Court Opinion

ID: 856925
Source: CourtListenerOpinion
Date Created: 2013-04-02 15:30:58.134041+00
Date Added: 2024-06-11T09:06:34.036771
License: Public Domain

In the

United States Court of Appeals
               For the Seventh Circuit

No. 12-1579

K ORANSKY, B OUWER & P ORACKY, P.C.,

                                                Plaintiff-Appellant,
                                 v.

T HE B AR P LAN M UTUAL INSURANCE C O .,

                                               Defendant-Appellee.

             Appeal from the United States District Court
      for the Northern District of Indiana, South Bend Division.
               No. 10 CV 535—William C. Lee, Judge.

      A RGUED JANUARY 17, 2013—D ECIDED A PRIL 2, 2013

 Before M ANION and T INDER, Circuit Judges, and L EE,
District Judge. 
 M ANION, Circuit Judge. The law firm of Koransky,
Bouwer & Poracky, P.C. represented a potential buyer


   Honorable John Z. Lee, of the Northern District of Illinois,
sitting by designation.
2                                              No. 12-1579

in the purchase of a Rite Aid drugstore located in
Lima, Ohio. Buyer and Seller executed the sales con-
tract separately. Koransky & Bouwer misfiled the con-
tract executed by Buyer, however, and Seller sub-
sequently attempted to rescind the contract—which it
characterized as an offer—because it had not timely re-
ceived a copy of the contract executed by Buyer. When
Seller’s efforts to avoid the purported contract ultimately
proved successful, Buyer sent a “formal notice of claim”
to Koransky & Bouwer. The law firm, in turn, sought
coverage from its professional liability insurer, but
that insurer concluded that Koransky & Bouwer was
not entitled to coverage because it failed to properly
notify the insurer of the mistake that ultimately led to
the malpractice claim. Koransky & Bouwer filed suit in
federal court for a declaratory judgment that the law
firm was entitled to coverage, and both the insurer and
the law firm moved for summary judgment. The district
court granted the insurer’s motion and denied the law
firm’s motion. Koransky & Bouwer appeals. We affirm.

                 I. Factual Background
  Koransky, Bouwer & Poracky, P.C. (“Koransky &
Bouwer”) is a law firm located in Indiana that
represented George Novogroder (“Buyer”) when he
entered into negotiations to purchase four Rite Aid
drugstores in Ohio from Newton Oldacre McDonald,
LLC (“Seller”). After the negotiations were completed,
Koransky & Bouwer drafted the sales contracts for each
of the transactions. The first three sales closed without
incident.
No. 12-1579                                             3

  This appeal arises from the fourth transaction, which
was virtually identical to the first three, and was for a
Rite Aid located in the city of Lima in Allen County,
Ohio. On January 24, 2007, after the negotiations had
ended, Koransky & Bouwer sent Seller’s counsel a copy
of the sales contract containing the agreed terms. Seller
executed the contract and returned it to Koransky &
Bouwer on January 31. Buyer executed the contract on
February 9. On February 11, counsel for Seller inquired
about the status of the contract, and Koransky &
Bouwer responded that Buyer had executed it. But
Koransky & Bouwer had inadvertently misfiled the
executed contract, and consequently failed to deliver it
to Seller.
  On February 22, Seller’s counsel sent a letter to
Koransky & Bouwer stating, “Buyer has not accepted
and returned the Contract, and effective immediately
Seller hereby rescinds Seller’s signature to the offer and
declares the Contract null and void and of no further
effect.” The next day, an associate at Koransky &
Bouwer sent an email to Seller’s counsel stating:
   I looked through all my files. It turns out the
   originals were placed in the wrong Rite Aid file,
   attached are scanned copies of the signed documents.
   This whole situation is my fault and not the fault of
   my client. I apologize for this situation. I therefore
   kindly request that the cancellation notice be with-
   drawn, and upon withdrawal, I will overnight the
   signed originals.
Counsel for Seller responded via email stating, “Our
business team has met and confirmed their decision to
4                                                 No. 12-1579

