Opinion
CIVIL ACTION No. 02-2294, SECTION: 1/3
September 8, 2003
ORDER AND REASONS
This matter is before the Court pursuant to motions for summary judgment filed on behalf of defendant, Westport Insurance Company ("Westport"), and on behalf of third party defendant, Villari Associates, a division of Brown Brown, Inc. ("Villari"). Westport seeks an order dismissing plaintiffs' claim against it and dismissing the cross-claim brought against it by defendant, H. Edward Sherman ("Sherman"). Villari seeks an order dismissing the third party demand brought against it by Sherman. This Court has jurisdiction over this diversity action pursuant to 28. U.S.C. § 1332. For the following reasons, Westport's motion for summary judgment is GRANTED and Villari's motion for summary judgment is DENIED.
Rec. Doc. No. 30; Rec. Doc. No. 32.
FACTUAL AND PROCEDURAL BACKGROUND
I. Plaintiffs Lawsuit Against Defendants Sherman and WestportThis is a legal malpractice action. Plaintiffs, Rodrick and Theresa Malmay (the "Malmays"), brought this action in the Orleans Parish Civil District Court on June 24, 2002, against Sherman, their former attorney, and Westport, Sherman's professional liability insurer. The Malmays stated a claim for damages under Louisiana law based on Sherman's alleged failure to timely file a personal injury action on behalf of Rodrick Malmay. Thereafter, Westport removed the action to this Court.
Doc. No. 1, Notice of Removal, PL Pet. in Damages ("Pl. Pet.").
See Pl. Pet., ¶¶ 3-14. Since the filing of this lawsuit, the plaintiffs settled their legal malpractice claim against Sherman and the plaintiffs and Sherman voluntarily dismissed, with prejudice, all claims between themselves. Rec. Doc. No. 24, PL Partial Mot. to Dismiss. The plaintiffs expressly reserved their claim against Westport. Id.
Rec. Doc. No. 1.
According to the Malmays, on or about January 2, 1998, Rodrick Malmay was injured while employed by Diamond Offshore Drilling, Inc. ("Diamond Offshore") and while working aboard the drilling vessel OCEAN VICTORY. They further allege that they retained Sherman to file the appropriate maritime claims on behalf of Rodrick Malmay with respect to a January, 1998, injury against Diamond Offshore and any other appropriate parties.
Pl. Pet., at ¶ 3.
Id.
On January, 5, 2001, Sherman filed a lawsuit under the maritime law on behalf of Rodrick Malmay against Diamond Offshore Drilling, Inc.("Diamond Offshore Litigation"). Sherman asserts that in April, 2002, during the course of the Diamond Offshore Litigation, he first discovered that Rodrick Malmay had a potential malpractice claim against him for his failure to timely assert a personal injury claim arising from the January, 2, 1998, injury. In May, 2002, Sherman represented to Rodrick Malmay and this Court that he had legal malpractice insurance under a policy issued by Westport to cover any potential malpractice claim brought by Rodrick Malmay. Thereafter, Rodrick Malmay settled his dispute with Diamond Offshore and the Diamond Offshore Litigation was dismissed on May 16, 2002. The Malmays assert that Sherman failed to timely file a lawsuit in connection with the January, 1998, injury, thereby allowing the three-year statute of limitations on maritime claims to toll on or about January 2, 2001
See Malmay v. Diamond Offshore Drilling, Inc. et at, 01-CV-42, Rec. Doc. No. 1, PL Complaint (E.D.La. Jan. 5, 2001).
See Rec. Doc. No. 36, Ex. 4, Affidavit of H. Edward Sherman ("Aff. Sherman"), ¶ 2; Diamond Offshore Drilling, Ol-CV-42, Rec. Doc. No. 61, Def. Mot. Partial Sum. J., at 12-15 (E.D.La. Apr. 2, 2002) (raising statute of limitations defense).
Id. at ¶ 3.
Diamond Offshore, 01-CV-42, Rec. Doc. No. 91, Order of Dismissal (E.D.La. May 16, 2002).
