Mendel v. Home Insurance Co.
United States District Court for the Eastern District of Pennsylvania
806 F. Supp. 1206 (1992)
M. Mark Mendel and Daniel Murray were attorneys and officers and directors of the law firm M. Mark Mendel, Ltd. (Mendel Ltd). Mendel, Murray, and Mendel Ltd. (collectively, the Mendel lawyers) (plaintiffs) had a professional-liability-insurance policy with Home Insurance Company (Home) (defendant). Mendel and Murray were also officers of Barton and Company (Barton), a subcontractor for a company owned by Marc Silver. Because of a business dispute between Barton and Silver, Murray signed, and Mendel Ltd. filed, an involuntary-bankruptcy petition against Silver’s company. Mendel stated in renewing the Home insurance policy that Mendel Ltd. filed the petition on Barton’s and its own behalf. Silver sued the Mendel lawyers for intentional interference with contractual and prospective contractual relations and intentional infliction of emotional stress. Nearly four years later, Home issued a reservation-of-rights letter based on a clause excluding judgments arising out of “deliberately wrongful acts.” The jury found for Silver. The Mendel lawyers brought an action to compel Home to pay the judgment. Home counterclaimed for a declaration that Home had no obligation under the policy. The Mendel lawyers and Home cross-moved for summary judgment. The Mendel lawyers argued, in part, that coverage was not excluded for the intentional economic torts that gave rise to the judgment, Mendel Ltd. was an innocent party under a provision that exempted innocent parties from the exclusion clause, and Home’s delay in sending the reservation-of-rights notice prejudiced the Mendel lawyers.
Rule of Law
Holding and Reasoning (Bartle, J.)
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