Westport Insurance v. Mirsky , 84 F. App'x 199 ( 2003 )

Opinions of the United
2003 Decisions States Court of Appeals
for the Third Circuit
12-23-2003
Westport Ins Corp v. Mirsky
Precedential or Non-Precedential: Non-Precedential
Docket No. 02-3779
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"Westport Ins Corp v. Mirsky" (2003). 2003 Decisions. Paper 30.
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 02-3779
___________
WESTPORT INSURANCE CORPORATION
v.
KENNETH L. MIRSKY, ESQUIRE; MICHAEL HEPPS, ESQUIRE;
THE LAW OFFICES OF MICHAEL B.L. HEPPS;
RENEE ROSETTI KASTON; DWIGHT THOMAS PETERSON
Kenneth L. Mirsky, Esquire; Michael Hepps, Esquire
and the Law Offices of Michael B.L. Hepps,
Appellants
___________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
District Court Judge: The Honorable Robert F. Kelly
(D.C. Civil No. 00-cv-04367)
___________
Submitted Under Third Circuit L.A.R. 34.1(a)
December 9, 2003
Before: AM BRO, FUENTES & CHERTOFF, Circuit Judges.
(Opinion Filed: December 23, 2003)
________________________
OPINION OF THE COURT
________________________
FUENTES, Circuit Judge:
Appellant Westport Insurance Corporation (“Westport”) brought a declaratory
judgment action against its insureds, Kenneth L. Mirsky, Esq. (“Mirsky”), Michael Hepps,
Esq. (“Hepps”) and the Law Offices of Michael B.L. Hepps (“Hepps Law Offices”), seeking
confirmation that it does not owe any coverage to them stemming from a legal malpractice
action brought against the attorneys. Westport relies on Exclusion B of the professional
liability policies the corporation issued to Mirsky and Hepps, which excludes coverage for
any CLAIM based upon, arising out of, attributable to, or directly or
indirectly resulting from:
....
B. any act, error, omission, circumstance or PERSONAL INJURY
occurring prior to the effective date of this POLICY if any
INSURED at the effective date knew or could have reasonably
foreseen that such act, error, omission, circumstance or
PERSONAL INJURY might be the basis of a CLAIM.
(Appellee’s Supplemental Appendix at S7-S8.) Hepps and Mirsky first bought one-year
professional liability policies from Westport’s predecessor in 1995, and have subsequently
bought one-year policies from Westport each year.
The District Court conducted a three-day bench trial and issued findings of fact which
we summarize briefly here. The underlying action with which Westport was concerned arose
out of a medical malpractice lawsuit filed in July 1995 by Renee Kaston against Valentine
Ciullo. In late 1995, Kaston’s attorney, Dwight Peterson, recruited Hepps to assist in the
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medical malpractice matter. Shortly after signing on, Mirsky began assisting Hepps in
researching various issues in the case.
By order dated October 21, 1997, the trial court in the medical malpractice action
barred Kaston’s expert witnesses from testifying as a sanction for alleged discovery
violations by her attorneys, and ordered Mirsky to pay a total of $800 in sanctions to the
defendants. Without these experts, Kaston could not present sufficient evidence to avoid
summary judgment, which the trial court granted the defendants on September 18, 1998.
Sometime after the grant of summary judgment (the record does not indicate the exact
dates), Mirsky and Hepps opted to renew their insurance policies with Westport. On
February 13, 1999, Mirsky’s one-year policy incepted; Hepps’ policy incepted on July 14,
1999. Neither Hepps nor M irsky reported to Westport any potential claim against them by
Kaston. In November 1999, Kaston notified Hepps and Mirsky that she was suing them for
legal malpractice, and Hepps and M irsky in turn notified Westport, which led to this
declaratory judgment action.
The District Court exercised jurisdiction over this matter based upon diversity of the
parties. 28 U.S.C. § 1332(a)(1). We have appellate jurisdiction pursuant to 28 U.S.C. §
1291. This Court reviews a district court’s findings of fact for clear error. Scully v. U.S.
WATS, Inc., 238 F.3d 497, 505 (3d Cir. 2001), and its conclusions of law de novo, Henglein
v. Colt Industries Operating Corp., 260 F.3d 201, 208 (3d Cir. 2001).
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After a careful review of the record and the Parties’ arguments, we find no basis for
disturbing the District Court’s thorough and well-reasoned opinion. The District Court first
made the sound conclusion that Exception B is not ambiguous. The District Court then
determined that Kaston’s legal malpractice claim arose out of acts and errors resulting during
the course of Hepps and Mirsky’s representation of Kaston. The District Court therefore
granted Westport judgment on the grounds that Hepps and M irsky should have reasonably
known of Kaston’s potential claim by September 18, 1998 (the date the trial court granted
summary judgment to the defendants), or by October 23, 1998 (the date they filed an appeal
of Kaston’s case), in either case, well before the inception of the polices under which they
now claim insure them for the alleged malpractice. The District Court’s conclusion was
warranted by the facts and the law. See Coregis Ins. Co. v. Baratta & Fenerty, Ltd., 264 F.3d
302, 307 (3d Cir. 2001) (“When an attorney has a basis to believe he has breached a
professional duty, he has a reason to foresee that his conduct might be the basis of a
professional liability claim against him.”)
The District Court also properly noted that because Mirsky was covered under his own
policy, as well as under Hepps’ policy (because he admitted to acting as an independent
contractor on behalf of Hepps), Exclusion B of the Hepps policy barred coverage for both
Mirsky and Hepps in connection with the Kaston malpractice action, because the Exclusion
states that if “any insured” knew of the basis of a claim, there is no insurance for any insured
under the policy. Additionally, the District Court pointed out that Hepps himself knew of the
potential malpractice claim, thus undeniably barring coverage under his policy. We will
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affirm for substantially the same reasons stated in the D istrict Court’s exhaustive opinion.
_____________________________
TO THE CLERK OF THE COURT:
Kindly file the foregoing Opinion.
/s/ Julio M. Fuentes
Circuit Judge
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