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Chicago Insurance Co. v. Paulson & Nace, PLLC

United States Court of Appeals, District of Columbia Circuit

April 21, 2015

CHICAGO INSURANCE COMPANY, APPELLEE
v.
PAULSON & NACE, PLLC AND BARRY JOHN NACE, APPELLANTS, GABRIEL ASSAAD AND SARAH GILBERT, APPELLEES

Argued, March 10, 2015

Page 898

Appeal from the United States District Court for the District of Columbia. (No. 1:12-cv-02068).

Stephen A. Horvath argued the cause and filed the briefs for appellants.

Paulette S. Sarp argued the cause for appellee Chicago Insurance Company. With her on the brief was David Hudgins.

Carla D. Brown was on the brief for appellee Sarah Gilbert.

Before: HENDERSON, SRINIVASAN and WILKINS, Circuit Judges.

OPINION

Page 899

Wilkins, Circuit Judge

A law firm was engaged to bring a medical malpractice action on behalf of a young woman who had become paralyzed after surgery. Roughly a year and a half after the engagement, the firm filed two complaints in Virginia state court, each of which was dismissed: the first without prejudice for failure to correctly caption a pleading; the second with prejudice for filing outside the statute of limitations. Shortly thereafter, the law firm applied for and obtained a new professional liability insurance policy. A few years later, the aggrieved client sued the law firm for legal malpractice, and the firm in turn sought coverage from its insurer.

The insurance coverage dispute at the heart of this appeal turns on whether, at the time the law firm applied for its new policy, the firm was on notice that it had committed a breach of professional conduct, or otherwise should have foreseen that the dismissals could give rise to a legal malpractice claim. If so, then the insurer was relieved of any obligation to cover the malpractice claim under the policy's " known risk" exclusion.

The District Court found, as a matter of law and without expert testimony, that the law firm was on notice of the potential malpractice claim. The District Court also rejected arguments that the insurer had forfeited or waived its right to deny coverage. We agree with the District Court's resolution of each of these issues, and therefore affirm its decision granting summary judgment in favor of the insurer.

I.

On July 28, 2004, Sarah Gilbert, a fourteen-year-old girl residing in Virginia, underwent a spinal surgery that left her paralyzed. Five months later, Ms. Gilbert's parents retained the law firm of Paulson & Nace, PLLC, to pursue a claim of medical malpractice on her behalf. J.A. 842. The firm filed a medical malpractice complaint in Virginia on July 24, 2006, four days ...


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