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A lawyer who was sanctioned $800 for discovery violations and later lost a medical malpractice case when the court barred him from presenting critical expert witnesses should have known that his client would have “no other recourse but to file a legal malpractice suit, if she lost the appeal,” a federal judge has ruled. In his 26-page opinion in Westport Insurance Co. v. Mirsky, Senior U.S. District Judge Robert F. Kelly enforced a “prior knowledge” exclusion in a “claims made” legal malpractice policy. Kelly, of the Eastern District of Pennsylvania, found that when Philadelphia attorney Kenneth L. Mirsky purchased a claims-made policy in February 1999, he should have known that his conduct in 1997 in handling the case of client Renee Kaston might be the basis for a future legal malpractice claim. “The record shows that Mirsky did not comply with discovery rules in order to properly litigate Kaston’s case. The [Philadelphia Common Pleas] Court not only strongly criticized Mirsky’s actions, but dismissed Kaston’s case as a result of such actions,” Kelly wrote. As a result, Kelly concluded that “the act, error or omission forming the basis of the alleged legal malpractice took place prior to February 13, 1999, the date of inception of the … policy.” Likewise, Kelly found that Mirsky’s co-counsel in Kaston’s suit, attorney Michael Hepps, was also aware of Kaston’s potential future claim and therefore was not entitled to coverage under a nearly identical policy from Westport. Since the policy issued to Hepps included Mirsky as an additional insured — due to his status as an independent contractor working for Hepps — Kelly found that coverage was barred by Mirsky’s prior knowledge. But even if Mirsky did not qualify as an independent contractor, Kelly found that Hepps’ own prior knowledge would bar coverage. When analyzing an insurer’s argument for enforcement of a prior knowledge exclusion in a claims-made policy, Kelly found that courts “should apply a ‘reasonable person’ standard to determine whether a lawyer ‘knew or could have reasonably foreseen’ that his conduct might be expected to be the basis of a claim.” Under such an objective test, Kelly found, the insured lawyer cannot successfully defend on the ground that “he did not understand the implications of conduct and events that any reasonable attorney would have grasped.” Kelly found that by September 1998, Mirsky “was cognizant of the numerous discovery issues, the sanctions levied against himself and the court’s criticisms of Mirsky’s handling of the case.” And when the court granted summary judgment in Kaston’s case, and after the filing of an appeal on her behalf in October 1998, Kelly found that Mirsky “was well aware that Kaston would have no other recourse but to file a legal malpractice suit, if she lost the appeal.” As a result, Kelly found, “a reasonable attorney” in Mirsky’s position “would have realized that he had a dissatisfied client who would undoubtedly take further legal action absent a miraculous and unlikely turnaround in events.” Kaston is represented in the legal malpractice suit by attorney Edwin P. Smith. Westport was represented in the federal declaratory judgment suit by attorneys Dennis Dolan, Bryan G. Schumann, Katherine A. Jones and R.J. Smyk of Bollinger Ruberry & Garvey in Chicago.

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