Multiple Acts of Legal Malpractice Alleged In A Single Lawsuit Constitute “Related Acts”

Wiley Rein LLP

The United States District Court for the Northern District of California, applying California law, has held that the claims made against an insured law firm and its attorneys arising out of their representation of three brothers in multiple lawsuits, arose out of or were attributable to the same or related acts, and thus constituted a single claim under the law firm’s insurance policy. Liberty Surplus Ins. Corp. v. Samuels, 2021 WL 4526193 (N.D. Cal. Oct. 4, 2021)

The brothers filed a malpractice action against the insured law firm alleging multiple legal errors in the filing and handling of several actions they brought against a general contractor hired to construct residential and commercial space. The firm tendered the malpractice action to their insurer, who agreed to defend under a reservation of rights, but the insurer did not initially address whether the matter constituted a single claim. The court entered a judgment for the brothers in the malpractice action, and the law firm appealed. While that appeal was pending, the insurer filed the subject action against the law firm and the brothers seeking a declaration that (1) a single $2 million “Each Claim” limit of liability applied; and (2) once that limit was exhausted, the insurer had no further defense or indemnity obligations. The insurer subsequently moved for summary judgment regarding whether the brothers’ allegations constituted a single claim or multiple claims under its policy.

The court granted summary judgment for the insurer, holding that the malpractice allegations against the law firm arose from “the same or related acts, errors or omissions” (which the policy did not further define) and thus constituted a single claim. In doing so, the court opined that, by filing a single underlying malpractice action against the law firm, the brothers implicated the law firm’s conduct with respect to all cases—which the court concluded established their relatedness, particularly given that the underlying actions all focused on similar construction defect claims. The court also determined that there was evidence that an “objectively reasonable insured” would have expected the malpractice actions would be treated as a single claim based on the brothers linking the claims by making them part of the same underlying lawsuit.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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