West Virginia Record

Monday, September 23, 2019

Insurer says it shouldn't have to cover attorney who fell for scam


By Kyla Asbury | Jul 17, 2019

CLARKSBURG — A federal complaint has been filed against a West Virginia law firm after an insurance company argued it is not responsible for covering a claim filed by the firm after it fell victim to a scam.

ALPS Property & Casualty Insurance Co. filed the lawsuit against S. Sean Murphy and his firm, according to a complaint filed July 1 in U.S. District Court for the Northern District of West Virginia.

On April 4, United Bank and Betty J. Parmer participated in a mediation of a 2017 lawsuit filed in Monongalia Circuit Court. The mediation resulted in a settlement and an agreement by Parmer to pay United Bank a confidential settlement amount. On April 11, Murphy requested "wire instructions" for the settlement payment from United Bank's counsel, Sean P. George, according to the suit.

ALPS claims George said he would request the information and would forward it to Murphy. Later that day, a person or group posing as George provided Murphy with wire instructions for transfer and indicated that the payment should be paid to a beneficiary known as CB Ventures and listed an account number for a Chase Bank account in Texas, which Murphy then provided to Parmer's banker, Sandra Drummond at Fulton Bank in Harrisburg, Pennsylvania.

On April 15, Fulton Bank transferred the settlement payment according to the wire instructions Murphy provided. However, on May 3, George informed Murphy that United Bank had never received the settlement payment, according to the suit.

ALPS claims the loss of the settlement payment was reported to Fulton Bank, Chase Bank and the FBI. Fulton Bank attempted to but could not recover the settlement payment.

On May 23, Geroge argued that the wire instructions Murphy transmitted to Fulton Bank were incorrect and that he had never provided the "bogus instructions" to him. He contended that the bank had a duty to verify the instructions as accurate before acting upon them.

ALPS claims George demanded the defendants contact law enforcement to see if the police would investigate and also requested a status conference with the court in the United Bank suit regarding the loss of the settlement payment.

ALPS, which issued a Lawyers Professional Liability Insurance Policy to Murphy's firm, claims Murphy's policy does not provide coverage for the potential claim.

"The potential claim is outside the coverage afforded by the policy because it arises from or in connection with conversion, misappropriation, wrongful disbursement, improper commingling, or negligent supervision by any person of client funds or property, or funds or property of any other person, held or controlled by an insured in any capacity or under any authority," the complaint states.

ALPS is seeking for judgment that the policy does not afford coverage for the potential claim and that ALPS has no duty to defend or indemnify the defendants under the policy. It is represented by Tiffany Durst of Pullin, Fowler, Flanagan, Brown & Poe.

U.S. District Court for the Northern District of West Virginia case number 1:19-cv-00132

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