The opinion of the court was delivered by: William W. Caldwell
This is a diversity action controlled by Pennsylvania law. Plaintiff, Minnesota Lawyers Mutual Insurance Company (MLM), seeks a declaratory judgment that it has no duty to defend or indemnify defendants, Thomas J. Ahrens, Esq., and his law firm, Ahrens Law Firm, P.C. ("the firm"), in two civil suits pending against them in the Court of Common Pleas of Cumberland County, Pennsylvania. The plaintiffs in those suits, in some capacity all legal clients of Ahrens and the firm, seek to recover funds they lost in investments Ahrens had arranged. At the pertinent times, MLM was the insurer for Ahrens and the law firm for claims arising from the performance of legal services.
In addition to Ahrens and the firm, MLM has named as defendants in this action the plaintiffs in the underlying state-court actions. Defendant, David E. Ricker, the only plaintiff in one of the actions, has filed a motion for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c). The nine plaintiffs in the second state-court action, which we will call the "Wagner action" after the lead plaintiff, have also filed a motion for judgment on the pleadings.
MLM presents several reasons why it has no duty to defend or indemnify. After review of the parties' submissions, we agree with at least one of those reasons, that the policy excludes coverage for claims "arising out of the solicitation or sale of . . . specific investments." We thus need not consider the other reasons and will grant the declaratory relief MLM seeks.
Under Fed. R. Civ. P. 12(c), "[a]fter the pleadings are closed - but early enough not to delay trial - a party may move for judgment on the pleadings." To be successful on a Rule 12(c) motion, the moving party must establish that "no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law." Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir. 2008)(quoted case omitted). "[W]e must view the facts presented in the pleadings and the inferences to be drawn therefrom in the light most favorable to the nonmoving party." Id. (quoted case omitted).
The complaints in the underlying state-court actions are part of the pleadings because they are attached to MVM's complaint as exhibits. See Fed. R. Civ. P. 10(c). See also Churchill v. Star Enterprises, 183 F.3d 184, 190 n.5 (3d Cir. 1999). In any event, as public records, they may be considered on a Rule 12(c) motion. Id.; Sutton v. Royal Chevrolet-Oldsmobile-Pontiac-Buick, Inc., No. 03-1825, 2004 WL 90071, at *3 n.3 (E.D. Pa. Jan. 15, 2004).
A. The Pertinent Policy Language
The policy obligated MLM to insure Ahrens and the firm for losses suffered "arising out of any act, error or omission of the INSURED . . . resulting from the rendering or failing to render PROFESSIONAL SERVICES while engaged in the private practice of law . . . ." (Doc. 28-2, CM/ECF p. 5, Am. Compl., Ex. A).*fn1 The policy defines "professional services," in pertinent part, as "legal or notary services for others . . . ." (Id., p. 7). The policy contains several exclusions. One of those exclusions precludes coverage for "any CLAIM arising out of the solicitation or sale of specific securities or specific investments by any INSURED." (Id.).
In his state-court complaint (his second amended complaint), Ricker alleges the following, in relevant part. In November 2008, Ahrens and the firm did some legal work for him and a business partner. (Doc. 28-3, p. 3 ¶ 4). During a cell phone call regarding those services, Ahrens spoke "about a possible investment opportunity . . . involv[ing] the purchase of gold" that "guaranteed a 100-percent profit and presented no risk" because any funds invested "would be secured by a note and a mortgage on real property." (Id. ¶ 5).
Ricker later "contacted Ahrens about the investment opportunity." (Id., ¶ 6). Ahrens told him that it was "fully-subscribed," (id.), "but that another opportunity existed which would guarantee a 50-percent return." (Id.). Ahrens told Ricker that this investment opportunity also presented no risk because the funds which Ricker invested would be secured by a note and a mortgage on real property. (Id.). "When gold hit its 'target number' the deal would be 'locked' and the funds would be paid ...