Id. at ¶ 4. Lawsuits brought under the Jones Act and the general maritime law "must be filed within three years from the date the cause of action accrues." Armstrong v. Trico Marine, Inc., 923 F.2d 55, 58 (1991) (citing 45 U.S.C. § 56 (Jones Act); 46 U.S.C.App § 763a (maritime tort)).
The Malmays filed the instant lawsuit to assert their legal malpractice claim against Sherman and Sherman's insurer, Westport, for damages in connection with Sherman's alleged malpractice. Thereafter, Sherman filed a cross-claim complaint against Westport, his insurer, and a third party demand against Villari, the insurance broker from whom Sherman purchased the Westport professional liability insurance policy, seeking indemnification for any loss sustained as a result of the Malmays' legal malpractice claim. II. Defendant Sherman's Cross-Claim against Westport and Third Party Demand against Villari
Rec. Doc. No. 10.
Sherman is the sole proprietor of a law office in New Orleans, Louisiana, which employs two lawyers. Villari is the current Louisiana administrator for Westport with respect to its Lawyers Professional Liability Insurance Program. Villari is not an insurance company; rather, it is an insurance broker.
See Rec. Doc. No. 32, Third Party Def. Mot. for Sum. J., Ex. A, Affidavit of Mary Katherine Van Vurst, Liability Underwriting Manager ("Aff Van Vurst"), Ex. 1., Fax "Quick APP" and Customized Practice Coverage Lawyers Professional Responsibility Liability Insurance Application ("Insurance Application"), at 7.
Aff. Van Vurst, ¶¶ 1 4. Pursuant to Local Rule 56.1, "[e]very motion for summary judgment shall be accompanied by a separate, short and concise statement of the material facts as to which the moving party contends there is no genuine issue to be tried." Pursuant to Local Rule 56.2, "[e]ach copy of the papers opposing a motion for summary judgment shall include a separate, short and concise statement of the material facts as to which there exists a genuine issue to be tried. All material facts set forth in the statement required to be served by the moving party will be deemed admitted, for purposes of the motion, unless controverted as required by this rule." In this case, neither plaintiffs nor Sherman filed a statement of contested material facts as required by Local Rule 56.2 and, therefore, they are deemed to have admitted the facts set forth in Westport's and Villari's statements of uncontested facts. See e.g., Harris v. Advance Transformer Co., 2000 WL 726889, *2 (E.D.La. 6/6/00); Smith v. Compass Rose Services, Inc., 1998 WL 24426, *1 (E.D.La. 1/22/98).
Aff. Van Vurst, ¶ 5.
On October 16, 2001, Sherman forwarded to Villari an application for professional liability insurance. In his application, Sherman disclosed that he allowed his prior professional liability insurance to lapse in March, 2000, because he felt insurance was "expensive" and "unnecessary" as his law office had never made a claim. Sherman did not purchase "Extended Reporting Period" coverage in conjunction with his prior professional liability insurance.
See Id., Ex. 1, Lawyers Professional Liability Insurance Application, at 1.
Id. at 3, 6.
Id at 3. Sherman's prior professional liability insurance policy was purchased from Westport with a policy period of March 4, 1999, to March 4, 2000. As explained in the current Westport Policy, an "Extended Reporting Period" is an option that gives the insured "the right to extend the time for reporting CLAIMS made against any INSURED under the policy." Rec. Doc. No. 30, Policy, Extended Reporting Period Endorsement, at 1.
On October 17, 2001, Villari responded to Sherman's application via a facsimile which provided a premium quotation (the "Quotation") through Westport The Quotation expressly provides on its first page under the heading "Notices":
Aff. Van Vurst, Ex. 2, Premium Quotation, at 1.
This quotation does NOT provide prior acts coverage. Your firm is uninsured for prior acts as an Extended Reporting Period Endorsement was not purchased at the time the prior coverage lapsed.
When quoting a premium, Villari does not ordinarily include the above-quoted provision in the "Notices" section. Villari specifically included the disclosure because Villari was aware that Sherman had allowed his prior insurance coverage to lapse. Under the heading, "Coverage Provisions," the Quotation states, "Prior Acts Coverage: Excluded" and " Retro Dates: Policy Inception."
