Not all courts read policies with a blind eye or with a goal of maximizing coverage. In Continental Casualty Company v. Howard Hoffman and Associates, 2011 IL App (1st) 100957 (August 15, 2011),sixteen different probate estates filed claims against a law firm for embezzling funds from their accounts. The amounts at issue far exceeded $300,000. The perpetrator of the embezzlement, a probate paralegal at the firm, pled guilty to 11 separate charges of theft and a judgment for restitution was entered in favor of each of the 11 different estates involved in the criminal charges. The insured's professional liability policy had limits of liability of $100,000 per claim and $300,000 in the aggregate. The court found that the "per claim" limit of liability of $100,000 applied to all of the civil claims asserted against the firm, and not the aggregate limits, as all of the insured's acts or omissions were connected to one overall scheme of the insured's probate paralegal to divert funds fraudulently from the estates to herself. As such, the claims of all of the estates should be treated as a single, "related claim" under the policy. The decision hinged on the policy language and the application of the terms "claims" and "related claims." A "Claim" was defined as "a demand received by the Insured for money or services arising out of an act or omission… in the rendering of or failing to render legal services." "Related claims" was defined as "all claims arising out of a single act or omission or arising out of 'related acts of omissions' in the rendering of legal services. "Related acts or omissions," in turn, was defined as "all acts of omissions in the rendering of legal services that are temporally, logically, or causally connected by any common fact, circumstance, situation, transaction, event advice or decision." The policy provided that if "related claims" are subsequently made against the insured and reported to the company, all such related claims, whenever made, shall be considered a single claim first made and reported to the company within the policy period in which the earliest of the related claims was first made and reported to the company. The court held that when combined together, the plain language of these various policy provisions indicates that that all claims arising out of all acts or omissions in the rendering of legal services that are temporally, logically or causally connected by any common fact, circumstance, situation , transaction, event, advice or decision shall be considered a single , related claim. That single related claim is subject to the per claim limit of $100,000. The court determined that although the paralegal's scheme involved the accounts of different estates, her actions in carrying out her embezzlement plan had "common ties" and involved the same "modus operandi." She only embezzled funds from accounts for which she had full responsibility. She then concealed her forgeries with the common scheme of destroying bank statements from each affected account and preparing false bookkeeping reports for the law firm. Employing the plain and ordinary meaning of the terms in the policy, the court found that the scheme to embezzle funds involved a common fact, circumstance, situation or decision and that the acts or omissions were temporally, logically or causally connected. The court found that the "cause theory," adopted by the Illinois Supreme Court in Nicor Inc. v. Associated Electric & Gas Ins. Serv. Ltd, 223 Ill. 2d 407 (2006), was not relevant to the determination of whether acts or omissions in the rendering of legal services constitute related claims. The "cause theory" applies only to "occurrence" based policies. The court also refused to apply the reasonable expectation doctrine, noting that a number of courts have rejected the notion that that doctrine applies in Illinois.
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