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An insurance company must indemnify and defend a law firm in a legal malpractice claim based on a fired associate’s actions, federal Judge Denise L. Cote of the U.S. District Court for the Southern District of New York has ruled. Chicago Insurance Co. could not escape its obligation under an insurance policy, Cote found, because the firm, Fuchsberg & Fuchsberg, “had no reason to believe that a professional duty had been breached or to foresee that a claim would be brought against the firm.” Cote’s ruling came in Fuchsberg & Fuchsberg v. Chicago Insurance Co., 00 Civ. 3118, on cross-motions for summary judgment that the parties agreed to convert to a bench trial. The dispute was triggered when Stephen J. Finkelstein retained Fuchsberg & Fuchsberg in 1980 to prosecute a medical malpractice claim against a doctor and Mount Sinai Hospital based on Finkelstein’s loss of a kidney. The medical malpractice case was placed on the calendar in Kings County Supreme Court in 1983. But it was stricken from the calendar in 1984 after the court granted the hospital’s default motion based on the failure of Finkelstein to submit to a physical examination and produce medical records — and the failure of his lawyer to appear and argue a motion. Nonetheless, in 1991, counsel for the hospital, assuming the case was still alive, wrote the Fuchsberg firm requesting that the firm produce medical authorizations for Finkelstein. Then, in 1993, the clerk of the court entered a certificate of abandonment and neglect to prosecute the case as of 1985. Judge Cote noted that, “despite this entry, several exhibits demonstrate that Fuchsberg attorneys acted as if the case were still active in 1993: for example, expert reports were signed in October 1993, and a letter was sent to a medical expert in December 1993.” And Cote said that the firm’s “desk book,” the computer database that tracks the status of the firm’s cases, still showed the Finkelstein matter as active. But firm lawyers later discovered that attorney Alan Jacobs had deleted the Finkelstein case from the computer database, and that Jacobs had repeatedly told Finkelstein that the case was still on the calendar. The firm also discovered, Cote said, that five other cases had been deleted from the desk book. In 1999, Jacobs was fired by Fuchsberg & Fuchsberg, and the firm went on to inform Chicago that there were “six possible claims” outstanding against the firm based on Jacobs’ actions. LEGAL MALPRACTICE CLAIM When Finkelstein sued the firm, Chicago challenged its obligations under the policy, asserting that it was required to cover Fuchsberg for malpractice prior to the effective date of the policy only if partners or employees of the firm had no reasonable basis to believe that one of its lawyers had breached a professional duty or could foresee that a claim would be made against the firm. So the issue for Judge Cote was whether or not Fuchsberg & Fuchsberg should have been aware of Jacobs’ misconduct at an earlier date and informed Chicago of its potential liability. “Chicago has failed to prove that Fuchsberg or any of its attorneys other than Jacobs had a reasonable basis before 1995 to believe that malpractice had occurred or to foresee that a claim would be brought against the firm,” Cote said. “Chicago relies on the fact that the firm learned in 1993 that Jacobs had misrepresented the status of one of his other cases to a client and considered firing him at that time,” she said. “While the age of the lawsuit, filed in 1980, and the discovery of Jacobs’ misconduct in 1993, should have caused a responsible person to review the Finkelstein v. Gelernt file carefully in 1993, there is no evidence that anyone did.” However, she said, that fact did not relieve Chicago of its obligations under the policy. The judge also found “unavailing” the insurance company’s claim that the actions in dispute occurred before 1989. “The alleged acts were part of a continuous course of conduct by one or more Fuchsberg attorneys beginning in 1984, and continuing through at least 1994,” she said. “The defendants in Finkelstein v. Gelernt continued to act as if the case were still alive after 1989, as did attorneys at Fuchsberg.” Jeffrey G. Stark, of Meyer, Suozzi, English & Klein, represented Fuchsberg & Fuchsberg. Kevin F. Cavaliere of Steinberg & Cavaliere, represented Chicago Insurance Co.

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