Napoli Shkolnik, PLLC v. Greenwich Insurance Co., Index No. 657246/2019 (N.Y. Sup. Ct. Sept. 18, 2020)
Nearly two years after it was sued in federal court in Maryland, the law firm Napoli Shkolnik reported the suit to its professional liability insurers, Greenwich Insurance Company and Hudson Excess Insurance Company. Greenwich and Hudson denied coverage on the grounds of untimely notice and failure to allege acts or omissions in the performance of professional services as required under the policies.
Napoli Shkolnik sued Greenwich and Hudson in New York State Supreme Court, seeking breach of contract damages of $900,000 and a declaration that the insurers were obligated to defend and indemnify the firm in connection with the Maryland federal action. Greenwich and Hudson moved to dismiss the complaint, arguing that the documentary evidence, including the insurance policies and the pleadings in the Maryland federal action, conclusively refuted Napoli Shkolnik's claim for coverage.
The trial court granted Greenwich and Hudson's motion to dismiss and denied Napoli Shkolnik's cross-motion to amend its complaint to add an affiliated law firm as a plaintiff. The court held that because the plaintiff in the Maryland federal action alleged that Napoli Shkolnik breached a fee-sharing agreement, that lawsuit did not involve acts or omissions in the performance of professional services. The court also held that Napoli Shkolnik "waited for nearly two years to tell [the insurers] about it. There is no way that was timely notice under the policies." The court denied Napoli Shkolnik's cross-motion to amend because the allegations in the underlying suit against the proposed plaintiff were for the breach of the same fee-sharing agreement and, therefore, the Maryland federal action did not constitute a claim for professional services under the policies.
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