Shaya B. Pacific, LLC v. Wilson, Elser, Moskowitz, Edelman & Dicker, LLP

This was a legal-malpractice action that involved multiple insurance carriers. Kazimierz Golebiewski, a demolition worker, was injured while working for and on the premises of Shaya B. Pacific, LLC (Pacific) (plaintiff). Accordingly, Golebiewski and his wife filed suit against Pacific soon after. Pacific’s insurer, Certain Underwriters at Lloyd’s of London (Lloyd’s), then retained Wilson, Elser, Moskowitz, Edelman & Dicker, LLP (Wilson) (defendant) to defend Pacific in Golebiewski’s personal-injury suit. Lloyd’s policy had a liability limit of $1,000,000, whereas Golebiewski’s suit named a demand of $52.5 million. Accordingly, in January 2001, Lloyd’s sent a letter to Pacific advising of the potential for exposure above the policy limits and advising that Pacific might wish to engage its own counsel with regard to excess judgments and to check with Pacific’s insurance agent to determine if Pacific had any applicable excess coverage. In February 2003, Golebiewski was granted summary judgment against Pacific regarding liability. In April 2003, when the matter of damages was to be tried, Wilson tendered the case to National Union Fire Insurance Company (National Union) for defense and indemnification with regard to any excess claim. Why Pacific would have been an insured of National Union was unclear. In a letter in May 2003, National Union declined the tender of the case and disclaimed coverage because National Union had not received timely notice of the suit. Further, National Union indicated that it lacked information to confirm that National Union insured Pacific. In October 2003, Golebiewski obtained a judgment against Pacific for $5.6 million, with his wife obtaining judgment for $795,000. Accordingly, Pacific filed suit against Wilson for legal malpractice based on negligence for failing to advise National Union of the suit and for breach of contract. Wilson then filed a motion to dismiss the complaint on the basis that (1) Pacific could not establish that it was insured under the National Union policy and thus lacked causation, (2) any negligence by Wilson was not a proximate cause because Pacific became aware of the need to notify an excess carrier more than three months before Wilson was retained, and (3) Wilson had no duty to advise Pacific regarding coverage matters. The New York Supreme Court granted the motion and dismissed the complaint, but Pacific appealed.