The United States District Court for the Southern District of Mississippi, applying Mississippi law, has granted summary judgment for an insured attorney, holding that his insurer was obligated to defend the attorney where the underlying complaint alleged misconduct that occurred both before and after the retroactive date in the attorney's professional liability policy. Burton v. Continental Cas. Co., 2007 WL 2669201 (S.D. Miss. Sept. 6, 2007).

The insurer issued a duty-to-defend professional liability policy to the attorney with a retroactive date of November 26, 2001. The policy included a "Retroactive Exclusion Clause Endorsement," which provided that the grant of coverage was available only if "the act or omission occurred on or after 11/26/2001."

Former clients filed suit against the attorney in December of 2002 in connection with his representation of them in a lawsuit against a life insurance company. The underlying plaintiffs alleged that, prior to November 2001, the attorney and other associated lawyers attempted to force plaintiffs to settle their case through a settlement pursuant to which the attorney would receive a separate sum of $2.9 million. The underlying plaintiffs also alleged that the attorney refused to return the case files when asked to do so in November 2002. The insurer denied coverage and declined to defend the attorney in the underlying action. The attorney subsequently filed the instant action.

On cross-motions for summary judgment, the court first held that the allegations concerning conduct that occurred prior to the November 26, 2001, retroactive date in the policy did not trigger the insurer's duty to defend. In this regard, the court stated that "[a]ll of the factual allegations in the relevant portions of the complaints—except for [the allegations regarding the clients' files]—involve acts or omissions that purportedly occurred prior to November 26, 2001; therefore, the Retroactive Exclusion Clause Endorsement, with its date of November 26, 2001, operates to preclude coverage for any claims predicated upon such alleged acts or omissions." The court noted, however, that "the parties have not broached the issue of whether—assuming that [the insurer] did have a duty to defend [the attorney] based upon other allegations in the complaints that were ostensibly covered by the Policy—[the insurer] would then have been responsible for defending even these uncovered allegations." 

Turning next to the allegations concerning the attorney's alleged failure to return the clients' files in 2002, the court held that these allegations triggered the insurer's duty to defend. In so holding, the court first rejected the insurer's argument that the allegations at issue did not constitute a "Claim," as defined by the policy. The court held that the assertions regarding refusal to return the clients' files "and the ad damnum clause viewed in tandem may be reasonably described as 'a demand received by the Insured for money or services arising out of an act or omission . . . in the rendering or failure to render legal services.'" It rejected the insurer's argument that the prayer for relief must be paired with factual allegations in the body of the complaint. 

The court also rejected the insurer's contention that because the allegations in question related to conduct that occurred after the underlying plaintiffs fired the attorney, any misconduct in 2002 was not in connection with provision of "legal services." The court reasoned that the definition of "legal services" in the policy is ambiguous because "the Policy does not address whether responding to former clients' requests for case files and other documents is a 'service performed . . . for others as a lawyer.'" It further noted that the insurer "has not directed the Court to any authority which holds that, upon the discontinuance of representation, an attorney ceases to have any persisting duties to a former client arising out of the attorney-client relationship which might reasonably fall under the label of 'legal services.'" Accordingly, the court held that some of the allegations of the underlying complaint fell within the scope of the policy, triggering the insurer's duty to defend, and that the insurer "failed to discharge this duty," at least with respect to those allegations.