The opinion of the court was delivered by: James M. Moody United States District Judge
Pending before the Court are cross-motions for summary judgment by plaintiff and defendants. For the reasons stated below the motion of the plaintiff will be granted and the motion of defendants denied.
The operative facts on which each motion is based are not in dispute. This coverage dispute arises out of the representation by Bobby Keith Moser ("Bobby Moser") of Michael Dewayne Sims with respect to matters involving the Michael Dewayne Sims Family Trust.
The firms with which Moser was associated at the relevant periods were Jewell, Moser, Fletcher & Holleman, a Professional Association ("JMFH") and Moser & Asociates, P.A. ("Moser & Associates").
Continental Casualty Company ("Continental") provided liability coverage to Moser and Associates through JMFH from August 1, 2001 through August 1, 2002 which policy was extended to August 1, 2003 and then cancelled September 1, 2002 ("JMFH Policy"). Beginning on September 1, 2003 Continental insured Bobby Keith Moser under a Lawyer Professional Liability Policy ("Moser Policy"). This coverage extended to September 1, 2004.
Both policies were "claims made and reported" policies which contained the following language:
THIS IS A CLAIMS MADE AND REPORTED POLICY. IT APPLIES ONLY TO THOSE CLAIMS THAT ARE BOTH FIRST MADE AGAINST THE INSURED AND REPORTED IN WRITING TO THE COMPANY DURING THE POLICY PERIOD. PLEASE REVIEW THE POLICY CAREFULLY AND DISCUSS THIS COVERAGE WITH YOUR INSURANCE AGENT OR BROKER.
The policies define a claim as:
a demand received by the Insured for money or services arising out of an act or omission, including personal injury, in the rendering of or failure to render legal services. A demand shall include the service of suit or the institution of an arbitration proceeding against the Insured.
Suit was first filed on March 26, 2003 by Michael Sims and the Family Trust in Lonoke Circuit Court. Sims alleged that Moser was acting as his lawyer and that Moser committed wrongdoing in failing to provide his client with information regarding sale of the property which comprised the corpus of the trust. This complaint only sought injunctive relief to obtain information regarding the sale of the property.
The complaint was amended on October 23, 2003 to seek compensatory and punitive damage alleging (1) breach of fiduciary duty; (2) conversion; and (3) recission. Default judgment was entered on the amended complaint on June 3, 2004.
A criminal information was filed against Bobby Moser in United States District Court for the Eastern Division of Arkansas, Western Division, on August 6, 2004 alleging that Moser defrauded eight unnamed victims from 1996 until 2004. As part of his agreement to plead guilty to these charges Bobby Moser promised to make restitution to the Sims Family Trust. Exclusion "A" of the Moser Policy states that the policy does not apply to "[a]ny claim based on or arising out of any dishonest, fraudulent, criminal or malicious act or omission by an Insured except that this exclusion shall not apply to personal injury."
Continental contends that it is entitled to summary judgment on the claims made by Michael Sims and the Family Trust because the claim was made on March 26, 2003 when no coverage was in effect for Moser and Associates under the JMFH policy or Bobby Moser under the Moser Policy. Continental also contends that, even if the claims under the Mosley Policy were timely made, the claims would be excluded under Exclusion "A" of the Moser Policy because it arises out of Bobby Moser's fraudulent conduct.
Defendants, on the other hand, assert that the first claim against Moser was the filing of the amended complaint on October 23, 2003 which would be covered by the Moser Policy and that the criminal act exclusion does not apply to ...