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New York Commercial Division Case Compendium A Searchable Database of Court Decisions Issued by New York’s Commercial Division

Law Firm’s Failure to File Notice of Appeal in Coverage Action Not Malpractice Where Insured’s Underlying Losses Were Not Covered under Policy

Posted in Declaratory Judgment, Healthcare, Insurance, Legal, Malpractice, Oing, Jeffrey K., Unjust Enrichment

In a decision dated December 30, 2015, the Appellate Division, First Department affirmed an order from the New York County Commercial Division granting defendant-law firm’s motion to dismiss plaintiff-health care provider’s malpractice action. The case arose out of an employment dispute between plaintiff and one of its doctors, who ultimately sued plaintiff for wrongful termination.

When plaintiff’s malpractice carrier refused to defend and indemnify plaintiff in connection with the employment dispute, plaintiff retained defendant and brought an action seeking a declaration that its carrier had a duty to do so, and the carrier removed plaintiff’s DJ action to federal court. After plaintiff and its former employee settled the underlying employment action, the District Court granted the carrier’s motion for judgment on the pleadings in the DJ action, finding that the settlement and related defense costs were not insurable losses under plaintiff’s medical malpractice insurance policy. Defendant sought reconsideration of the carrier’s motion but never appealed the District Court’s judgment.

After its motion for reconsideration was denied, plaintiff retained new counsel and attempted to appeal the District Court’s judgment, which was dismissed as untimely. Plaintiff then commenced this action against defendant for legal malpractice. The Supreme Court granted defendant’s motion to dismiss plaintiff’s malpractice action, also finding that losses related to the underlying employment dispute were not covered under plaintiff’s policy. Plaintiff appealed.

Following the District Court and Supreme Court, the First Department affirmed, holding that plaintiff “failed to establish that its insurance contract covered the loss for which plaintiff sought coverage in the federal court declaratory judgment action.” While acknowledging that defendant’s failure to appeal the District Court’s judgment “constituted a breach of their duty,” the First Department held that “plaintiff did not show that defendant’s negligence was a proximate cause of plaintiff’s losses.”

Women’s Integrated Network, Inc. v Anderson Kill P.C. , 133 AD3d 512 [1st Dept 2015]