Law Firm's Execution of Tolling Agreement Constituted Making of "Claim" Under Professional-Liability Policy

On October 27, 2023, Justice Joel M. Cohen of the New York County Commercial Division issued a decision in Allied World Assurance Company (U.S.) Inc. v. Golenbock Eiseman Assor Bell & Peskoe, LLP, Index No. 653762/2022, holding that an insured's execution of a tolling agreement was a "Claim" under the insured's professional-liability policy, and because this "Claim" was made before the policy period began, the carrier was entitled to a declaratory judgment that this "Claim" was not covered under the policy, explaining:

The Policy expressly includes within the definition of claim "a request to toll or waive a statute of limitations." It is undisputed that Golenbock and Workspace, its former client, entered into the Tolling Agreement prior to the Policy period. Under the terms of the Policy, a tolling agreement need only to seek to hold Golenbock responsible for "any Wrongful Act" to constitute a claim (Policy Section I.2.b ). Golenbock' s argument that the Tolling Agreement is ambiguous or not specific enough is unavailing. Although the Tolling Agreement does not describe the specific claims Workspace was considering, it references the 106 Spring Street Action concerning specific transactions on which Golenbock advised Workspace. The parties had no relationship other than as attorney and client, and thus the only claim that reasonably could have been contemplated was one for a Legal Services Wrongful Act, as defined in the Policy. The terms of the Policy do not require that the Tolling Agreement spell out the proposed claims in
detail.

Under the terms of the Policy, therefore, the "claim" embodied in the Workspace Action was in fact made prior to the Policy's effective period. Accordingly, there is no coverage under the Policy for the Workspace Action and Plaintiff is entitled to summary judgment on its first cause of action for a declaratory judgment (Am. Country Ins. Co. v Umude, 176 AD3d 542, 542 [1st Dept 2019]).

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning an insurance-coverage dispute.