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Pelagatti v. Minnesota Lawyers Mutual Insurance Co.

United States District Court, Third Circuit

June 26, 2013

GUSTINE PELAGATTI, SR., Plaintiff,
v.
MINNESOTA LAWYERS MUTUAL INSURANCE CO., Defendant.

MEMORANDUM

EDUARDO C. ROBRENO, District Judge.

Gustine J. Pelagatti, Sr. (Plaintiff) brings this action against Minnesota Lawyers Mutual Insurance Co. (Defendant), seeking a declaratory judgment and damages arising from allegations that Defendant breached its contractual duty to defend Plaintiff pursuant to a legal-malpractice policy and Pennsylvania's bad faith statute, 42 Pa. Cons. Stat. § 8371.[1] Plaintiff and Defendant filed cross-motions for summary judgment. For the reasons that follow, the Court will grant Defendant's Motion for Summary Judgment and deny Plaintiff's cross-motion.

I. BACKGROUND

On or around February 4, 2003, Plaintiff purchased a legal-malpractice insurance policy from Defendant. Pl.'s Mot. Summ. J. ¶ 1, ECF No. 14. Plaintiff renewed the policy annually between 2003 and 2010. Pl.'s Mot. Summ. J. Ex. 2, Pl.'s Aff. ¶ 2. Plaintiff completed a Firm Information Verification Form to continue his insurance coverage from Defendant in late 2009. Def.'s Mot. Summ. J. Ex. L, Firm Verification Form. On the form, Plaintiff checked an option that reads:

There have been changes to the Firm Name, Schedule of Lawyers or significant changes to the previously submitted application information or the firm is aware of a claim(s) or circumstances that could reasonably result in claims or disciplinary actions that have not been reported to Minnesota Lawyers Mutual. The undersigned will provide immediate written notification on this form or an attachment describing the changes, claims, potential claims and disciplinary actions to Minnesota Lawyers Mutual before accepting the quotation.

Id. Plaintiff noted on the form that his firm's name had changed, but he did not discuss any potential or outstanding claims. Id.

Plaintiff executed a request to issue insurance coverage after filling out the form described above. Def.'s Mot. Summ. J. Ex. M, Request-to-Issue. Plaintiff's insurance policy (the Policy) was a claims-made policy that became effective on February 1, 2010. Id . The coverage section of the Policy specifies as follows:

WE will pay, subject to OUR limit of liability, all DAMAGES the INSURED may be legally obligated to pay and CLAIM EXPENSE(S), due to any CLAIM, provided that:
(1) the CLAIM arises out of any act, error or omission of the INSURED or a person for whose acts the INSURED is legally responsible;
(2) the act, error, or omission occurred on or after the PRIOR ACTS RETROACTIVE DATE and prior to the expiration date of the POLICY PERIOD;
(3) the CLAIM results from the rendering of or failure to render PROFESSIONAL SERVICES;
(4) the CLAIM is deemed made during the POLICY PERIOD; and
(5) the CLAIM is reported to U.S. during the POLICY PERIOD or within 60 days after the end of the POLICY PERIOD.

Def.'s Mot. Summ. J. Ex. P, Policy, at 1. Relevant to this action, the Policy specifies that a claim is made when "an INSURED first becomes aware of any act, error or omission by any INSURED which could reasonably support or lead to a demand for damages." Id.

On June 18, 2006, Tondalia Cliett's son drowned on an unsupervised beach in Ocean City, New Jersey (the City). Pl.'s Mot. Summ. J. Ex. 3, Ocean City Police Incident Report, at 1. The next month, Cliett retained Plaintiff to represent her in her own right and as administratrix of her son's estate in a wrongful death and survival action against the City. Pl.'s Mot. Summ. J. ¶ 8. At no point during Plaintiff's representation of Cliett was he admitted to practice law in New Jersey.[2] Def.'s Mot. Summ. J. Ex. B, Pelagatti Dep., at 11:17-20, May 22, 2012.

On September 18, 2006, ninety days after Cliett's son's death, Plaintiff filed a complaint in the United States District Court for the District of New Jersey on Cliett's behalf. Def.'s Mot. Summ. J. Ex. A, Cliett v. City of Ocean City, No. 06-4368 (JBS), 2007 WL 2459446 (D.N.J. Aug. 24, 2007). On November 24, 2006, the City filed a motion to dismiss Cliett's complaint for failure to place the City on notice of the action as required by the New Jersey Tort Claims Act (NJTCA). Id. at *6. Plaintiff untimely filed the required Notice of Claim with the City after receiving the motion to dismiss. He filed a motion for leave to file a late notice of claim in the district court a week later. Id. at *2. The district court converted the City's motion to dismiss into a motion for summary judgment, granted summary judgment for the City and denied Plaintiff's motion. Def.'s Mot. Summ. J. Ex. D, Order, Aug. 21, 2007.

Plaintiff then filed a timely motion for reconsideration; shortly thereafter, he voluntarily withdrew the motion and instead appealed to the Third Circuit. Def.'s Mot. Summ. J. Ex. C, Cliett v. City of Ocean City Docket, at 3. The Third Circuit dismissed Cliett's appeal as untimely because Plaintiff filed it more than thirty days ...


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