Charleston law firm must pay for malpractice case against it

CHARLESTON – Because they ignored “plainly worded policy requirements” to file a claim with their insurance carrier, the state Supreme Court has ruled two Charleston attorneys and their law firm will have to eat the costs of a 2008 legal malpractice case.

The court on April 25 affirmed a 2011 decision made by Kanawha Circuit Judge Charles E. King, Jr. that granted summary judgment in favor of Attorney Liability Protection Services, Inc. and against Dr. Richard D. Lindsay, his wife Pamela Tabor Lindsay and their firm, Tabor Lindsay and Associates.

In a unanimous, nine-page memorandum opinion, the court said King was correct in finding ALPS had no duty to indemnify the Lindsays or TL&A in a legal malpractice case filed by a former client as they filed the claim at least two years too late.

Memorandum opinions are issued in cases that present no new issues of law.

Smith and his wife Nancy hired the Charleston law firm of DiTrapano, Barrett & DiPiero in 1990 to aid them in filing a medical malpractice suit. Because of their expertise in the medical field – Richard Lindsay is a medical doctor, and Pamela Lindsay a registered nurse – DiTrapano, Barrett and DiPiero brought TL&A into the case.

As a result of a settlement in the case, the Nancy E. Smith Irrevocable Trust was established in 1995 to receive the proceeds. She died three years later.

A decade later, Ronnie filed a pro se lawsuit against TL&A, alleging that it wrongfully issued to Pamela Lindsay, one of the three trustees, a check in the amount of $290,000. Later in 2008, Smith would hire an attorney and file an amended complaint to include a claim of negligence.

According to court records, the Lindsays and TL&A opted to initially hire defense counsel on their own. The first time they notified ALPS of Smith’s suit was via letter on May 20, 2010, two years after he filed the amended complaint.

Citing its claims-made-and-reported policy that states any claim must be filed in the year of policy coverage, ALPS declined to cover the Lindsays or TL&A. In their defense, they stated they didn’t file the claim during the 2008 coverage year because they viewed Smith’s suit as a “nuisance case.”

Though the Lindsays submitted a claim shortly after Smith filed a second amended complaint in October 2010, ALPS again denied it on the grounds the facts alleged were the same in the two prior complaints.

Because the claims-made-and-reported policy was unambiguous, the court said ALPS was correct to deny the Lindsays and TL&A coverage.

“The ALPS policy plainly required Tabor Lindsay to provide notice to ALPS of the Smith suit in 2007 when that claim was first made,” the court said. “Tabor Lindsay’s failure to provide notice as required by the policy precludes coverage for that claim under the 2007 policy.

“Tabor Lindsay seeks to overcome the plain policy language by arguing, in essence, that because the allegations contained in the initial Smith suit would not have been covered under their policy, there was no need to report the same.

“However, given the broad policy definition of the term ‘claim,’ and the fact that Tabor Lindsay was required by the policy to notify ALPS of ‘an act, error or omission... that could reasonably be expected to be the basis of a claim’ as well as ‘every demand, notice, summons or other process received’ in connection with a claim, Tabor Lindsay’s argument is untenable.”

In a footnote to the opinion, the court said there is no indication if an ethics complaint was ever lodged against the Lindsays for the alleged misappropriation of the $290,000 from the trust. However, the court said the allegation is serious enough that the Office of Disciplinary Counsel, the arm of the court that investigates attorney misconduct, should at least consider it.

Without offering any further comment, the court directed Rory Perry II, the court clerk, to forward a copy of the opinion to ODC.

Justice Allen H. Loughry II recused himself from hearing the case. No reason is stated for his recusal.

Putnam Circuit Judge Phillip M. Stowers was assigned in his place.

West Virginia Supreme Court of Appeals case number 11-1651