Our firm's client provides investment and insurance services for its clientele. A former owner of the firm secretly engaged in improper financial dealings, causing financial losses to various individuals. When the conduct was revealed, the former owner was arrested and convicted of fraud related crimes. Various victims of the fraud sued our client's company in state court.
Subsequently, the Errors & Omissions insurer sued our client in federal court. The insurer sought a declaration that it is not obligated to defend our client, by paying legal fees in the state court lawsuit, and that it is not obligated to indemnify for any damages awarded against our client in the state court suit. The insurer argued that certain insurance policy exclusions applied and that because of those exclusions there is no insurance coverage.
We fought back hard, made a summary judgment motion, and argued that the insurer is legally obligated to defend the state court suit by paying the legal fee defense costs. In addition, we argued that the legal fees incurred by our client in the federal insurance coverage case needed to be covered by the insurance company.
The federal court agreed, awarding both defense costs in the state court suit, ordering the payment of defense costs in the future, and awarding legal fees for the work defending the client in the federal insurance coverage lawsuit.