Aff Van Vurst, ¶ 9.
Aff. Van Vurst, Ex. 2, at 2 (emphasis in original).
In October, 2001, Westport issued a legal malpractice insurance policy to Sherman with a policy period of October 17, 2001, to October 17, 2002 (the "Policy"). Sherman alleges that a Villari account executive informed him that he had purchased a "claims-made" insurance policy. He further alleges that the Policy was supposed to cover any claims made within the policy period. On May 16, 2002, Sherman informed Westport of Rodrick Malmay's potential legal malpractice claim connected with Sherman's untimely assertion of the claim relating to the January, 1998, injury. On June, 3, 2002, prior to plaintiffs filing the instant lawsuit, Westport informed Sherman that there would be no coverage under the Policy for any malpractice claim arising from any "act, error, omission . . . or breach of duty" which occurred prior to October 17, 2001, the "Retroactive Date" designated in the Policy. Westport determined that the "wrongful act" giving rise to a potential legal malpractice action by Malmay occurred on or about January 2, 2002, the date that Malmay's claim expired pursuant to the three-year statute of limitations. Accordingly, Westport denied liability and refused to provide Sherman with a defense or indemnity.
Rec. Doc. No. 30, Def. Mot. for Sum. J., Ex. C, Policy No. LAM-000049-5. Sherman acknowledges that Villari caused the Policy to be delivered to his law office in New Orleans. See Rec. Doc. 10, ¶ 5.
Hec. Doc. No. 10, ¶ 5.
Id.
Rec. Doc. 36, Ex. 2, at 1.
Rec. Doc. No. 36, Ex. 3, at 1.
Id. at 2. Sherman has not contested Westport's determination that the act giving rise to legal malpractice liability occurred on or about January 2, 2002.
Id.
LAW AND ANALYSIS
I. Summary Judgment StandardPursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Once the moving party carries its burden of proving that there is no material factual dispute, the burden shifts to the nonmovant "to show that summary judgment should not lie." Hopper v. Frank, 16 F.3d 92, 96 (5th Cir. 1994). While the court must consider the evidence with all reasonable inferences in the light most favorable to the nonmovant, the nonmoving party must come forward with specific facts showing that there is a genuine issue for trial. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Webb v. Cardiothoracic Surgery Associates of North Texas, 1998 WL 175313, *2 (5th Cir. 1998). This requires the nonmoving party to do "more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec., 475 U.S. at 586, 106 S.Ct. at 1356. The nonmoving party must "go beyond the pleadings and by her own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); Auguster v. Vermillion Parish School Board, 249 F.3d 400, 402 (5th Cir. 2001). In this case, there is no genuine issue as to any material fact regarding the coverage afforded under the Policy, and, therefore, Westport is entitled to a judgment as a matter of law. However, the Court finds that with respect to Sherman's third party demand brought against Villari, genuine issues of material fact exist which preclude summary judgment.
II Sherman's Cross-Claim Against Westport
The sole issue raised by Westport's summary judgment motion is whether the Policy provides professional liability insurance coverage to Sherman for his alleged failure to timely file Rodrick Malmay's personal injury claim pertaining to the January, 1998, injury. Since this case is brought pursuant to the Court's diversity jurisdiction, this Court is bound to apply the substantive law of Louisiana when interpreting the Policy. See Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188(1938).
An insurance policy is an agreement between the parties and it should be interpreted by using ordinary contract principles. Magnon v. Collins, 739 So.2d 191, 196 (La. 1999) ( citing Louisiana Ins. Guar. Ass'n v. Interstate Fire Cas. Co., 630 So.2d 759 (La. 1994)); Ledbetter v. Concord Gen. Corp., 665 So.2d 1166, 1169 (La. 1996); Smith v. Matthews, 611 So.2d 1377, 1379(La. 1993); Dunn v. Potomac Ins. Co. of Illinois, 657 So.2d 660, 663 (La.App. 1st Cir. 1995). The Louisiana Civil Code provides that the interpretation of a contract "is the determination of the common intent of the parties." La. Civ. Code art. 2045 (West 2002); see Ledbetter, 665 So.2d at 1169; Dunn, 657 So.2d at 663. The parties intent, as reflected by the words of the policy, determine the extent of coverage under an insurance policy. Ledbetter, 665 So.2d at 1169. The intention of the parties is determined "in accordance with the general ordinary, plain and popular meaning of the words used in the policy, unless the words have acquired a technical meaning." Id. see La. Civ. Code art. 2047 ("The words of a contract must be given their generally prevailing meaning."); Dunn, 657 So.2d at 663. Moreover, the parties' intent may be ascertained by "giving consideration on a practical basis to the instrument in its entirety." Dunn, 657 So.2d at 663.
