Continental Casualty Company v. Donald T. Bertucci, Ltd.
399 Ill.App.3d 775, 926 N.E.2d 833, 339 Ill. Dec. 358 (1st dist. 6th div. 2010)Words & Phrases
Professional Liability Policy: In GeneralTrial Judge
Nancy J. ArnoldAppellate Judge
Justice McBrideHolding
Professional liability insurer did not have duty to defend lawyer against suit by former client because suit did not seek “damages” but restitution.Fact Summary
In Continental Casualty Co. v. Donald T. Bertucci, Ltd., 399 Ill. App. 3d 775, 926 N.E.2d 833 (1st Dist. 2010), the court held that the insurer was justified in denying that a duty to defend existed because the “complaint and plain, unambiguous language of the policy lead us to find that the insurer’s interpretation of the coverage is the only reasonable one.” It found that the improper retention of settlement proceeds did not constitute “legal services” as that term was used in a professional liability insurance policy issued to the attorney, and therefore, the insurer had no duty to defend a malpractice claim concerning the return of “legal fees.”
Continental Casualty Company issued a professional liability policy to Donald Bertucci and his solo law practice providing coverage for sums that the insured was legally obligated to pay as damages because of a claim by reason of any act or omission in the performance of legal services. The policy also covered up fees and costs for a disciplinary proceeding arising out of an act or omission in the rendering of legal services.
After Bertucci purchased the policy, one of his former clients sued him on the basis that he improperly retained $750,000 of the proceeds of a $2.25 million settlement in a medical malpractice claim. Bertucci was also brought before the ARDC on the same basis. Continental denied coverage for both proceedings and filed a declaratory judgment action. The trial court ruled that there was no coverage for the civil action because it did not seek “damages” as that term was used in the policy; but, the disciplinary proceeding was covered as arising out of an act or omission in the rendering of “legal services.”
On cross-appeals, the appellate court affirmed that there is no coverage for the civil action, noting that “damages” are defined in the policy as “judgments, awards and settlements” and do not include “legal fees . . . charged by the Insured, no matter whether claimed as restitution of specific funds, forfeiture, financial loss, set-off or otherwise . . . and injuries that are a consequence of any of the foregoing.” Id. at 780. As the court held, the underlying suit was not covered because it indisputably sought (1) restitution for legal fees which Bertucci improperly charged against his client’s settlement proceeds and (2) consequential expenses for his impropriety, including statutory interest, subsequent attorneys’ fees, and punitive damages.
The appellate court also held that Bertucci’s improper retention of the settlement proceeds was not an “act or omission in the performance of legal services by the insured” as required under the policy.
It is apparent that Rodriguez’s claims concern ordinary, nonlegal services rather than “an act or omission in the performance of legal services by the Insured” within the meaning of the insuring agreement.
Citing various non-Illinois cases, the court held that billing a client for legal services does not implicate the legal malpractice policy. The coverage for disciplinary proceedings was also limited to proceedings arising out of acts in the performance of “legal services.” Accordingly, the court reversed the trial court’s ruling that the disciplinary proceeding was covered.