Insurer's duty to defend is evaluated, along with ruling on coverage and exclusions
Emir Ibrahimovic sued his former attorney, David Zimmerman, and the Medmarc Casualty Insurance Company, alleging that Zimmerman committed malpractice and that MedMarc, Zimmerman's insurer, should provide coverage. Zimmerman had assisted Ibrahimovic in an earlier matter and according to the Plaintiff, he committed malpractice in enticing Ibrahimovic to hire another attorney, with whom Zimmerman shared office space, to represent him in a car accident claim. The insurer denied coverage, relying on an exclusion that applied to partner liability or joint ventures.
The trial judge ruled that there was coverage under the policy, at least initially, and that the insurer was estopped from raising issues it had not brought up at the outset of managing the claim. The Court of Appeals upheld the lower court on the first issue but reversed its holding regarding coverage. The appellate judges pointed out that the duty to defend arises whenever a claim--even if frivolous--might fall within the policy terms. On that basis, the independent claims of malpractice in Ibrahimovic's complaint required Medmarc to defend the action. On the other hand, it was not required to provide coverage--or estopped to raise exlcusions--if the effect would be to broadent the coverage that it had originally sold to Zimmerman.