An insurer was not obligated to provide malpractice coverage to a law firm where the firm knew it could be held liable for the fraudulent activities of a client but did not tell the insurer before purchasing the policy, the New York Court of Appeals decided Monday.

Disagreeing with the Appellate Division, 1st Department, New York’s highest court ruled that two insurers can invoke “prior knowledge” exclusions in excess coverage policies and refuse to indemnify Pepper Hamilton and partner W. Roderick Gagne in a suit for, among other things, professional malpractice and breach of fiduciary duty.

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