Sparks v. St. Paul Insurance Co.
New Jersey Supreme Court
495 A.2d 406 (1985)
- Written by Rich Walter, JD
Facts
St. Paul Insurance Company (St. Paul) (defendant) insured Raymond Guarriello against legal-malpractice claims under a series of one-year, claims-made policies in force between late 1976 and early 1980, when St. Paul canceled Guarriello’s coverage for nonpayment of premiums. Unlike typical claims-made policies, St. Paul’s policies covered a lawyer only for malpractice events occurring and reported within the one-year duration of the policy. Any retroactive coverage was limited to years in which the lawyer was insured by St. Paul. In 1978, Guarriello represented John and Carolyn Sparks (plaintiffs) in a house sale that, due to Guarriello’s negligence, turned sour and gave rise to a lawsuit, for which the Sparks hired new counsel. Soon after taking on the case, the new counsel reported Guarriello’s negligence to St. Paul. The Sparks eventually lost the house-sale case, but they successfully sued Guarriello for malpractice and went on to sue for a declaratory judgment that St. Paul was liable for covering the malpractice-damages award. The trial court’s summary judgment for the Sparks was affirmed by an intermediate appellate court. St. Paul appealed to the New Jersey Supreme Court.
Rule of Law
Issue
Holding and Reasoning (Stein, J.)
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