by the Act, and I shall consider this documentary evidence as well. Id. (finding that the trial court erred when it precluded the admission of receipts and canceled checks pursuant to the Dead Man's Act.)
B. Knowledge and Reliance
Defendants contend that summary judgment must be denied because there exist genuine issues of material fact with regard to the third and fourth elements of the cause of action -- that Angst knew the statements were false and made them in bad faith and that the Mt. Airy relied on the statements in issuing the policy. Defendants argue that the record contains no statements or admissions by Angst confirming that he misappropriated funds from the estate of Glosser. Despite the lack of direct proof of the knowledge of Angst, I infer from the overwhelming evidence of record that Angst knew of the misappropriation of funds at the time he completed and submitted the application for insurance and made the representations on the application in bad faith. See McCloskey v. New York Life Ins. Co., 292 Pa. Super. 1, 436 A.2d 690, 692 (Pa. Super. Ct. 1981) (inferring from uncontroverted testimony and documentary evidence that insured knowingly and in bad faith misrepresented his medical condition when answering the medical questionnaire).
What is that evidence? William J. Glosser died on April 21, 1992. The executrix of the estate of Glosser, Dawne Ney ("Ney"), testified that Angst contacted her after the death of Glosser, claiming that he represented Glosser. Deposition of Ney ("Dep.") at 9. According to Ney, she clearly expressed, at the onset, her desire to sign all checks. Dep. at 15. Despite her wishes, Angst established a checking account for the estate and withdrew money from the account by issuing checks payable to himself or the professional corporation, which he signed, without her authorization. Dep. at 10-11, 13, 15. Angst recorded the purpose of each withdrawal from the account with a notation on the memo line, appearing on the bottom left corner of each check. Angst denoted "predeath legal expense" on check number 101 dated June 10, 1992, in the amount of $ 3,200. However, Ney was unaware of any debts or expenses owed by Glosser and defendants have presented no evidence of this purported debt for pre-death legal expenses. Dep. at 19. From June 11, 1992, through March 1994, Angst wrote five checks (numbers 102, 108, 138, 139 and 151) in varying amounts ranging from $ 350 to $ 10,000 to cover what he designated "legal/administrative expenses," "administrative expenses" or "legal/administrative fees." However, Angst and Ney never discussed any fees payable to Angst for acting as the lawyer for the estate. Dep. at 15. The remaining checks numbered 103, 119, 120, 121, 122, 123, 124, 126, 128, and 130, written from June 1992, through June 1993, were payable to Thomas E. Angst or the professional corporation with a memo to indicate "transfers to the Skippack escrow account." Ney testified that she did not know the meaning of this designation. Dep. at 24. Because Angst had offices located in Skippack, Pennsylvania, I infer that this designation indicated the firm escrow account. However, Ney never gave permission for Angst to write checks payable to himself or his professional corporation. Dep. at 15. When Angst completed and submitted the insurance application on behalf of the professional corporation in May 1994, he had already withdrawn from the estate checking account $ 148,869.42, without authorization from the executrix of the estate and for reasons unbeknownst to the executrix.
In July 1992, when Ney inquired about the distribution of specific bequests to beneficiaries in accordance with the terms of Glosser's will, Angst refused to respond to her inquiry. Dep. at 43-44. Thereafter, Ney attempted on several occasions to meet with Angst. Each time Ney scheduled an appointment with Angst, Angst's secretary called to cancel the meeting. Dep. at 45. In sum, Angst cancelled approximately twenty or thirty scheduled meetings. Dep. at 47-48. When Angst finally attended a meeting with Ney and her attorney, Angst simply gestured with his hands in response to questions about the assets of the estate of Glosser. Dep. at 48. Furthermore, Angst ignored the repeated requests of Ney to obtain an accounting. Dep. at 49. All of Angst's evasive activity took place before he submitted the application for insurance on behalf of the professional corporation.
