Court Opinion

ID: 38174
Source: CourtListenerOpinion
Date Created: 2010-04-25 20:04:12+00
Date Added: 2024-06-11T17:15:54.995457
License: Public Domain

United States Court of Appeals
                                                               Fifth Circuit
                                                            F I L E D
              IN THE UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT                   May 18, 2005

                                                        Charles R. Fulbruge III
                                                                Clerk
                             No. 04-30404

CONTINENTAL CASUALTY CO

                    Plaintiff - Appellant

v.

FEINGERTS & KELLY, APLC; BRUCE L FEINGERTS

                    Defendants - Appellees

                       --------------------
          Appeal from the United States District Court
              for the Eastern District of Louisiana
                           03-CV-2683-C
                       --------------------

Before HIGGINBOTHAM, SMITH, and BENAVIDES, Circuit Judges.

BENAVIDES, Circuit Judge:*

     In this case, we are presented with an insurance coverage

dispute between a law firm and its legal liability insurer.

Plaintiff-Appellant Continental Casualty Co. (“Continental”)

appeals the district court’s grant of summary judgment in favor

of Defendants-Appellees Feingerts & Kelly, A.P.L.C. (the “Firm”)

and Bruce Feingerts (“Feingerts”), and the district court’s

     *
          Pursuant to 5TH CIR. R. 47.5, the Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.

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denial of its motion for summary judgment.    In so ruling, the

district court determined as a matter of Louisiana state law that

Continental was obligated to tender a defense to the Firm and

Feingerts individually for claims filed against the Firm and

Feingerts by a former client.   On appeal, Continental challenges

the district court’s coverage determination, contending that the

damage claims asserted against the Firm and Feingerts by their

former client are excluded from the scope of Continental’s

coverage obligation.   Having reviewed the record and considered

the briefs and arguments on appeal, we affirm.

                           I. BACKGROUND

     In September 1998, Feingerts, a partner in the law firm of

Feingerts & Kelly, A.P.L.C. agreed to represent Jonette Franks

(“Franks”) in connection with certain trust litigation then

pending in Louisiana state court, and in subsequent related

litigation.   After several years, the lawyer-client relationship

between Feingerts and Franks disintegrated.    In April 2002,

Franks terminated Feingerts’s employment and refused to pay any

of the legal fees the Firm claims she owes.    In response to

Franks’s failure to pay the legal fees claimed by the Firm, the

Firm intervened in the two underlying trust actions in which

Franks was involved.

     Subsequently, Franks submitted a complaint to the Louisiana

Attorney Disciplinary Board Office of Disciplinary Counsel

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alleging professional misconduct on the part of Feingerts.    After

conducting a brief investigation, the Disciplinary Board closed

its file in October 2002, withholding a decision on the merits of

the complaint pending resolution of the Firm’s intervention

claims in state court.

     In August 2003, Franks filed a reconventional demand against

the Firm in the state trust litigation and joined Feingerts as a

defendant in reconvention.   In her petition, Franks alleged that

Feingerts and the Firm owed her damages for breach of contract,

breach of legal duties and obligations, bad faith contractual

dealings, and unjust enrichment.

     After being served with the petition, Feingerts timely

forwarded the petition to Continental and requested that

Continental tender a defense in accordance with the terms of the

Lawyers Professional Liability Policy (the “Policy”) issued by

Continental to the Firm.   Initially, Continental denied coverage

to both the Firm and Feingerts on the ground that the damage

claims asserted by Franks are excluded from the scope of

Continental’s coverage obligation; ultimately, however,

Continental decided to defend both the Firm and Feingerts subject

to a full and complete reservation of rights to continue to

contest coverage.

     In September 2003, Continental filed this declaratory

judgment action against the Firm and Feingerts individually.

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Continental seeks a declaration that it had no duty to defend or

indemnify the Firm or Feingerts from the claims asserted by

Franks on the ground that the claims contained in Franks’s

petition sought damages expressly excluded from its coverage

obligation under the Policy.    The Firm and Feingerts filed a

cross-motion for summary judgment, contending that the damage

claims asserted in Franks’s petition triggered Continental’s duty

to defend.   The district court denied Continental’s motion and

granted summary judgment in favor of the Firm and Feingerts.         In

so ruling, the district court held that Continental was obligated

under the Policy to tender a defense to the Firm and Feingerts

against the claims asserted in Franks’s petition.1      This appeal

by Continental followed.

                       II.   STANDARD OF REVIEW

     We review the district court’s grant of a motion for summary

judgment de novo.    Hardy v. Hartford Ins. Co., 236 F.3d 287, 290

(5th Cir. 2001).    Summary judgment is proper when, taking the

evidence in the light most favorable to the non-moving party,

there is no genuine issue of material fact and the moving party

is entitled to judgment as a matter of law.       Celotex Corp. v.

Catrett, 477 U.S. 317, 322 (1986).

     1
       The district court abstained from reaching Continental’s
claim regarding indemnity; the court concluded that the indemnity
claim was not ripe since the Firm and Feingerts had not yet been
found liable for any of Franks’s claims.