rescind the Seller’s offer. We have decided to take a
different strategic direction with this property.” In re-
sponse, on March 2, Peter Koransky sent a letter to
Seller’s counsel stating that Buyer “is desirous of
pursuing all applicable remedies both in law and in
equity to enforce the terms of the Contract . . . .” Koransky
went on to say that, while Buyer wished to avoid “pro-
tracted litigation,” if no agreement could be reached,
then “we would have no alternative but to file appro-
priate litigation at this time including a lis pendens notice.”
  The sales contract provided that any litigation
arising from the agreement would be in the county
where the property was located and would be con-
trolled by the law of the state in which the property
was located. Thus, under the terms of the contract,
venue was in Allen County, Ohio, and Ohio law would
apply to any litigation arising out of the contract. Buyer
hired an attorney in Ohio who notified Buyer and
Koransky & Bouwer that, in his opinion, the sales
contract was binding because Ohio law does not re-
quire that a contract be delivered in order to be valid.1

1
  The district court and The Bar Plan Mutual Insurance Co.
both reference a specified date by which the executed
contract was supposed to be delivered to Seller. The sales
contract does not specify a date by which it had to be
delivered, however, and we can find no evidence in the
record that Buyer and Seller had otherwise stipulated to
such a date. Although such an agreed delivery date would
be significant inasmuch as Buyer and Seller were free to
                                              (continued...)
No. 12-1579                                                   5

   However, on March 14, Seller commenced an action
in Alabama state court seeking a declaration that no
contract had been formed. Buyer hired an Alabama
firm, which employed an attorney who had previously
served as the Chief Justice of the Supreme Court of Ala-
bama. That law firm filed a motion to dismiss the
Alabama action contending that the Alabama court
could not exercise jurisdiction over the case or apply
Alabama law. Buyer also initiated an action in Ohio
state court on March 30, which was later removed
to federal court, seeking to enforce the contract.
  Meanwhile, Koransky & Bouwer was in the process
of renewing its professional liability insurance with
The Bar Plan Mutual Insurance Co. Koransky &
Bouwer’s 2006-07 policy was in effect in February and
March 2007. It contained a discovery clause (reproduced
in Appendix A attached to this opinion) which re-
quired Koransky & Bouwer to notify The Bar Plan
within the policy period in which the law firm first be-
comes aware of any act or omission which “may give
rise to a Claim.”
  Because Koransky & Bouwer’s 2006-07 policy was
expiring on April 15, 2007, the law firm submitted a

1
  (...continued)
contract around Ohio’s rule that a contract need not be
delivered to be effective, see Indus. Heat Treating Co., Inc. v.
Indus. Heat Treating Co., 662 N.E.2d 837, 842-44 (Ohio Ct.
App. 1995), we do not rely upon this fact in resolving
this appeal.
6                                              No. 12-1579

renewal application on March 10. In completing that
application, Koransky & Bouwer responded in the
negative to the question: “Does the firm or any attorney
or employee in the firm have knowledge of any
incident, circumstance, act or omission, which may
give rise to a claim not previously reported to us?”
In executing the application, Koransky & Bouwer
agreed that all representations were true and that no
information had been omitted. Further, the law firm
agreed to notify the Bar Plan of any material changes
“between the date of the application and the effec-
tive date of the Policy.” The application warned
Koransky & Bouwer to report all known circumstances,
acts, or omissions, which could result in a malpractice
claim against the firm, within the time frame specified
in the 2006-07 policy. Below this language (reproduced
in Appendix B attached to this opinion) the renewal
application was signed by Koransky.
  Based on the renewal application, The Bar Plan
issued Koransky & Bouwer a policy effective from
April 15, 2007, through April 15, 2008. That policy (repro-
duced in pertinent part in Appendix C attached to
this opinion) required Koransky & Bouwer to notify
The Bar Plan during the policy period if, at some
point during that policy period, the law firm “first
becomes aware of a specific incident, act or omission
while acting in a professional capacity providing Legal
Services, which may give rise to a Claim . . . .” Further,
in the Professional Liability and Claims-Made and Re-
ported Clause, the policy limited coverage for acts or
omissions predating the policy period to situations where
No. 12-1579                                                   7