Under Louisiana law, courts are required to read specific sections and subsections of an insurance policy in light of the whole policy. Crabtree v. State Farm Ins. Co., 632 So.2d 736, 741 (La. 1994); Bernard v. Chrysler Ins. Co., 734 So.2d 48, 51 (La.App. 3dCir. 1999); (citing Crabtree, 632 So.2d at 736; Armand v. Rhodes, 685 So.2d 546, (La.App. 3d Cir. 1996), writ denied 691 So.2d 81 (La. 1996)). A provision in an insurance policy may not be read in isolation or at the expense of another provision in the policy because the purpose of contract interpretation is to give each provision the meaning and effect that is suggested by the entire contract. See id.; Dunn, 657 So.2d at 663 (citing Epps v. City of Baton Rouge, 604 So.2d 1336, 1349 (La.App. 1st Cir. 1992)); Crabtree, 632 So.2d at 741; see also La. Civ. Code art. 2050.
La. Civ. Code art. 2050 provides that "[e]ach provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole."
Moreover, an insurance policy should not be interpreted in an unreasonable or strained manner so as to enlarge or to restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve absurd conclusions. Valentine v. Bonneville Ins. Co., 691 So.2d 665, 668 (La. 1997). If the language in an insurance contract is clear and unambiguous, the agreement must be enforced as written. Marcus v. Hanover Ins. Co., 740 So.2d 603, 606 (La. 1999); Smith, 611 So.2d at 1379; Dunn, 657 So.2d at 663; see also La. Civ. Code art. 2046. If there is any doubt or ambiguity as to a provision in an insurance contract, Louisiana law applies a rule of "strict construction" that requires that any doubt or ambiguity in an insurance contract be construed in favor of coverage to the insured and against the insurer who issued the policy. Louisiana Ins. Guar. Ass'n, 630 So.2d at 764; see also La. Civ. Code art. 2056 ("In case of doubt that cannot be otherwise resolved, a provision in a contract must be interpreted against the party who furnished its text."); accord Valentine, 691 So.2d at 668; Crabtree, 632 So.2d at 741. If an ambiguity exists, Louisiana courts may resolve it through an application of the "reasonable expectations doctrine," which directs a court to "construe the policy `to fulfill the reasonable expectations of the parties in the light of the customs and usages of the industry." Louisiana Ins. Guar. Ass'n, 630 So.2d at 764; Breland v. Schilling, 550 So.2d609, 610-11 (La. 1989) ("Ambiguity will also be resolved by ascertaining how a reasonable insurance policy purchaser would construe the clause at the time the insurance contract was entered."). However, the "mere fact that an insurance policy is a complex instrument, requiring analysis to understand it, does not make it ambiguous." Id. at 766; Bernard, 734 So.2d at 51. Moreover, insurance companies "have the right to limit coverage in any manner they desire, so long as the limitations do not conflict with statutory provisions or public policy." Ledbetter, 665 So.2d, at 1169; Louisiana Ins. Guar. Ass'n, 630 So.2d 763 (collecting cases).
La. Civ. Code art. 2046 provides that "[w]hen the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent."