                                   4
                          III.   DISCUSSION

     The only dispute in this case is whether the Policy issued

by Continental to the Firm provides coverage to the Firm and

Feingerts for the claims alleged by Franks.    Under the terms of

the Policy, the Firm and Feingerts are insureds.    The Policy

further states that Continental has a “duty to defend in the

Insured’s name and on the Insured’s behalf a claim covered by

this Policy even if any of the allegations of the claim are

groundless, false or fraudulent.”     The Policy defines “claim” as

“a demand received by the Insured for money or services arising

out of an act or omission . . . in the rendering of or failure to

render legal services.”

     The Policy further provides that

     [Continental] agrees to pay on behalf of the Insured all
     sums in excess of the deductible that the Insured shall
     become legally obligated to pay as damages and claim
     expenses because of a claim that is both first made
     against the Insured and reported in writing to
     [Continental] during the policy period by reason of an
     act or omission in the performance of legal service by
     the Insured or by any person for whom the Insured is
     legally liable.

The Policy defines “damages” as “judgments, awards and

settlements, provided any settlement is negotiated with the

assistance and approval of [Continental].”    However, “[d]amages

do not include . . . legal fees, costs and expenses paid or

incurred or charged by the Insured, no matter whether claimed as

restitution of specific funds, forfeiture, financial loss, set-

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off or otherwise, and injuries that are a consequence of any of

the foregoing.”

     On appeal, Continental contends that Franks’s petition does

not state a claim within the scope of Continental’s coverage

obligation, and that therefore it has no duty to defend either

Feingerts or the Firm.   Specifically, Continental maintains that

Franks’s petition does not state a claim for covered damages

because it alleges only “a fee dispute” and seeks relief for

injuries sustained as a result of that legal fee dispute.

     In determining whether Continental has a duty to defend, we

must examine the allegations in Franks’s petition.    As we have

stated, “[t]he duty to defend is determined by examining the

allegations of the injured plaintiff’s petition . . . and the

insurer is obligated to tender a defense unless the petition

unambiguously excludes coverage.”     Hardy, 236 F.3d at 290.

     In her petition, Franks alleged that Feingerts and the Firm

caused her injury by:    (1) misleading her in connection with the

original retainer and fee agreement; (2) failing to keep her

appraised of the status of the proceedings and failing to provide

her with sufficient information for her to participate

intelligently in decisions to continue the trust litigation; (3)

failing to timely and properly account for fees and costs; (4)

misrepresenting the true status of the litigation, including

opportunities for settlement, settlement negotiations, and the

                                  6
potential award expected from settlement, in an effort to

continue to collect fees; (5) engaging in unnecessary activities

to prolong the litigation in an effort to increase fees and

costs; (6) exploiting knowledge of Franks’s personal finances;

(7) charging excessive, unreasonable, and unearned fees; and (8)

failing to disclose the conflict of interest that arose when the

Firm’s pecuniary interest became contrary to Franks’s interest in

continuing to proceed with litigation.    Based on these

allegations, Franks contended that Feingerts and the Firm owed

her “damages for breach of contract, legal duties and

obligations, bad faith contractual dealings, and return of

excessive fees previously paid.”

     While the majority of Franks’s claims against the Firm and

Feingerts are excluded from coverage under the Policy because

those claims seek damages for legal fees, we agree with the

district court that at least one claim is not unambiguously

excluded under the terms of the Policy.    Franks’s allegation that

Feingerts did not keep her apprised of the progress of the

proceedings, the true status of the case, and the potential for

settlement is not a claim seeking damages for “legal fees, costs

[or] expenses paid or incurred or charged by the Insured . . .

[or] injuries that are a consequence of any of the foregoing.”

Rather, this claim is by its own terms a claim seeking damages

for Feingerts’s failure to appraise Franks of the settlement

                                   7
proceedings.   Accordingly, these damages would include expenses

incurred by Franks as a result of Feingerts’s failure to appraise

her of the status of her case, as well as the loss occasioned to

Franks by the loss of the settlement opportunity, if she can

prove that had she known about the opportunity she would have

taken it.   These damages are not a consequence of legal fees

charged by the Firm; rather, these damages are a consequence of

alleged acts and omissions by Feingerts in the rendering of legal

services, for which the Policy explicitly provides coverage.     The

mere fact that Feingerts’s actions were allegedly motivated by a

desire for additional fees does not mean that Franks’s injury is

a consequence of legal fees; to the contrary, the injury to

Franks is the loss occasioned by the missed settlement

opportunity.   Therefore, this claim cannot be construed as a

legal fee dispute or a claim for damages as a result of injuries

incurred as a consequence of a legal fee dispute.   Because an

insurer’s duty to defend is triggered under Louisiana law unless

the petition unambiguously excludes all coverage, see Hardy, 236

F.3d at 290, this solitary claim is sufficient by itself to

trigger Continental’s defense obligations under the Policy.

                          IV.   CONCLUSION

     Because at least one of Franks’s claims is not unambiguously

excluded from coverage under the Policy, Continental is obligated

pursuant to the terms of the Policy to tender a defense to the

                                  8
Firm and Feingerts against the claims asserted by Franks in her

petition.   Accordingly, the district court’s grant of summary

judgment in favor of the Firm and Feingerts is AFFIRMED.

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