Attorney’s Disclosure of Dissatisfied Clients to Prospective Insurer when Applying for Claims-Made Malpractice Insurance Policy
In Illinois State Bar Association Mutual Insurance Co. v. Gold, Messner hired Gold to represent him in a lawsuit he filed against Cynthia and Sarabeth Krenzelak. The trial court entered a judgment against Messner. Messner sent Gold a letter expressing displeasure with how Gold handled Messner’s lawsuit. However, in the same letter Messner asked Gold to perform further work on his behalf. When Gold sought to obtain new liability insurance from Illinois State Bar Association Mutual Insurance Company (“ISBA Mutual”), he did not inform ISBA Mutual about the letter from Messner. Three years after Messner sent the letter to Gold, Messner sued Gold for legal malpractice. Gold tendered defense to ISBA Mutual, who filed a declaratory judgment action contending that it had no duty to defend or indemnify Gold for the claim because Gold knew of the claim at the start of the policy period. Gold filed a counterclaim asking the court to impose sanctions on ISBA Mutual for its vexatious claims practices.
The court reviewed whether Gold should have informed ISBA Mutual of the letter from Messner regarding his dissatisfaction and whether, pursuant to the policy, ISBA Mutual had a duty to defend and indemnify.
Messner’s claim is covered under ISBA Mutual’s policy, which took effect on September 1, 2006. As of that date, Gold knew that Messner sent him a letter, in March 2004, accusing Gold of being a lazy advocate, failing to use due diligence, and failing to distill the information provided to Gold by Messner into a viable complaint. In the same letter, however, Messner asked Gold to continue to represent him in negotiations with the Krenzelaks, and Messner later agreed the Gold should prepare the brief for the appeal from the adverse decision the trial court rendered. The appellate court affirmed the trial court’s judgment, and Messner took no further action and made no further complaints against Gold for more than a year from the date of the decision and the effective date of the policy.
The letter sent in 2004 informed Gold that Messner had considered “going to war” against Gold, but the letter did not state a clear and unmistakable intent to bring a claim for professional malpractice. Further, Messner continued to seek and use Gold’s professional services, both in the letter he sent in 2004 and thereafter, in negotiations, and in an appeal. After, Messner made no further mention of dissatisfaction with Gold for more than two years before Gold applied for the insurance policy at issue here. The entire course of the attorney-client relationship showed that the threat of a claim had apparently dissipated before Gold applied for the policy that covered claims brought in 2006 and 2007. As of the effective date of the policy in 2006, Gold had no knowledge of a claim by Messner. Therefore, the policy covered the claim Messner first made in 2007.
The court held that in an application for a claims-made malpractice insurance policy, an attorney need not inform the prospective insurer about every client who has expressed dissatisfaction with the attorney’s services. A letter in which a client mentions the possibility of suing an attorney for malpractice, and in which the client requests further professional services from the attorney on the client’s behalf, does not notify the attorney of a claim for malpractice.
Illinois State Bar Association Mutual Insurance Co. v. Gold., 2013 WL 4029129 (Ill.App. 1 Dist.). (This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(3)(1)).
