The opinion of the court was delivered by: Yohn, J.
Gail and John Bradley ("the Bradleys") filed suit against plaintiff
Carosella & Ferry, P.C. ("Carosella") for malpractice. Carosella —
having purchased a malpractice insurance policy from defendant TIG
Insurance Company ("TIG") — filed for coverage on the Bradley
suit. TIG declined coverage, and Carosella subsequently sued TIG for
breach of contract and bad-faith conduct under 42 Pa. C.S.A. § 8371.
Before the court is TIG's motion for summary judgment on the breach of
contract issue. First, TIG contends that if the insured had a reasonable
basis to foresee that a malpractice claim would be made against the
insured for the provision of services rendered prior to the start of the
policy period, the policy does not cover claims arising from the provision
of those services. Second, TIG contends that the policy does not cover
claims made prior to the start of the policy period.
Several months prior to the start of the policy period, the Bradleys'
attorney wrote Carosella a letter stating that the Bradleys planned to
sue Carosella for malpractice. The letter provided a reasonable basis to
foresee that the Bradleys would make a claim against Carosella and in any
case, the letter is itself a claim made prior to the start of the policy
period. Accordingly, TIG's decision to decline coverage does not
constitute a breach of the policy.
The facts are undisputed. On October 29, 1998, Carosella received a
letter from the Bradleys' lawyer. Def.'s Mem. at Ex. A; Ex B (request and
response to Admission #1). Carosella had represented the Bradleys in
1997. Pl.'s Mem. at 6. The letter is entitled "Re: Bradley v. Carosella &
Ferry, P.C." and in relevant part states:
"On November 3, 1997, on behalf of the Bradleys and
their corporation, you filed a petition to open
judgment. Unfortunately, that petition did not assert
certain facial defects in the confessed judgments, nor
did your petition seek to strike the confessed
judgments. . . .
"You are hereby notified of the intention of Mr. and
Mrs. Bradley to file an action against you and your
law firm for professional malpractice consisting of
your failure timely to litigate the issues raised in
our subsequent Motion to Strike Confessed Judgment. If
you have not already done so, please notify your
errors and omissions carrier at once. . . .
"We will presently pursue a direct appeal and/or a
motion [seeking reconsideration]. In any event, the
Bradleys continue to sustain damage consisting, at a
minimum, of the expense of this extraordinary
litigation. Please ask your carrier to contact me at
Def.'s Mem. at Ex. A. On November 4, 1998, Carosella wrote back and
stated that the Bradleys did not have any grounds for their malpractice
claim, stated that Carosella would not contact its errors and omissions
carrier, and threatened to file suit against the Bradleys and their new
lawyers if the threatened malpractice suit were filed. Def.'s Mem. at
On August 17, 1999, the Bradleys filed a malpractice suit against
Carosella in the Court of Common Pleas of Chester County. Pl.'s Mem. at
6. Soon after, Carosella was served notice of the suit, and in turn,
Carosella notified its liability carrier, TIG, of the complaint and
requested that TIG provide a defense. Id. Carosella had purchased a TIG
malpractice insurance policy
for the period extending from March 1, 1999
through March 1, 2000.
TIG investigated Carosella's claim and determined that the policy
purchased by Carosella did not cover the Bradleys' suit. Def.'s Mem. at
6. On October 13, 1999, TIG issued its decision to Carosella. Id.
Subsequently, Carosella represented itself and filed a motion for
judgment on the pleadings. Pl.'s Mem. at 6. The motion was granted. Id.
Carosella sued TIG in state court for breach of contract and bad-faith
conduct in violation of 42 Pa.C.S.A. § 8371, and TIG removed the
action to the Eastern District of Pennsylvania. TIG moved for summary
judgment on the breach of contract issue, while Carosella moved for
summary judgment on the bad-faith conduct issue. However, both parties
have requested that the court resolve the breach of contract allegation
first. Letter from Attorneys for ...