POLICY DOES NOT COVER SUIT AGAINST LAW FIRM

Commercial General Liability	Breach Of Fiduciary Duty
Professional Liability Exclusion	Defamation

David Carmell was a client of Gould & Ratner (G&R). G&R also represented Apex Automotive Warehouse L.P. (Apex) in a bankruptcy proceeding. According to Carmell, Jonathan Backman, a partner at G&R, twice sent a letters via fax to several people that contained unfavorable statements about Carmell. Carmel also stated that when Backman called Carmell as an adverse witness in the Apex bankruptcy Beckman used information that was protected by the attorney-client privilege in his cross-examination. Carmel sued G&R for breach of fiduciary duty and defamation.

G&R promptly notified Vigilant, its commercial general liability carrier, of the suit. Vigilant denied liability, stating that Carmell's claims were excluded by its policy. G&R defended itself and eventually settled the Carmell action. It then filed this action for breach of contract, and Vigilant filed for a declaratory judgment. The trial court granted summary judgment in favor of Vigilant in both instances and G&R appealed.

The policy included coverage for personal injury but excluded any claim or suit due to professional legal services being rendered or failing to be rendered. G&R contended Vigilant should have defended under a reservation of its rights or filed a suit for declaratory judgment.

The appellate court ruled that even though Backman was not acting as Carmell’s attorney at the time of the alleged actions, he was acting in a professional capacity. Therefore, the professional exclusion applied and Vigilant had no duty to defend or indemnify G&R.

The appellate affirmed the summary judgment in favor of Vigilant.

Gould & Ratner, Appellant, v. Vigilant Insurance Company-No. 1-02-1288-Appellate Court of Illinois, First District, Third Division-December 4, 2002-782 North Eastern Reporter 2d 749