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St. Paul Fire & Marine Insurance Co. v. Global Title Co.

October 16, 2006

ST. PAUL FIRE & MARINE INSURANCE COMPANY PLAINTIFF
v.
GLOBAL TITLE COMPANY, INC., ET AL. DEFENDANTS



The opinion of the court was delivered by: Garnett Thomas Eisele United States District Judge

ORDER GRANTING SUMMARY JUDGMENT

Before the Court is a Motion for Summary Judgment filed by Plaintiff St. Paul Fire & Marine Insurance ("St. Paul"). Gregory Hopkins, as Successor Receiver for Global Title Company, Inc. ("Successor Receiver"), has filed a response in opposition to the motion. Mr. Hopkins is the only Defendant who responded to the summary judgment motion.*fn1

St. Paul seeks a declaration that it owes no duty to defend or indemnify Defendants Global Title Company, Inc. ("Global") or Mary O'Hanlon Smith a/k/a Mary Nash ("Smith") in connection with certain claims filed against them by Defendants Columbian National Title Insurance Company ("Columbian"), Arley Rabey, Jr. ("Rabey"), John Bradley Martin ("Martin"), and Daniel C. Deguisne and Rebecca L. Desguisne (collectively, the "Desguisnes") in Arkansas state courts. The underlying state court litigation will be referred to collectively as the "Underlying Litigation." In the Underlying Litigation, Columbian, Rabey, Martin, and the Desguinses seek (or sought) restitution for losses incurred as a result of Ms. Smith's (Global's president) admitted misappropriation and diversion of Global escrow and operating account funds.

For the reasons stated below, the Court concludes that St. Paul is entitled to judgment as a matter of law.

FACTS WITHOUT MATERIAL CONTROVERSY

The following facts are taken from the Statement of Facts submitted by St. Paul and uncontroverted by the Successor Receiver.

I. Relevant Policy Provisions

St. Paul began providing professional services liability insurance to Global on May 24, 2004, pursuant to a Real Estate Professional Services Liability Protection Policy (Policy No. GL00645093), effective May 24, 2004 through May 24, 2005 (the "Policy"). The Policy's basic coverage provision provides:

Real estate professional services liability. We'll pay amounts any protected person is legally required to pay as damages for covered loss that: * results from real estate professional services by or for you; * is caused by a wrongful act committed on or after the retroactive date and before the ending date of this agreement; and * results in a claim or suit first made or brought against a protected person and reported to us while this agreement is in effect, or during the limited reporting period or the extended reporting period, if either one applies.

We'll consider each wrongful act in a series of related wrongful acts to be committed on the date the first wrongful act in the series of related wrongful acts is committed. (Policy, Pl.'s Exh. 1 at P0450 p. 2).

The Policy contains the following exclusion provisions:

Handling of Funds. We won't cover loss that results from any of the following:

* Any unauthorized act committed by any protected person that deprives an owner of the use of their funds.

* Any unauthorized use of funds by any protected person.

* Mixing client-funds with any protected person's funds.

* The failure of any protected person to properly account for funds. (Pl.'s Exh. 1 at P0450 p. 10).

Criminal, Dishonest o Fraudulent Wrongful Acts or Knowing Violations of the Rights or Laws. We won't cover loss that results from any criminal, dishonest, or fraudulent wrongful act or any knowing violation of rights or laws committed by:

* The protection person; or

* Anyone with the consent or knowledge of the protected person.

However, we won't apply this exclusion to our duty to defend that protected person until it has been determined that such criminal, dishonest, or fraudulent wrongful act or such knowing violation of rights or laws was committed. (Pl.'s Exh. 1 at P0450 p. 10).

Known wrongful acts. We won't cover loss that results from any wrongful act, including any part of related wrongful acts, that any protected person knew about before the beginning date from which we or any of our affiliated insurance companies have continuously provided this ...


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