South-Western Legal Studies in Business

No Professional Insurance Coverage for Acts of Fraud
Description

Louisiana high court held that professional insurance did not cover fraud by an attorney who cheated his clients. The policy excluded acts of dishonesty, criminality and fraud, so no coverage applied.

Topic Insurance
Key Words

Professional Liability; Fraud; Exclusion

C A S E   S U M M A R Y
Facts

Sanders was killed while working. His heirs hired attorney Borne to represent their interests in claims related to the death. Borne negotiated a settlement without plaintiffs’ knowledge or consent. He had his employees sign the Sanders’ agreement and also forged the signatures of witnesses. Borne kept the $450,000 settlement money. Plaintiffs later learned of what happened and sued Borne and other parties. Borne demanded that Westport Insurance, his professional liability carrier, provide coverage. Westport was denied summary judgment at trial and appealed.

Decision

Reversed. The claim in this case arose out of dishonest or fraudulent acts and, thus, the intentional acts exclusion in the policy applied. Professional liability insurance, as written in the policy, did not apply to any claim based upon criminal, dishonest, malicious or fraudulent acts, errors, or omissions. The acts here were intentional and dishonest. There is no requirement that there must be a finding of criminality in the act for the exclusion to apply.

Citation

Bonin v. Westport Insurance Co., 930 So.2d 906 (Sup. Ct., La., 2006)

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