The Louisiana Supreme Court has explained: "The reasonable expectations doctrine can be capsulized as follows: `courts will protect the [insured's] reasonable expectations . . . regarding the coverage afforded by insurance contracts even though a careful examination of the policy provisions indicates that such expectations are contrary to the expressed intention of the insurer.'" Louisiana Ins. Guar. Assoc., 630 So.2d at 764 n. 9 (quoting R. Keeton and A. Widiss, Insurance Law § 6.13 (1988) (alteration in original)). However, the reasonableness of an insured's expectation of coverage is a function of the purposes underlying the kind of policy in question and whether the expected coverage constitutes a reasonably bargained-for risk. See Id. at 767-69 (rejecting the reasonable expectations doctrine as applied to an expectation of drop-down coverage in excess insurance policies).
A. The Westport Policy
The Policy contains the following notice on the declarations page:
NOTICE: This is a Claims-Made and Reported POLICY. Except as maybe otherwise provided herein, this coverage is limited to liability for only CLAIMS which are first made against the NAMED INSURED and reported to the Company while the POLICY is in force.
Rec. Doc. No. 30, Ex. C, Declarations, at 1 (emphasis in original).
The declarations page of the Policy further states that the policy period is from October 17, 2001, to October 17, 2002, and that the "Retroactive Date" is October 17, 2001. Under the definition of "Retroactive Date," the Policy explains that "CLAIMS arising from any WRONGFUL ACT, as defined in each of the attached COVERAGE UMTS, occurring prior to [the "Retroactive Date"] are not covered by this POLICY. Finally, the Lawyer's Professional Liability Coverage Unit states that liability insurance coverage is provided for "CLAIMS first made against any INSURED during the POLICY PERIOD and reported to the Company in writing during the POLICY PERIOD or within 60 days thereafter, by reason of any WRONGFUL ACT occurring on or after the RETROACTIVE DATE, if any."
Id.
The full definition of "Retroactive Date" states:
" RETRO ACTIVE DATE" MEANS the date, as specified in the Declarations or in any endorsement attached hereto, on or after which any WRONGFUL ACT, as defined in each of the attached COVERAGE UNITS, must have occurred in order for CLAIMS arising therefrom to be covered under this POLICY. CLAIMS arising from any WRONGFUL ACT, as defined in each of the attached COVERAGE UNITS, occurring prior to this date are not covered by this POLICY.Id., General Terms and Conditions, Section XV, Definitions, at 8 (emphasis in original).
Id., Lawyers Professional Liability Coverage Unit, Section I, Insuring Agreements, at 1 (emphasis in original). The definition of "WRONGFUL ACT" in this coverage unit provides in part:
"WRONGFUL ACT" WHENEVER USED IN THIS COVERAGE UNIT MEANS any act, error, omission, circumstance, PERSONAL INJURY or breach of duty in the rendition of legal services for others in the INSURED's profession as a lawyerId., Section VII, Definitions, at 7.
The above-quoted notice on the declarations page clearly designates the Policy as a "claims-made and reported" policy. In distinguishing a "claims-made" policy from an "occurrence" policy, the Louisiana Supreme Court has explained:
The major distinction between the "occurrence" policy and the "claims made" policy constitutes the difference between the peril insured. In the "occurrence" policy, the peril insured is the "occurrence" itself. Once the "occurrence" takes place, coverage attaches even though the claim may not be made for some time thereafter. While in the "claims made" policy, it is the making of the claim which is the event and peril being insured and, subject to policy language, regardless of when the occurrence took place.Anderson v. Ichinose, M.D., 760 So.2d 302, 304 (La. 1999) (quoting Sol Kroll, The Professional Liability Policy "Claims Made, " 13 Forum 842, 843 (1978)). Both Sherman and the plaintiffs argue that the language in the above-quoted notice on the declarations page of the policy, designating the Policy as a "claims-made and reported" policy, renders the "Retroactive Date" limitation ambiguous. They assert that the effect of the "Retroactive Date" is unclear in light of the designation of the Policy as a "claims-made" policy and because the Policy states that the policy period is from October 17, 2001, to October 17, 2002. From the face of the declarations page, they assert, the Policy can reasonably be construed as covering all claims made during the policy period.
