Opinion ID: 3012374
Heading Depth: 2
Heading Rank: 1

Heading: The Insuring Agreement

Text: The insuring agreement states that the policy covers claims arising out of services rendered or which should have been rendered by any insured . . . and arising out of the conduct of the insured’s profession as a Lawyer. Westport argues that the Lakens’ claims did not arise out of Bayer’s conduct as a lawyer and, therefore, the policy does not cover Bayer’s liability for those claims. 6 Citing a Ninth Circuit appellate decision, General Accident Ins. Co. v. Namesnik, 790 F.2d 1397 (9th Cir. 1986), and a federal district court case from North Carolina, H.M. Smith v. Travelers Indem. Co., 343 F. Supp. 605 (M.D.N.C. 1972), Westport contends that Bayer’s policy covers only those claims that arise from acts or omissions unique to the practice of law. Westport argues that the _________________________________________________________________ 6. Westport makes repeated reference to the fact that the Lakens were not in an attorney-client relationship with Bayer. We note that professional liability can arise out of an attorney’s activities with those other than his own client. See Harad v. Aetna Cas. & Surety Co., 839 F.2d 979, 984 (3d Cir. 1988) (stating that the plain meaning of the term professional service, does not of itself require an attorney-client relationship); Humphreys v. Niagara Fire Ins. Co., 590 A.2d 1267, 1270 n.9 (Pa. Super. Ct. 1991) (noting that policy language similar to that in the instant case does not state that it will only cover claims brought by clients of the attorney or third party beneficiaries to the attorney-client relationship. . . . [or] that it will only cover claims for malpractice.) 9 district court’s findings in Lakens v. Fryer Group demonstrate that Bayer’s liability to the Lakens does not stem from failure to do anything related to uniquely legal skill or training. Thus, according to Westport, Bayer’s liability is not covered by the insuring agreement. We reject this argument. We note, as an initial matter, that neither Namesnik nor H.M. Smith applies Pennsylvania law. In addition, Namesnik does not stand for the proposition that a lawyer’s professional liability insurance policy covers only claims arising from acts unique to the practice of law. H.M. Smith better supports Westport’s argument, but we ultimately find it unpersuasive. In Namesnik, an attorney had recommended to his clients that they invest in corporations which he formed, operated, and for which he performed legal work. At the same time, the attorney continued to perform legal services for the clients. He billed the clients for that legal work, but not for any work performed in the financial ventures. When the clients lost the money they had invested, they brought a legal malpractice claim against the attorney and the insurer sought a declaratory judgment of noncoverage. The district court granted summary judgment to the insurer and the Ninth Circuit Court of Appeals affirmed. The Ninth Circuit determined that the lack of fees directly traceable to the [investments], at a time when fees were billed for legal services supported the insurer’s contention that the clients’ claims against the attorney stemmed from his actions as a business agent rather than a lawyer. Namesnik, 790 F.2d at 1399. The court held that the clients’ failure to respond directly to this evidence left no genuine issues of material fact, making summary judgment for the insurer appropriate. Namesnik does not require that the Lakens’ claims stem from an act by Bayer that required uniquely legal skill or training. If Namesnik is applicable at all to the case before us, it merely requires that the Lakens present evidence that Bayer provided professional services from which the Lakens’ claims arise. The facts found by the district court support the conclusion that the Lakens presented such evidence. 10 In H.M. Smith, a federal district court, citing a helpful New Jersey Supreme Court case, determined that an attorney did not act in a legal capacity when he solicited, and then invested, funds from a non-client. 343 F.Supp. at 609-610. The court based its decision, in part, on its determination that the transaction itself is one that requires no legal skill or training. We conclude, however, that whatever persuasive authority that case provides is overcome by the following analysis which applies Pennsylvania law. Bayer’s policy does not define what it means for an injury to aris[e] out of the conduct of the insured’s profession as a lawyer. The Pennsylvania appellate courts have determined that use of the undefined phrase‘professional services’ may well give rise to a finding of ambiguity in an insurance policy. Biborosch v. Transamerica Ins. Co., 603 A.2d 1050, 1056 (Pa. Super. Ct. 1992). Likewise, language in a professional liability policy stating that the insurer will cover all injuries arising out of  the rendering or failure to render professional services, and will defend any suit against the insured seeking such damages, signals that the coverage is to be broadly construed. Danyo v. Argonaut Ins. Cos., 464 A.2d 501, 502 (Pa. Super. Ct. 1983). We therefore broadly construe the coverage afforded by the insuring agreement of Bayer’s policy. A policy provision is ambiguous if reasonably intelligent people would honestly differ as to its meaning when considering it in the context of the entire policy. Northbrook, 690 F.2d at 372. Under a broad construction of the coverage in Bayer’s policy, reasonably intelligent people would differ as to whether the provision covering claims arising out of services rendered or which should have been rendered . . . and arising out of the conduct of the insured’s profession as a Lawyer includes Bayer’s actions in preparing installment notes, transferring money, and generally advising investment in Fryer’s companies while holding himself out as an attorney who is watching over the Lakens’ investments. See Home Ins. Co. v. Law Offices of Jonathan DeYoung, P.C., 32 F. Supp. 2d 219, 230 (E.D. Pa. 1998) (denying summary judgment to attorney’s liability insurer and concluding that under Pennsylvania law, 11 [b]ecause the term ‘professional services’ is undefined in the policy, it is possible for reasonable minds to reach varying conclusions as to whether an attorney who had invested funds on client’s behalf had rendered professional services). That policy provision is therefore ambiguous. Where a policy provision is ambiguous, we construe the provision in favor of the insured in a manner consistent with the reasonable expectations insured had when obtaining coverage. Standard Venetian Blind Co. v. American Empire Ins. Co., 469 A.2d 563, 566 (Pa. 1983); Danyo, 464 A.2d at 502. The addendum Bayer attached to his application for coverage indicates his reasonable expectation that his work concerning Park Securities, Ltd. would be covered. We therefore construe the policy’s language in favor of coverage. We conclude that the policy’s insuring agreement provides coverage to Bayer for the Lakens’ claims against him.