A Manhattan judge has ordered an insurer to pay the defense costs of a law firm facing a malpractice suit after the carrier initially denied coverage. In the underlying suit, Jane Kurtin alleged legal malpractice and other claims against partners R. Randy Lee and Michael Amtzis, and their now-dissolved firm, Lee & Amtzis. The complaint alleged Kurtin entered into two loan transactions with Lee and Astoria Station, a real estate company in which Lee was principal, and the loan payments became overdue, according to court documents. The suit, filed in Superior Court in New Jersey, where Kurtin lives, alleges that she made the loans in reliance of advice by Lee and Amtzis.

In 2010, Lee & Amtzis’ malpractice carrier, American Guarantee and Liability Insurance, denied coverage for the firm, citing various exceptions such as the policy shall not apply to any claim arising out of the insured’s capacity as an officer or employee of a business enterprise.

Ruling on summary judgment in Lee & Amtzis v. American Guarantee and Liability Ins., 653050/2011, Manhattan Supreme Court Justice Ellen Coin (See Profile) said the insurer must defend the firm. “Kurtin’s claims in her causes of action for negligence, legal malpractice and respondeat superior all are based exclusively on the Attorney Defendants’ obligation to Kurtin, not to Astoria or to Lee individually,” she said. “Thus, the exclusions relied upon by AGLIC are patently inapplicable.” Coin said the determination of the insurer’s duty to indemnify the firm and its partners must await the outcome of the New Jersey suit.

“We think Judge Coin made the correct decision,” said the firm’s attorney, Matthew Schwartz of Schwartz & Ponterio. The insurer’s attorney, Adam Smith of Coughlin Duffy, said his client is considering its options.