Defendants fail to offer a scintilla of evidence to contradict or refute the testimony of Ney. Nor do defendants attempt to justify the checks written by Angst. To defeat a motion for summary judgment the non-moving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. Defendants have failed to meet this burden. I find that defendants have failed to offer any suggestion to shed doubt on the obvious conclusion that a reasonable person in the position of Angst would have known, at the very least, that neglect of a client's case, including consistent cancellations of scheduled appointments, creates a legitimate basis for a legal malpractice claim and, furthermore, that the (1) failure to provide a reasonable explanation when questioned about assets over which the attorney has control and (2) failure to comply with the request for an accounting to justify the disposition of such assets could give rise to a claim for legal malpractice or misappropriation. I conclude that a reasonable jury could not find that Angst could or would have no idea of the possibility of a legal claim against him in light of the events that transpired and the acts or omissions for which he was personally responsible. No genuine issue of material fact remains with regard to the knowledge and bad faith of Angst at the time he completed and submitted the insurance application, which contained misrepresentations indicating no knowledge of circumstances, acts, errors or omissions that could result in a professional liability claim against any attorney of the firm, on behalf of the professional corporation.
Although defendants contend that a genuine issue of material fact remains with respect to the reliance of Mt. Airy on the representations of Angst, defendants have not pointed to any evidence of record to support their contention. The express terms of the insurance policy state, "In consideration of the payment of the premium and in reliance upon the statements in the application and supplements, attached hereto and made a part hereof, and subject to all of the terms of the policy, the Company agrees with the NAMED INSURED as follows," see Motion for summary judgment, Exhibit A (emphasis added). Condition XIII of the policy provides:
By acceptance of this policy, all INSUREDS reaffirm as of the effective date of this policy that (a) the statements in the application including all information communicated by the INSURED to the Company, attached hereto and made a part hereof are all INSUREDS' agreements and representations, (b) this policy is issued in reliance upon the truth and accuracy of such representations and (c) this policy embodies all agreements between all INSUREDS and the Company or any of its agents relating to this insurance.
See Motion for summary judgment, Exhibit A (emphasis added). Furthermore, Lucy Aeillo, the supervisor of underwriters at the time Angst submitted the application for coverage of his law firm, confirmed in a sworn statement that the representations on the application were material and that the underwriting department relied on the representations in agreeing to issue the policy to Thomas E. Angst & Associates, P.C. See Motion for summary judgment, Exhibit A. Upon consideration of the evidence of record, I conclude that no reasonable jury could find that the misrepresentations on the application did not influence the judgment of the insurer in issuing the policy to Thomas E. Angst & Associates, P.C.
In sum, defendants have failed to meet their burden to show that they will be able to produce admissible evidence at trial to defeat the grounds upon which the motion for summary judgment is based. I conclude from the evidence of record that no reasonable jury could find that Angst's representation that the law firm applicant had no knowledge of any lawyers in the firm who knew of any circumstances, acts, errors or omissions that could result in a professional liability claim against any attorney of the firm was made in good faith and without knowledge of (1) his neglect managing the calls, appointments, and requests of Dawne Ney, a client of the firm, and (2) his unauthorized transfer of funds from the estate of Glosser to himself and the firm. I further conclude that no reasonable jury could find that Mt. Airy did not rely on the statements made by Angst in the application, in light of the express terms of the insurance policy and the sworn statements of the underwriter.
This Court concludes that Mt. Airy has proven every element to support its cause of action, i.e., the statements made by the law firm applicant were false; (2) the statements made were material; (3) the applicant knew the statements were false and made them in bad faith; and (4) Mt. Airy relied on the statements in issuing the policy. Accordingly, summary judgment will be granted in favor of Mt. Airy and against defendants.
An appropriate Order follows.
AND NOW, this 22nd day of January, 1997, upon consideration of the motion of plaintiff Mt. Airy Insurance Company ("Mt. Airy") for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure (Document No. 12), the various briefs of the parties relating thereto, and the pleadings, depositions, answers to interrogatories, admissions on file, affidavits, and other discovery of record, having found that there remain no genuine issues of material fact, it is hereby ORDERED that the motion for summary judgment is GRANTED and judgment is hereby entered in favor of plaintiff Mt. Airy Insurance Company and against defendants.
IT IS HEREBY DECLARED that the Professional Liability Insurance Policy No. 524-197695-6 issued by Mt. Airy to Thomas E. Angst and Associates, P.C. is void ab initio and Mt. Airy has no obligation to the named insured under the policy.
IT IS FURTHER ORDERED that Mt. Airy shall return to the named insured, within 30 days of the entry of this Order, any and all premiums paid by the named insured in connection with the issuance of the Professional Liability Insurance Policy No. 524-197695-6, or if further judicial review is obtained, within 30 days of the entry of final judgment.
THIS IS A FINAL ORDER.
LOWELL A. REED, JR., J.
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