Koransky & Bouwer “had no basis to believe that [it]
had committed such an act or omission.” And, under III.
Exclusions L, the policy expressly precluded coverage
for unreported actions or omissions predating the
policy period where, “before the Policy effective date,”
the law firm “knew, or should reasonably have known,
of any circumstance, act or omission that might
reasonably be expected to be the basis of that Claim.”
  On June 12, 2007, after Koransky & Bouwer’s 2007-08
policy was issued, the Alabama state court held a
hearing on Buyer’s motion to dismiss, and then con-
cluded that it had jurisdiction to decide the case.2 There-
after, the Ohio district court stayed Buyer’s action
because the Alabama action had been filed first. See
Novogroder v. NOM Lima Shawnee, LLC, No. 3:07 CV 1284,

2
   It is unclear when the Alabama trial court first decided that
it would exercise jurisdiction. Koransky & Bouwer’s brief
states that the Alabama court held a hearing on Buyer’s
motion to dismiss on June 12. But the Alabama court’s
October 15 order, which disposed of the issues raised at the
June 12 hearing, states that, prior to the June 12 hearing,
the Alabama court had ruled that it had jurisdiction on at
least two different occasions. See Newton Oldacre McDonald,
LLC v. Novogroder, No. CV-07-72-R (Cir. Ct. Ala. Oct. 15, 2007).
And Seller’s appellate brief to the Supreme Court of Alabama
(which admittedly is not part of the record) states that the
Alabama trial court first entertained arguments regarding
the motion to dismiss at a hearing on April 16. See Brief of
the Appellees, Novogroder v. Newton Oldacre McDonald, LLC,
54 So. 3d 965 (2009), 2008 WL 6507582, at *2.
8                                             No. 12-1579

2010 WL 4628583, at *1 (N.D. Ohio Nov. 8, 2010). The
Alabama court eventually held that no contract had
been formed because the executed contract was never
delivered to Seller. Newton Oldacre McDonald, LLC v.
Novogroder, No. CV-07-72-R (Cir. Ct. Ala. Oct. 15, 2007).
The Ohio district court then dismissed Buyer’s claims.
Novogroder, 2010 WL 4628583, at *1.
  In August 2007, Buyer informed Koransky & Bouwer
that he was considering a malpractice claim against the
law firm. Koransky & Bouwer immediately called its
insurance agent. According to Koransky & Bouwer, the
insurance agent advised the law firm that he could
do nothing until Buyer made a claim. The insurance
agent recommended that Koransky & Bouwer attempt
to obtain a claim-letter from Buyer. On August 28,
Buyer sent a “formal notice of claim” to Koransky &
Bouwer. Koransky & Bouwer forwarded this claim to
The Bar Plan, which received it on August 30.
   After performing an initial investigation, The Bar
Plan concluded that Koransky & Bouwer had learned
of the facts underlying the claim in February 2007. There-
fore, The Bar Plan concluded that Koransky & Bouwer
should have made a report prior to the April 15 expira-
tion date of the 2006-07 policy. But because the law
firm did not make an initial report until August 2007,
The Bar Plan decided that Koransky & Bouwer could
not meet the coverage requirements for a claim arising
out of an act or omission predating the 2007-08 policy’s
effective date. The Bar Plan also relied upon the 2007-08
policy’s exclusion of “[a] Claim against an Insured
No. 12-1579                                            9

who before the Policy effective date knew, or should
reasonably have known, of any circumstance, act or
omission that might reasonably be expected to be the
basis of that Claim.” Thus, The Bar Plan declined to
represent Koransky & Bouwer in or indemnify it for
Buyer’s malpractice claim.
  Unsurprisingly, Koransky & Bouwer disagreed with
The Bar Plan’s determination, and eventually the par-
ties’ dispute ended up in federal court. Both parties
moved for summary judgment. The district court con-
cluded that coverage for Buyer’s malpractice action was
precluded by the terms of Koransky & Bouwer’s 2007-
08 policy because the law firm did not notify The Bar
Plan of its failure to deliver the executed contract to
Seller in February and of the Alabama and Ohio
lawsuits in March—all of which occurred prior to
April 15, 2007, when the 2006-07 policy expired and the
2007-08 policy became effective. Thus, the district court
granted The Bar Plan’s motion for summary judgment
while denying Koransky & Bouwer’s motion. Koransky
& Bouwer appeals.

