July 2014 Article:
Goldberg v. Axis Surplus Insurance Company, 39 Fla. L. Weekly D741a (Fla. 3d DCA April 9, 2014)
Insurance coverage was found by the Third DCA against insurance carrier in $168 Million class action lawsuit under a multiple claims provision of a professional liability accounting policy. The Appellate Court found that a class action brought by investors in real estate projects brokered by Berman Mortgage Corp. qualified for coverage under an Axis claims-made professional liability policy because it related to a similar, individual complaint that project investor Robert Revitz lodged during the policy period. The allegations of professional liability asserted in the class action complaint took place outside of the coverage period for the professional liability policy.
The trial court entered summary judgment on behalf of the carrier, finding that the Revitz suit was a claim under a provision preserving coverage for claims arising from an insured’s self-reported wrongful acts. The provision requires information about the scope of an insured’s liabilities, and since the Revitz suit lacked that information, the trial court reasoned that it didn’t activate coverage for the subsequent class action lawsuit. The Third DCA disagreed with the trial court and reversed the summary judgment finding that the class action should have been evaluated as a tag-along claim to the Revitz suit under a separate, multiple claims policy provision, which had no such self-reporting requirement.
Specifically, the Appellate Court found that “the multiple claims provision does not require that the insured anticipate the subsequent related claim or provide a description of the estimated damages that might result from any subsequent claim,” and that “the multiple claims provision governs whether the class claim relates back to the Revitz claim.” The main issue analyzed was whether the class action suit arose from the same common facts and circumstances as the Revitz claim and should be treated as one wrongful act under the policy, according to the opinion. The Third DCA concluded that both claims were based on the same course of conduct by which Berman allegedly failed to perform proper due diligence on its real estate projects, maintain proper accounting and detect liens on properties that provided collateral for loans. The Court’s ultimate interpretation of the policy provisions at issue aligns with the purpose of multiple-claims provisions in claims-made policies by limiting the carriers liability to a single policy period and coverage limit.