors. After being notified of the Trustee Complaint, Kleyman contacted CCC, which had provided him with professional liability insurance from 1996 through November 27, 2004. Kleyman sent CCC a copy of the Trustee Complaint, and demanded that CCC assume liability for the claim and provide a defense, under the terms of his insurance. On July 11, 2006, CCC denied coverage on the grounds that Kleyman was not insured for claims against him unless those claims were made and reported during the coverage period, which ended in 2004.

On July 27, 2006, Kleyman filed a complaint ("Kleyman Complaint") against CCC seeking declaratory judgment ordering CCC to provide coverage for the Trustee Complaint, as well as damages. This motion for summary judgment was filed by CCC on September 18, 2006.

Insurance Policy

The policy issued by CCC is a "claims-made" policy.*fn2 In such a policy, the insured must both receive notice of a claim made against him and provide notice of the claim to the insurance company during the policy period; as the policy states, CCC will cover "damages and claim expenses because of a claim that is both first made against [the insured] and reported in writing to [CCC] during the policy period." Accountants Professional Liability Policy, p.4 (emphasis added) (hereinafter "Policy"). The policy defines "claim" as "a demand received by [the insured] for money or services naming [the insured] and alleging an act or omission . . . in the rendering of professional services . . . . [including] the service of suit." Id. at 2. The policy defines "policy period" as "the period of time from the effective date and time shown in the Declarations and that date and time of termination, expiration or cancellation of this Policy." Id. at 3.

Discussion

Jurisdiction

The Kleyman Complaint asserts diversity jurisdiction under 18 U.S.C. § 1332. To bring a claim under diversity jurisdiction, the amount in controversy must be greater than $75,000 and there must be "complete diversity" between parties from different states. See Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978) (complete diversity exists when each defendant is a citizen of a different State from each plaintiff).

As clarified at oral argument on December 20, 2006, Kleyman is domiciled in Florida while CCC is a company incorporated under the laws of New Jersey, with its principal place of business in Illinois. In addition, the amount in controversy is $100,000, the damages alleged ...


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