                     II. Discussion
   On appeal, Koransky & Bouwer contends that its pro-
fessional liability insurance policy provided coverage
for Buyer’s malpractice claim because the law firm
did notify The Bar Plan when Buyer actually made a
malpractice claim. Alternatively, Koransky & Bouwer
argues that it notified The Bar Plan as soon as the law
firm had reason to think that its failure to deliver the
10                                              No. 12-1579

executed contract to Seller might result in a claim.
Finally, Koransky & Bouwer contends that, even if its
notice was untimely under the terms of the policy, The
Bar Plan was not prejudiced by the delay. The Bar
Plan disputes each of these contentions and argues in
its brief that it is entitled to rescission of the 2007-08
policy because Koransky & Bouwer’s application for
that policy contained a material misrepresentation.
Because the district court ruled at the summary judg-
ment stage, our review is de novo. Mass. Bay Ins. Co. v. Vic
Koenig Leasing, Inc., 136 F.3d 1116, 1119-20 (7th Cir. 1998).
“Moreover, insofar as interpretations of insurance
contracts are questions of law, we likewise review
such issues de novo.” Id.
  Because the district court sits in Indiana and the
parties do not challenge the district court’s application
of Indiana law, we construe Koransky & Bouwer’s
policy in accordance with Indiana law. See Citadel Grp.
Ltd. v. Wash. Reg’l Med. Ctr., 692 F.3d 580, 587 n.1 (7th
Cir. 2012) (“We do not worry about conflict of laws
unless the parties disagree on which state’s law applies.
Further, when neither party raises a conflict of law issue
in a diversity case, the federal court simply applies the
law of the state in which the federal court sits.” (internal
quotation marks and citations omitted)). Indiana law
provides that insurance policies are to be governed by
the general rules applicable to all contracts. Kimmel v.
W. Reserve Life Assurance Co. of Ohio, 627 F.3d 607, 609
(7th Cir. 2010). Hence, we must enforce the terms of
Koransky & Bouwer’s policy according to their plain
No. 12-1579                                              11

and ordinary meaning, so long as that meaning is unam-
biguous. Id.
  Koransky & Bouwer’s policy is a “claims made” policy.
“A ‘claims made’ policy links coverage to the claim
and notice rather than the injury.” Paint Shuttle, Inc. v.
Cont’l Cas. Co., 733 N.E.2d 513, 522 (Ind. Ct. App. 2000)
(citing Home Ins. Co. of Ill. v. Adco Oil Co., 154 F.3d 739,
742 (7th Cir. 1998)). “Thus, a ‘claims made’ policy
protects the holder only against claims made during
the life of the policy.” Id. (citing St. Paul Fire & Marine
Ins. Co. v. Barry, 438 U.S. 531, 535 n.3 (1978)).
   In this case, because Koransky & Bouwer reported
the claim to The Bar Plan in August 2007, the law
firm’s 2007-08 policy controls. As with the previous
policy, the 2007-08 policy required Koransky & Bouwer
to notify The Bar Plan during the policy period if, at
some point during that policy period, the law firm
“first becomes aware of a specific incident, act or
omission while acting in a professional capacity
providing Legal Services, which may give rise to a
Claim . . . .” This notice requirement “is not simply the
part of the insured’s duty to cooperate, it defines the
limits of the insurer’s obligation.” Paint Shuttle, 733
N.E.2d at 522; see also Ashby v. Bar Plan Mut. Ins. Co., 949
N.E.2d 307, 312 (Ind. 2011). That is, “the notice require-
ment is ‘material, and of the essence of the contract.’ ”
Paint Shuttle, 733 N.E.2d at 520 (quoting London Guarantee
& Accident Co. v. Siwy, 66 N.E. 481, 482 (Ind. Ct. App.
1903)). This means that “[t]he duty to notify an
insurance company of potential liability is a condition
12                                              No. 12-1579

