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Continental Casualty Co. v. Law Offices of Kaplan

Case Date: 12/03/2003
Court: 1st District Appellate
Docket No: 1-02-2951 Rel

THIRD DIVISION
FILED: 12/03/03




No. 1-02-2951

CONTINENTAL CASUALTY COMPANY,

                          Plaintiff-Appellee,

                                       v.

LAW OFFICES OF MELVIN JAMES KAPLAN,

                          Defendant-Appellant,

                                          and

CORT CHUBKO,

                           Defendant. 

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)		 APPEAL FROM THE
CIRCUIT COURT OF
COOK COUNTY









HONORABLE
RICHARD A. SIEBEL,
JUDGE PRESIDING.


PRESIDING JUSTICE HOFFMAN delivered the opinion of thecourt:

The Law Offices of Melvin James Kaplan (Kaplan) appeals froma summary judgment entered in favor of its malpractice insurancecarrier, Continental Casualty Company (Continental), inContinental's action seeking a judicial declaration that it hasno duty to defend Kaplan in an action brought by one of itsformer clients, or to indemnify Kaplan from any judgment thatmight be entered in that action. Kaplan also appeals from thedenial of its cross-motion for summary judgment. For the reasonswhich follow, we reverse the judgment of the circuit court andremand this cause with directions to enter a partial summaryjudgment in favor of Kaplan.

The facts of this case are not in dispute. Continentalissued a policy of insurance (hereinafter referred to as the"Policy") pursuant to which it agreed to pay on behalf of Kaplanall sums in excess of the stated deductible that Kaplan "shallbecome legally obligated to pay as damages and claim expensesbecause of a claim that is both first made against *** [Kaplan]and reported in writing to *** [Continental] during the policyperiod by reason of an act or omission in the performance oflegal services by *** [Kaplan] or by any person for whom ***[Kaplan] is legally liable ***." The Policy defines "legalservices," in relevant part, as "those services performed by anInsured for others as a lawyer." It also states that the term"damages" includes "judgments, awards, and settlements," but thatthe term does not include, among other things:

"1. legal fees, costs and expenses paid orincurred or charged by *** [Kaplan], no matter whetherclaimed as restitution of specific funds, forfeiture,financial loss, set-off or otherwise, and injuries thatare a consequence of any of the foregoing;

2. civil or criminal fines, sanctions, penaltiesor forfeitures, whether pursuant to law, statute,regulation or court rule ***;

3. punitive or exemplary amounts;"

The Policy provides that Continental has "the right and dutyto defend in *** [Kaplan's] name and on *** [Kaplan's] behalf aclaim covered by this Policy even if any of the allegations ofthe claim are groundless, false or fraudulent."

On January 3, 2001, Cort Chubko, one of Kaplan's formerclients, filed a class-action complaint in the Federal DistrictCourt for the Northern District of Illinois (hereinafter referredto as the "underlying action"). Chubko's second amendedcomplaint in that action alleged, inter alia: that Kaplanrepresented him in a proceeding brought pursuant to Chapter 7 ofthe United States Bankruptcy Code (Code) (11 U.S.C.