Attorneys Liability Protection Society, Inc. v. Ingaldson Fitzgerald, P.C.

The Ninth Circuit federal Court of Appeals certified two questions of Alaska law to the State Supreme Court. Ingaldson Fitzgerald was an Alaska law firm. Attorneys Liability Protection Society, Inc. (ALPS) was a Montana insurance company and risk-retention group. From April 29, 2007, to April 29, 2008, ALPS insured Ingaldson Fitzgerald. Ingaldson Fitzgerald’s insurance policy with ALPS insured the firm against claims arising from “an act, error or omission in professional services that were or should have been rendered by [Ingaldson Fitzgerald].” The policy expressly excluded from coverage any claims arising from conversion or disputes over fees. The policy also contained a provision providing that Ingaldson Fitzgerald would reimburse ALPS for fees and costs ALPS incurred in defending non-covered claims. In 2008 the bankruptcy trustee for the bankrupt estate of a former client of Ingaldson Fitzgerald, in conjunction with a separate former client of the firm, brought a claim against the firm arising out of Ingaldson Fitzgerald’s actions in disbursing from and withdrawing fees and costs against a retainer. The former client and the trustee sought recovery of that retainer, and asserted claims against Ingaldson Fitzgerald for, among other things, restitution, disgorgement, and conversion. The Ninth Circuit asked: (1) whether Alaska law prohibited enforcement of a policy provision entitling an insurer to reimbursement of fees and costs incurred by the insurer defending claims under a reservation of rights, where (a) the insurer explicitly reserved the right to seek such reimbursement in its offer to tender a defense provided by independent counsel, (b) the insured accepted the defense subject to the reservation of rights, and (c) the claims were later determined to be excluded from coverage under the policy; and (2) if yes, then did Alaska law prohibit enforcement of a policy provision entitling an insurer to reimbursement of fees and costs incurred by the insurer defending claims under a reservation of rights, where (a) the insurer explicitly reserved the right to seek such reimbursement in its offer to tender a defense provided by independent counsel, (b) the insured accepted the defense subject to the reservation of rights, and (c) it is later determined that the duty to defend never arose under the policy because there was no possibility of coverage? The Alaska Supreme Court answered both certified questions “yes.” View "Attorneys Liability Protection Society, Inc. v. Ingaldson Fitzgerald, P.C." on Justia Law