precedent to the company’s liability to its insured.” Id.
(citing Shelter Mut. Ins. Co. v. Barron, 615 N.E.2d 503,
507 (Ind. Ct. App. 1993)). And “[w]hen the facts of the
case are not in dispute, what constitutes proper notice
is a question of law for the court to decide.” Id.
  The Bar Plan argues that Koransky & Bouwer did
not properly notify it of the potential liability because
Koransky & Bouwer did not notify it as soon as the
law firm first had a basis to believe that it had commit-
ted acts or omissions which may give rise to a mal-
practice claim, as required by the policy. Specifically, The
Bar Plan asserts that Koransky & Bouwer first knew
or should have known that it had committed such
acts or omissions in February and March—prior to
April 15, 2007, when the 2006-07 policy expired and
before the 2007-08 policy became effective. If so, then
Koransky & Bouwer’s notice was untimely because the
2007-08 did not cover acts or omissions predating the
policy period unless Koransky & Bouwer “had no basis
to believe that [it] had committed such an act or omis-
sion.” In fact, the policy expressly precluded coverage
for unreported actions or omissions predating the
policy period where, “before the Policy effective date,”
the law firm “knew, or should reasonably have
known, of any circumstance, act or omission that might
reasonably be expected to be the basis of that Claim.”
  Koransky & Bouwer initially responds that the 2007-08
policy did not require the law firm to notify The Bar
Plan until the law firm actually receives a malpractice
claim. The policy provisions quoted above demonstrate
No. 12-1579                                              13

that the Koransky & Bouwer’s argument is without
merit. The discovery clause required Koransky & Bouwer
to notify The Bar Plan within the policy period in which
the law firm first becomes aware of an act or omission
which “may give rise to a Claim.” (emphasis added).
Similarly, the policy expressly precluded coverage for
unreported actions or omissions predating the policy
period if the law firm knew or reasonably should
have known before the policy effective date “of any
circumstance, act or omission that might reasonably
be expected to be the basis of that Claim.” (emphasis
added). These provisions make clear that the obligation
to notify The Bar Plan arose, not when the law firm
has received an actual claim, but when it became aware
of an “act or omission” which “may give rise to a Claim.”
  Thus, the proper question is whether in February
and March 2007, prior to the 2007-08 policy’s effective
date, Koransky & Bouwer had knowledge of an act or
omission on its part that might reasonably be expected
to be the basis of a malpractice claim by Buyer. On Feb-
ruary 22, Koransky & Bouwer received a communica-
tion from Seller’s counsel stating that Seller was “rescind-
ing” its offer because it never received the executed
contract. On the following day, an associate at Koransky
& Bouwer attempted to salvage the deal by admitting
to Seller’s counsel that he had mistakenly misfiled the
executed contract and failed to deliver it to Seller.
The associate apologized and informed Seller’s counsel
that Buyer, who was without fault, still wished to
complete the sale. Seller’s counsel responded that the
deal was definitely off. In response, on March 2,
14                                             No. 12-1579

Koransky sent a letter to Seller’s counsel stating that
Buyer intended to enforce the contract and threatening
“to file appropriate litigation” if no agreement could
be reached.3 A reasonable attorney in Koransky &
Bouwer’s position would realize that his client might
bring a malpractice claim against him because, as a
result of the attorney’s mistake, Seller was refusing
to complete the negotiated sale.
  But we need not rely solely on the February exchange.
Three weeks later, Seller filed a declaratory-judgment
action in Alabama state court seeking a declaration that
no contract existed. Thereupon, Koransky & Bouwer
was informed of the filing and knew, beyond doubt,
that Seller had no intention of honoring its agreement
and that Koransky & Bouwer’s failure to deliver the
executed contract may result in a claim against it
for malpractice.
  Koransky & Bouwer responds that it had no reason
to think that the deal was truly doomed because it had
on good authority—a former Alabama Supreme Court
Chief Justice—that the Alabama court would not
exercise jurisdiction, and Buyer’s Ohio counsel informed
Koransky & Bouwer that the contract was enforceable
because Ohio law does not require delivery. But whether
a court would eventually rule in favor of Koransky &
Bouwer’s former client is irrelevant. The question is

