Court Opinion

ID: 8434668
Source: CourtListenerOpinion
Date Created: 2022-11-04 10:56:42.320817+00
Date Added: 2024-06-11T16:48:41.253429
License: Public Domain

HAMILTON, Senior Circuit Judge,
dissenting.
The majority opinion tells us that the meaning of “professional liability claim” is clear and unambiguous. In my view, the meaning of “professional liability claim” is not so cut-and-dry. Because the term is ambiguous, it must be construed in favor of the insured, Draper & Goldberg (D & G). Construing the term in D & G’s favor, Carolina Casualty Insurance Company (Carolina) is not entitled to rescind the policy. Accordingly, I dissent from the court’s decision to reverse.
Question 16 asks, “Has any professional liability claim been made against the Applicant Firm, or any predecessor in business, or any of the past or present lawyers in the firm, during the past 5 years?” (J.A. 17). The parties concede that the application does not define the term “professional liability claim.”
The standard to be applied here is not in dispute. Under Virginia law, we must give the words used in an insurance contract their ordinary and customary meaning. Graphic Arts Mut. Ins. Co. v. C.W. Warthen Co., 240 Va. 457, 397 S.E.2d 876, 877 (Va.1990).
The term “professional” is defined as “following an occupation as a means of livelihood.” Random House Webster’s College Dictionary 1056 (2000). There appears to be no dispute that the profession referred to in Question 16 is the practice of law by the lawyers of D & G. A “lawyer” is defined as a “person whose profession is to represent clients in a court of law or to advise or act for them in other legal matters.” Id. at 752. “Liability” is defined as the state of being “legally responsible.” Id. at 765.
Because the term “lawyer” has traditionally been associated with the representation of clients, it certainly is reasonable to conclude that “profession,” in the legal context, relates to the representation of clients, not nonclients. Thus, it follows that a reasonable construction of the term “professional liability claim” is a claim made by a client against the attorney who represented the client for damages or other relief arising from the representation. Cf. Ayyildiz v. Kidd, 220 Va. 1080, 266 S.E.2d 108, 112 (Va.1980) (noting that an “attorney’s liability for damages generally is only to his client following some dereliction of duty to the client”). Under this interpretation of “professional liability claim,” D & G was not required to disclose the 500 lawsuits at issue. This is so because it is undisputed by all parties, including the majority, see ante at-, that the 500 lawsuits at issue do not involve claims made by past or present clients of D&G.
That is not to say that the above interpretation, which was adopted by the district court, is the only reasonable interpretation of the term “professional liability claim.” The majority itself provides such an interpretation. They conclude the “plain and ordinary meaning of the words ‘professional liability claim’ encompasses any type of claim attempting to assert liability against the applicant law firm arising out of its rendering of legal services.” Ante at---. According to this definition, if the claim arose from the ren*552dering of legal services, then the claim was required to be disclosed.
It is arguable that performing the duties of a successor trustee does not involve the rendering of legal services, as nonlawyers may be appointed successor trustees. Cf. Cohen v. Employers Reinsurance Corp., 117 A.D.2d 435, 503 N.Y.S.2d 33, 34-35 (1st Dep’t 1986) (holding that, unless the policy specifically insures the attorney for liability arising out of an act or omission while serving as a trustee, such activities are not covered by a policy which limited coverage to claims arising out of the performance of professional services in the insured’s capacity as a lawyer). However, it is plausible to interpret “professional liability claim” to include claims arising out of a lawyer’s performance of successor trustee duties. Given such an interpretation, D & G would have been required to disclose the 500 lawsuits at issue in this dispute.
With two reasonable and logical interpretations of the term “professional liability claim,” one in favor of coverage and one against, the term unquestionably is ambiguous. Indeed, the majority has not identified a single case which provides a definitive definition one way or the other. But, more importantly, even Carolina conceded below that the term was ambiguous. As the district court noted, Carolina conceded that the term was susceptible to more than one interpretation when it stated that the “‘five claims reported by D & G in response to Question 16 are not all classic “professional liability” claims as the term may be conservatively interpreted.’ ” (J.A. 461) (citation omitted); cf. Home Ins. Co. v. Law Offices of Jonathan DeYoung, P.C., 32 F.Supp.2d 219, 230 (E.D.Pa. 1998) (noting that “Pennsylvania courts have found that where a professional liability insurance policy fails to define ‘professional services,’ as is the case here, the phrase standing alone can be deemed ambiguous, and therefore, must be construed against the insurer”).
Under Virginia law, if a term in an insurance contract is ambiguous, “it will be construed against the insurance company and in favor of coverage.” Andrews v. American Health and Life Ins. Co., 236 Va. 221, 372 S.E.2d 399, 401 (Va.1988). Applying this long-standing principle, it is evident that Carolina is not entitled to rescission. Question 16 can be read to ask the law-firm applicant to disclose if any of their attorneys had claims made against them by a client for damages or other relief arising from the attorneys’ or the firm’s representation. As the record discloses no such claims, it cannot be said that D & G provided materially false information. Cf. id. at 402 (“Because we conclude that the phrase ‘nervous disorder,’ as used in this application, is ambiguous and could be read to refer to only physical disorders, we find that Ballenger did not answer question four untruthfully when he failed to disclose his periods of depression for which he sought medical attention.”).
Citing Andrews, the majority states that Virginia’s ambiguity rule of insurance contract construction applies only “when there is evidence that the ambiguity in the insurance application could have misled the applicant into providing false information.” Ante at -. From this premise, the majority concludes that Virginia’s ambiguity rule does not apply here because D & G construed the term “professional liability claim” to include claims by nonclients. One searches in vain in Andrews and Virginia’s ambiguity case law for the subjective intent limitation formulated by the majority. In fact, there is nothing extraordinary about Virginia’s ambiguity rule. As noted above, under Virginia law, “[i]f the term is ambiguous, it will be construed against the insurance company and *553in favor of coverage.” Andrews, 372 S.E.2d at 401. Moreover, we examine the language of an insurance contract from an objective, rather than a subjective, standpoint. Cf Dan River, Inc. v. Commercial Union Ins. Co., 227 Va. 485, 317 S.E.2d 485, 487 (Va.1984) (holding “[t]he interpretation of policy language” authorizing notice when considered appropriate “in the opinion of the insured” nevertheless “demands an objective determination” made “from an objective standpoint”). Thus, what D & G’s principals allegedly understood or did not is of no moment. Rather, what is of consequence is the meaning of “professional liability claim” in the objective sense. Under Virginia law, the term is ambiguous and must be construed against Carolina and in favor of coverage.
It follows that I would affirm the well-reasoned opinion of the district court.