It is undisputed that the act giving rise to malpractice liability occurred on or about January 3, 2001, when the statute of limitations on Rodrick Malmay's personal injury claim expired. Rec. Doc. No. 36, Ex. 2, Letter from Sherman to Westport dated May 16, 2002, at 1. This date falls outside the policy period and it is prior to the "Retroactive Date" stated in the Policy. It is also undisputed that the Malmays filed their lawsuit on June 24, 2002, within the policy period. The parties in this case have not disputed that the filing of the lawsuit constituted a claim made within the policy period.
The Court disagrees. First, the notice on the Declarations page merely constitutes one limitation on Westport's liability; claims made or reported outside the policy period are not covered under the Policy. That such claims are excluded from coverage by virtue of the Policy being a "claims-made" policy does not necessarily mean that all claims made within the policy period are included within the scope of coverage. Rather, the "Retroactive Date" operates as an independent and additional limitation on coverage for claims arising prior to the retroactive date but first made within the policy period. See Davis v. Mayberry, 697 So.2d 364, 365 (La.App. 4th Cir. 1997) (explaining the operation of a retroactive date provision in a claims made legal malpractice policy). Absent the "Retroactive Date," the policy would cover all claims first made against Sherman during the policy period, however long ago a wrongful act giving rise to that claim took place. See Id. In construing "claims-made" insurance policies, the Louisiana Supreme Court has explained the operation and purpose of a "Retroactive Date" limitation:
The retroactive date generally is the date (usually specified in the policy declarations) on or after which the wrongful act or omission must have occurred in order for claims arising therefrom to be covered. Retroactive dates are viewed as necessary protection against adverse selection, in that a prospective insured could otherwise wait until a claim is imminent before first buying claims-made coverage.Ichinose, 760 So.2d at 304 n. 3.
Interpreting the Policy as Sherman and plaintiffs do would negate both the affirmative statement of coverage in the Policy for claims arising from acts occurring "on or after the RETROACTIVE DATE," and the clear statement within the definition of "Retroactive Date" warning that claims arising from acts occurring prior to the retroactive date are "not covered under this POLICY." Sherman and the plaintiffs read the declarations page in isolation and disregard other Policy provisions that clearly express an intent by Westport to limit liability for acts occurring prior to October 17, 2001. In short, by focusing only on the "claims-made" notice and the policy period in the declarations page, Sherman and the plaintiffs introduce an ambiguity in the Policy that on further analysis of the relevant provisions does not exist.
Because the Policy clearly limits Westport's liability for claims made after the "Retroactive Date," this Court may not construe the Policy against Westport to provide coverage for Sherman's alleged error which occurred prior to that date. "[T]he rule of strict construction does not `authorize a perversion of language, or the exercise of inventive powers for the purpose of creating an ambiguity where none exists.'" Ledbetter, 665 So.2d at 1169 (quoting Muse v. Metropolitan Life Ins. Co., 192 So.2d 72, 75 (La. 1939); accord Louisiana Ins. Guar. Ass'n, 630 So.2d at 764 ("When the language of an insurance policy is clear, courts lack the authority to change or alter its terms under the guise of interpretation."). Accordingly, because the relevant provisions, read as a whole, are not ambiguous, the rule of "strict construction" is inapplicable in this case. Similarly, because the Policy is not ambiguous, the "reasonable expectations doctrine" is inapplicable to its interpretation.
The Malmays further argue that because Sherman believed he was purchasing an insurance policy that would cover any claim made within the policy period, the terms of the Policy do not express the true intent of the parties and, therefore, the contract should not be enforced as written. However, the law is well-settled in Louisiana that a contract must be interpreted within its four corners and if the language of an insurance contract is clear and explicit, a court may not rely on extrinsic evidence of a party's intent to vary the terms of a contract. See Gebreyesus v. F. C. Schaffer Associates, Inc., 204 F.3d 639, 643 (5th Cir. 2000); Peterson v. Schimek, 729 So.2d 1024, 1031 (La. 1999); La. Civ. Code arts. 2045, 2046 1848. Accordingly, evidence of Sherman's subjective belief about the coverage afforded may not be considered to vary the unambiguous terms of the Policy.