3
   Koransky sent this letter eight days before he submitted
the application to renew Koransky & Bouwer’s professional
liability insurance.
No. 12-1579                                                15

whether Koransky & Bouwer had reason to believe
that their acts or omissions may result in a claim for
malpractice. Because Koransky & Bouwer knew that
Seller was refusing to go through with the deal as a
result of the law firm’s failure to deliver the executed
contract, it had such knowledge.
  Moreover, we decline Koransky & Bouwer’s invitation
to hold that the notice requirement was too burden-
some because it required the law firm to “report every
error, no matter how trivial . . . .” It may well be difficult
to determine exactly when an act or omission “might
reasonably be expected to be the basis of” a malpractice
claim. But this case is not a close one. Buyer believed
that the parties had formed a binding agreement.
However, as a result of Koransky & Bouwer’s failure
to deliver the executed contract, Seller refused to
complete the deal and active litigation ensued. Once
the Alabama case was filed, Koransky & Bouwer knew
or should have known that the only thing standing be-
tween it and a probable malpractice claim was the ques-
tion of whether the Alabama state court would exercise
jurisdiction. No matter how we construe the record, it
is clear that a reasonable attorney would have recog-
nized that his failure to deliver the contract, in light
of the communications and legal activity that quickly
followed, was an omission that could reasonably
be expected to be the basis of a malpractice claim.
  Koransky & Bouwer contends that, even if its notice
was untimely, The Bar Plan was not prejudiced by the
delay. The district court concluded that, under Indiana
16                                            No. 12-1579

law, prejudice is irrelevant to “claims made” professional
liability policies. See Paint Shuttle, 733 N.E.2d at 523
(“Because we believe that the extension of notice period
in a ‘claims made’ policy would create an unbargained
for expansion of coverage, we do not believe that [the
insurer] is required to show that it was prejudiced by
the untimely delay.”). On appeal, Koransky & Bouwer
does not explicitly challenge the district court’s ruling
regarding the controlling legal rule in Indiana. Nor
does Koransky & Bouwer cite any authority under-
mining that ruling or in support of the law firm’s limited
discussion of prejudice. Therefore, Koransky & Bouwer
has likely waived any challenge to the district court’s
ruling regarding prejudice. See United States v. Hook,
195 F.3d 299, 310 (7th Cir. 1999) (holding that failure
to address or develop a claim in an opening brief consti-
tutes waiver); Sanchez v. Miller, 792 F.2d 694, 703 (7th
Cir. 1986) (holding that failure to cite relevant au-
thority constitutes waiver).
  Of course, Koransky & Bouwer’s assertion that The
Bar Plan was not prejudiced is certainly an implicit
attack on the district court’s conclusion that prejudice
is legally irrelevant—albeit, an attack still unsupported
by precedent. But even if Koransky & Bouwer has not
waived the prejudice issue, we would agree with the
district court that Paint Shuttle renders the law firm’s
argument irrelevant. See 733 N.E.2d at 523.
  Although the analysis above disposes of Koransky &
Bouwer’s appeal, we briefly discuss one final matter
raised by The Bar Plan. Specifically, The Bar Plan argues
No. 12-1579                                               17

