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COA: insurer received actual notice from clients

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The insurance company that provided legal professional liability coverage for the attorney who abandoned his practice and went on a crime spree did receive actual notice of the attorney’s clients’ claims against the insurer, the Indiana Court of Appeals ruled today.

The Bar Plan Mutual Insurance Co. intervened in complaints filed by clients of C. Bruce Davidson Jr. for legal malpractice against the attorney. The Bar Plan issued a policy to Davidson effective from March 2003 to March 2004. In November of that year, Davidson abandoned his law practice without notice and went on a multi-state bank robbery crime spree. He was disbarred in 2004 and is now in federal prison.

Bar Plan argued in its motion for summary judgment that the fact Davidson didn’t notify the insurer of the claims or suits, that he failed to assist or cooperate in the investigation of the claims, and that coverage is moot because there could be no recovery in the underlying suits because recovery in such cases is precluded under the policy.

The trial court granted the motion, finding Paint Shuttle, Inc. v. Continental Casualty Co., 733 N.E.2d 513 (Ind. Ct. App. 2000), applied and was dispositive.

The Court of Appeals concluded in Michael Ashby, et al. v. C. Bruce Davidson, Jr., No. 49A04-0910-CV-569, that Paint Shuttle didn’t support the insurer’s arguments.

Bar Plan received actual written notice of the clients’ claims from the clients, not Davidson, so Bar Plan argued under the policy that it didn’t receive written notice within the policy period.

Under the policy, Davidson was supposed to provide written notice, but he was running from the law during the relevant time period, noted Judge James Kirsch, and also unable to receive demands from the clients within that period. Under the facts of the case, notice provided by Davidson was impossible. Also, the insurer did receive “timely” and “true” notice as those terms are set out in Paint Shuttle.

The purpose of the notice provision has more to do with the ability of Bar Plan to investigate and defend claims in a timely manner than with the ability of Bar Plan to deny coverage because actual notice was supplied by the wrong person, wrote Judge Kirsch. As a matter of law, the actual notice Bar Plan received from the clients was proper.

The case was remanded for further proceedings.  
 

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