Legal malpractice ruling favors Swiss Re

A legal malpractice lawsuit constituted only a single claim, not multiple claims, says a federal appeals court, in a ruling upholding a lower court decision in favor of a Swiss Re Ltd. unit.

Anastasios Papadopoulos filed suit against his former attorney, Peter G. Mylonas, of the Broomall, Pennsylvania-based Law Offices of Peter George Mylonas P.C., stating he had retained Mr. Mylonas to advise him in connection with the formation of a corporation, Corinthian Marble and Granite Inc., according to Friday’s ruling by the 3rd U.S. Circuit Court of Appeals in Philadelphia in Westport Insurance Corp. v. Peter G. Mylonas; Law Offices of Peter George Mylonas P.C.; Anastasios Petropoulos.

Mr. Papadopoulos filed suit against Mr. Mylonas and his law firm, charging the attorney had negligently transferred Corinthian stock without his shareholders’ consent, as required by the corporate documents Mr. Mylonas had prepared, which resulted in Mr. Petropoulos losing his company and its assets.

The complaint charged the firm with negligence, breach of fiduciary duties and breach of contract, and alleged up to eight discrete wrongful acts, according to the ruling.

Mr. Mylonas’ defense costs at trial were paid by his insurer, Overland Park, Kansas-based Westport, a Swiss Re unit. A jury returned a $525,000 verdict in Mr. Papadopoulos’ favor.

Mr. Mylonas’ professional liability insurance policy with Westport had a limit of $500,000 per claim, or $1 million in the aggregate. “The difference is substantial in this case, as Westport’s defense costs — here $420,000 — count against the limits,” said the ruling.

Westport filed a declaratory judgment action in U.S. District Court in Philadelphia, asking whether the lawsuit constituted a single claim or multiple claims. The District Court held the lawsuit constituted a single claim, and a three-judge appeals court panel unanimously agreed.

“The policy is unambiguous,” said the ruling. “It states plainly the lower, per-claim limit applies if the underlying state lawsuit was a single claim. The per claim limit also applies if there were multiple claims, but they arose out of a series of related or continuing wrongful acts,” the ruling said.

“We begin as we must, with the policy definition of ‘claim,’” the ruling said. By its very definition, “one demand for loss is one claim. Here, Papadopoulos served Mylonas with one suit.”

“He made only one demand for redress of his losses: that same suit. Based on the definition of ‘claim,’ only one claim was made,” said the ruling in affirming the lower court’s decision.