in its brief that it is entitled to rescission of the 2007-08
policy because Koransky & Bouwer’s application for
that policy contained a material misrepresentation—
namely, that the law firm responded in the negative
to the question: “Does the firm or any attorney or em-
ployee in the firm have knowledge of any incident, cir-
cumstance, act or omission, which may give rise to a
claim not previously reported to us?” But the district
court did not grant The Bar Plan’s rescission request,
and at oral argument we asked counsel for The Bar
Plan whether his client was still seeking rescission.4
Counsel responded, “No, I think you can go with exclu-
sion, but you could also go with rescission.” He also
observed that he did not think that we needed to
address the issue of rescission in order to get the result
that The Bar Plan seeks, and stated that he was com-
fortable with affirmation rather than an expansion of
the district court’s judgment to include rescission. Ac-
cordingly, because we are affirming, there is no need
to address the merits of The Bar Plan’s rescission argu-
ment. See McDonough v. Royal Caribbean Cruises, Ltd.,
66 F.3d 150, 151 (7th Cir. 1995) (“[I]f the district court’s
reasoning is sound and has sufficient evidentiary sup-
port, the appellate court need not consider issues on
which the district court’s holding did not rest.”).

4
    The 2007-08 policy expired on April 15, 2008.
18                                          No. 12-1579

                   III. Conclusion
   Koransky & Bouwer’s knowledge of the email ex-
change with Seller’s counsel on February 22-23 and of
the Alabama declaratory-judgment action filed on
March 14 constituted knowledge of “any circumstance,
act or omission that might reasonably be expected to be
the basis of” a malpractice claim by Buyer. Therefore,
the district court’s opinion and order granting The Bar
Plan’s motion for summary judgment and denying
Koransky & Bouwer’s motion for summary judgment
is A FFIRMED.
No. 12-1579                                              19

                      APPENDIX A
(Excerpts from Koransky & Bouwer’s 2006-07 professional
liability insurance policy):
II. COVERAGE
                            ***
C. DISCOVERY CLAUSE:
If during the Policy Period, or any Extension Period
elected hereunder, an Insured first becomes aware of a
specific incident, act or omission while acting in a profes-
sional capacity providing Legal Services, which may
give rise to a Claim for which coverage is provided
under this Policy, and during the Policy Period or any
Extension Period Coverage the Insured gives written
notice to the company of:
1. The specific incident, act or omission;
2. The injury or damage which has resulted or may result
from such incident, act or omission; and
3. The circumstance(s) by which the Insured first became
aware of such incident, act or omission;
then any Claim that may subsequently be made against
the Insured arising out of such incident, act or omission
shall be deemed for the purposes of this insurance to
have been made during the Policy Period or any
Extension Period elected hereunder. The Insured shall
cooperate fully with the Company as provided in Sec-
tion VII. CLAIMS, Paragraphs A. and B., and any investiga-
tion conducted by the Company or its representatives
shall be subject to the terms set forth in this Policy.
20                                            No. 12-1579

                     APPENDIX B
(Excerpts from Koransky & Bouwer’s renewal application
for the 2007-08 professional liability insurance policy):
NOTICE TO APPLICANT—PLEASE READ CARE-
FULLY:
REPRESENTATION: Applicant represents that the state-
ments and information contained herein are true and
that Applicant has not suppressed, omitted or misstated
any facts. Applicant has made inquiry with each lawyer
in the firm regarding the accuracy of the answers on
this application. Applicant agrees that this application
shall be the basis of the Policy of insurance issued by
the Company and incorporated therein. Applicant agrees
to notify the Company of any material change(s) in
the statements in the application forms between the date
of the application and the effective date of the Policy of
insurance. Applicant understands that any change(s)
may result in an adjustment of the terms and conditions
of the Policy of insurance and/or premium charges.
Applicant understands that the Policy applied for
provides coverage on a “claims made and reported” basis
for ONLY THOSE CLAIMS THAT ARE FIRST MADE
AGAINST THE INSURED AND REPORTED TO THE
COMPANY DURING THE POLICY PERIOD and that
coverage ceases with the termination of the Policy
unless Applicant exercises the options available in
the Policy for Extended Reporting Coverage.
No. 12-1579                                21

IMPORTANT REMINDER
TO AVOID LOSS OF COVERAGE IT IS IMPERATIVE
THAT ALL KNOWN CIRCUMSTANCES, ACT [sic] OR
OMISSIONS WHICH COULD RESULT IN A PROFES-
SIONAL LIABILITY CLAIM AGAINST YOU, YOUR
FIRM OR A PREDECESSOR IN BUSINESS BE RE-
PORTED TO YOUR PRESENT INSURER WITHIN THE
TIME PERIOD SPECIFIED IN YOUR PRESENT POLICY.
PLEASE CONTACT THE BAR PLAN MUTUAL INSUR-
ANCE COMPANY IF YOU DESIRE ASSISTANCE.
22                                           No. 12-1579

