Court Opinion

ID: 70803
Source: CourtListenerOpinion
Date Created: 2010-04-26 07:07:46+00
Date Added: 2024-06-11T12:07:15.652312
License: Public Domain

United States Court of Appeals,

                            Eleventh Circuit.

                              No. 94-8219.

         CONTINENTAL CASUALTY COMPANY, Plaintiff-Appellant,

                                   v.

   HSI FINANCIAL SERVICES, INC., et al., Defendants-Appellees.

                             April 30, 1996.

Appeal from the United States District Court for the Northern
District of Georgia (No. 1:91-CV-2022-MHS);  Marvin H. Shoob,
Judge.

Before TJOFLAT, Chief Judge, ANDERSON, Circuit Judge, and MORGAN,
Senior Circuit Judge.

     PER CURIAM:

     In 1991, HSI Financial Services, Inc. ("HSI") brought suit

against Page, Sevy & Henderson, P.C., a law firm, and its partners,

Joseph Frances Page, Jerry Sevy, and William L. Henderson.        HSI

alleged that Page converted to himself various sums of money

belonging to HSI and that this would not have occurred had Sevy and

Henderson exercised due care in supervising Page's activities. HSI

sought judgment against Sevy and Henderson (as well as Page), and

the law firm.

     At the time of the conversion, the law firm had a professional
                                                           1
liability   policy    with Continental Casualty Company.        After

receiving HSI's complaint, the firm and the partners requested

Continental to defend the case.         Continental refused to do so,

citing the following policy exclusion:

     1
      The complete factual history is set forth in our initial
opinion in this case, Continental Casualty Co. v. HSI Financial
Servs., Inc., 61 F.3d 845 (11th Cir.1995).
     We will not defend or pay, under this Coverage Part for ...
     any claim arising out of ... any dishonest, fraudulent,
     criminal or malicious act or omission by you or any of your
     partners, officers, stockholders or employees....

Continental then brought this suit seeking a declaration whether it

had a duty to defend the suit HSI had brought against the firm and

the partners.   The district court held that Continental had a duty

to defend, and this appeal followed.

     In our initial opinion, we found that "Page's alleged theft of

the funds clearly falls within the plain language of" the exclusion

clause.    Continental   Casualty   Co.,   61   F.3d    at   847.   Thus,

Continental has no duty to defend HSI's claims against Page or

against the law firm.     The only question remaining is whether

Sevy's and Henderson's failure to exercise due care in supervising

Page likewise falls within the exclusion clause.

     Georgia law provides the rule of decision in this case.

Because Georgia precedent afforded no answer to the question posed

here, we certified the following question to the Supreme Court of

Georgia:

          DOES A CLAIM FOR A LAW PARTNER'S NEGLIGENCE WITH RESPECT
     TO SUPERVISING AND MITIGATING A FELLOW PARTNER'S CRIMINAL ACT
     "ARISE OUT OF" "ANY DISHONEST, FRAUDULENT, CRIMINAL OR
     MALICIOUS ACT" WITHIN THE MEANING OF THIS INSURANCE POLICY
     EXCLUSION?

Continental Casualty Co., 61 F.3d at 847.              The supreme court

answered the question in the affirmative, Continental Casualty Co.

v. HSI Financial Servs., Inc., 266 Ga. 260, 466 S.E.2d 4 (1996),

finding that,

     within the plain meaning of the insurance policy, the claims
     against Sevy and Henderson for negligence and malpractice with
     respect to their alleged failure to supervise and mitigate
     Page's criminal acts arose out of the dishonest, fraudulent,
     criminal and malicious conduct engaged in by Page, bringing
     those claims within the scope of the policy's exclusionary
     clause.

Continental Casualty Co., 466 S.E.2d at 7 (emphasis added).

     The court's answer to our certified question determines this

appeal:   HSI's claims against Sevy and Henderson fall within the

exclusion.   Accordingly, Continental has no duty to provide a

defense to HSI's suit.     The district court's holding to the

contrary is therefore REVERSED.

     SO ORDERED.