In this case, the act giving rise to Sherman's professional liability occurred prior to October 17, 2001. In light of the provisions of the Policy unambiguously limiting Westport's liability for claims arising from Sherman's untimely filing of Rodrick Malmay's claim, Westport is entitled to a judgment as a matter of law on the issue of coverage afforded by the Westport Policy.
III. Sherman's Third Party Demand Against Villari
In his third party demand, Sherman alleges that a Villari account executive informed him that he had purchased a "claims made" policy. Sherman further alleges that because of his belief that the Policy was a "true claims made policy," he did not seek other legal malpractice insurance to cover him prior to the effective date of the Policy, i.e., October 17, 2001.
Rec. Doc. No. 10, ¶ 5.
Id. at ¶ 6.
Villari asserts two substantive arguments in support of its motion for summary judgment. First, Villari argues that because the Policy is not ambiguous and precludes coverage for acts of malpractice occurring prior to October 17, 2001, Villari is entitled to a judgment as a matter of law with respect to liability for oral representations made to Sherman concerning the coverage afforded by the Policy. Villari rests this argument on the assertion that, as noted above, parol evidence may not be introduced to contradict the terms of an unambiguous insurance contract, e.g., Schimek, 729 So.2d at 1031, and, therefore, any alleged representations made to Sherman cannot be the basis for liability to Sherman.
The Court notes that in addition to the substantive arguments presented by Villari, it also argues that due to Sherman's settlement with the Malmays in this case, Sherman's prayer for indemnification for "any amount for which H. Edward Sherman is cast in judgment" precludes any relief in this case. Villari argues that because the Malmays voluntarily dismissed their claims against Sherman as a result of the settlement, Sherman is not entitled to indemnification because any amount that Sherman is liable to the Malmays does not arise from being "cast in judgment." In light of this Court's order allowing Sherman to amend his cross-claim and third party demand to specify his damages resulting from his settlement with the Malmays, See Rec. Doc. No. 55, Villari's argument on this point is moot.
Although Villari is correct on the principle of law it recites, the Court rejects this argument. Contrary to Villari's assertions, the issues presented by Sherman's third party demand go beyond the interpretation of the Policy. Cf. Callahan v. Bankers Ins. Grp., 1997 WL 634304, at *2, 4 (E.D. La) (noting that issues of fact with respect to an insurance agent or brokers duty and an insured's claim of detrimental reliance are not resolved by the legal interpretation of the insurance contract in question); Campbell v. Continental-Emasco Co., 445 So.2d 70, 72 (La.Ct.App. 2d Cir. 1984) (holding that the obligation of an insurance broker or agent to procure requested insurance coverage exists separate and apart from the contract of insurance procured pursuant to it). In this case, Sherman alleges that certain express representations were made to him by Villari, an insurance broker, concerning the coverage under a policy issued by an insurance company, Westport, and that he relied on these representations in purchasing professional liability insurance. Therefore, the claim against Villari is distinct and separate from the interpretation of the Policy and the resolution of the contract interpretation issue presented by Westport in its summary judgment motion is not dispositive of Sherman's claim against Villari for their alleged representations concerning coverage under the Policy.
Second, Villari contends that the documents and affidavits introduced in support of their motion for summary judgment, and described above, show that at all times Villari informed Sherman that the Westport Policy did not include coverage for prior acts. However, Sherman presents summary judgment evidence which, when construed in the light most favorable to Sherman, contradicts Villari's evidence with respect to the representations made to him by the Villari account executive and his understanding of the coverage he was purchasing based on those representations.
Rec. Doc. No. 36, Aff. Sherman, ¶ 2-4.
Therefore, after reviewing the pleadings, the memoranda, and the affidavits and other documentary evidence submitted by Villari and Sherman, the Court finds that genuine issues of material fact exist as to what representations were made by Villari concerning the "claims-made" nature of the Policy and whether, in light of the notice Sherman received informing him that he was uninsured for prior acts, Sherman was justified in relying on contradictory representations made by the Villari account executive.
Accordingly, for the above and foregoing reasons,
IT IS ORDERED that the motion of defendant, Westport Insurance Company, for summary judgment is GRANTED, and that the motion of third party defendant, Villari Associates, for summary judgment is DENIED.