                     APPENDIX C
(Excerpts from Koransky & Bouwer’s 2007-08 professional
liability insurance policy):

               IMPORTANT NOTICES
This is a Claims-Made and Reported Policy. Only those
Claims first made against an Insured and reported to
the Company during the Policy Period are covered,
subject to the terms and conditions of this Policy.
If a Claim is made against an Insured during the Policy
Period as a result of an act or omission prior to the
Policy Period, Coverage is subject to the Insured having
no basis to believe that such Insured had committed
such an act or omission prior to the Policy Period and
subject to the other terms and conditions of this Policy.

                          ***

I. DEFINITIONS Whenever used in this Policy:

                          ***

D. “CLAIM” means: Receipt by an Insured of a demand
for money or services (including the service of suit or
the institution of arbitration proceedings) against the
Insured from one other than that Insured.
No. 12-1579                                             23

                           ***
M. “POLICY PERIOD” means: The one-year period from
the effective date of this Policy to the expiration date as
set forth in the Declarations or its earlier cancellation
or termination date.
                           ***
II. COVERAGE

A. PROFESSIONAL LIABILITY AND CLAIMS-MADE
AND REPORTED CLAUSE:
The Company will pay on behalf of an Insured all sums,
subject to the Limit(s) of Liability, Exclusions and terms
and conditions contained in this Policy, which an Insured
shall become legally obligated to pay as Damages as
a result of CLAIMS (INCLUDING CLAIMS FOR PER-
SONAL INJURY) FIRST MADE AGAINST AN INSURED
DURING THE POLICY PERIOD OR ANY APPLICABLE
EXTENSION PERIOD COVERAGE AND REPORTED
TO THE COMPANY DURING THE POLICY PERIOD,
THE AUTOMATIC EXTENDED CLAIM REPORTING
PERIOD, OR ANY APPLICABLE EXTENSION PERIOD
COVERAGE by reason of any act or omission by an
Insured acting in a professional capacity providing Legal
Services.

PROVIDED ALWAYS THAT such act or omission hap-
pens:
24                                           No. 12-1579

1. During the Policy Period: or
2. Prior to the Policy Period, provided that prior to the
effective date of this Policy:
 a. Such Insured did not give notice to the Company
 or any prior insurer of any such act or omission; and
 b. Such Insured had no basis to believe that such
 Insured had committed such an act or omission.

                           ***
III. EXCLUSIONS
THIS POLICY DOES NOT PROVIDE COVERAGE FOR
ANY CLAIM BASED UPON OR ARISING OUT OF:

                           ***
L. A Claim against an Insured who before the Policy
effective date knew, or should reasonably have known,
of any circumstance, act or omission that might
reasonably be expected to be the basis of that Claim.

                           ***
VII. CLAIMS
A. NOTICE OF A CLAIM:
As a condition precedent to the coverage provided by
this Policy and subject to the provisions of Section II.
COVERAGE, Paragraph D. of this Policy, an Insured
No. 12-1579                                                   25

shall, within twenty (20) days of the date of any Claim
is first made against that Insured, give written notice
of that Claim to the Company.

                              ***

VIII. OTHER CONDITIONS
A. APPLICATION
By acceptance of this Policy, all Insureds agree that the
representations made in the Declaration Letter and Ap-
plication (including all supplements) attached hereto
and hereby made part of this Policy are true and
complete to the best of the knowledge of all Insureds.
This Policy is issued in reliance upon the truth of such
representations and all Insureds warrant that no facts
have been suppressed or misstated. This Policy em-
bodies all agreements existing between the Insureds
and the Company and any agents of the Company
relating to this Policy.5

5
   The 2007-08 policy also contained a discovery clause identical
to the one in the 2006-07 policy.

                             4-2-13