Court orders Aspen to defend law firm in liability case
A federal appeals court ruled that Aspen American Insurance must defend law firm Marcus & Cinelli in a professional liability case alleging fraudulent conveyance and tortious interference. The Second Circuit reversed a lower court decision on Monday, finding that actions taken by the firm while handling client assets fell within coverage terms.
Patterson Belknap Webb & Tyler sued Marcus & Cinelli after the firm facilitated the sale of a 24.79 carat diamond ring belonging to client Barbara Stewart and collected fees from the proceeds. Patterson held an unpaid judgment against Stewart and had served her with a New York restraining notice.
Aspen denied coverage by citing a policy exclusion for misappropriation of assets. The appeals court determined that the complaint did not allege Marcus & Cinelli acted without the client’s consent, only that the firm potentially violated creditors’ rights. New York law requires insurers to resolve ambiguous policy language in favor of policyholders.
