A federal appeals court on Tuesday upheld a lower court ruling in favor of a Crum & Forster Co. unit in litigation over its refusal to defend and indemnify an attorney under his professional liability insurance, based on an exclusion of prior actions.
In November 2016, a defendant in a lawsuit charged with illegal acts and misappropriation of corporate assets hired Max D. Leifer, of the Law Offices of Max D. Leifer PC in New York, as his defense attorney, according to the complaint in North River Insurance Co. v. Max D. Leifer and Law Offices of Max D. Leifer PC
Mr. Leifer allegedly failed to respond to the subpoena in a timely manner or file an extension of time, and a default judgment was entered against the client. Mr. Leifer was dismissed.
In September 2019, Leifer submitted an application for professional indemnity insurance to the North River C&F unit. In the application, he checked “no” to the question of whether there was reasonable cause to believe that his services could form the basis of a claim.
North River issued a legal malpractice policy for the year beginning October 2020 that included a waiver of past actions. In November 2020, Leifer’s former client sued him for malpractice.
North River filed a lawsuit in US District Court in New York in September 2021, seeking a declaratory judgment that it was under no obligation to defend or indemnify Leifer.
The district court ruled in favor of the insurer and was upheld by a three-judge appeals panel.
“Leifer’s own submissions leave no doubt that, at the time of the policy’s effective date, (1) Leifer had knowledge of the facts and circumstances giving rise to (the client’s) malpractice claim, and (2) a reasonable attorney would have understood that Leifer’s conduct could reasonably have been expected to give rise to a malpractice claim,” the panel said in affirming the lower court.