Carton, Crahay and Handler. The opinion of the court was delivered by Carton, P.J.A.D.
This appeal involves a question of coverage under a professional insurance policy for claims against an attorney for negligent performance of his duties.
Late in 1967 or early 1968 plaintiffs Passanante consulted one Borrus, a New Jersey attorney, intending to engage him to handle a medical malpractice claim for them. Borrus, who did not handle such cases, referred the matter to defendant Milton Yormark. The Passanantes visited Yormark, who assured them that he would handle the case. This interview occurred sometime prior to April 30, 1968.
Plaintiffs' medical malpractice claim arose out of an operation performed on Salvatore Passanante at the Overlook Hospital in Summit. Passanante had entered the hospital in July 1967 for a spinal fusion. He claimed that after the operation the nurse improperly applied a brace to his neck. He testified that he had complained to no avail that it was too tight and that he lost consciousness. When he awoke he was paralyzed.
The parties have stipulated that the incident occurred on July 15, 1967, a date of crucial significance since Yormark had at least 15 months after his initial interview with the Passanantes within which to file an action on their behalf before the two-year statute of limitations expired. No such action was filed.
There was, however, some further activity with respect to the claim. According to plaintiff Angelina Passanante, she spoke to Yormark three or four times after the initial interview, but there was no further in-person interview. Angelina Passanante testified that Yormark telephoned her early in 1972, stating that the case was "coming up" in Somerset County and that he would visit their home in "a couple of weeks" to discuss the case. Yormark never showed up.
Borrus related that Yormark had indicated to him in 1970 that suit had been filed in the matter. He had also averred in an affidavit on a motion for summary judgment
that he had a conversation with Yormark early in 1969 during which Yormark informed him the suit had already been filed. However, Borrus explained this in his testimony as meaning he thought Yormark was going to file suit, not that he had already done so.
Yormark was disbarred on February 7, 1972, In re Yormark , 60 N.J. 175 (1972); see also, State v. Yormark , 117 N.J. Super. 315 (App. Div. 1971), certif. den. 60 N.J. 138, cert. den. 407 U.S. 925, 92 S Ct 2459, 32 L Ed. 2d 812 (1972). In March 1972 Borrus attempted to contact Yormark, but he was unsuccessful in doing so. Finally, he wrote a letter to Yormark seeking a status report or return of the file and mentioning plaintiffs' dissatisfaction with Yormark's failure to communicate with them. No response was received. Yormark has vanished.
Plaintiffs brought the present action against Yormark to recover for his negligence in handling the medical malpractice case entrusted to him. Substituted service was made on defendant St. Paul Insurance Company, Yormark's malpractice insurance carrier. Plaintiffs later filed an amended complaint joining the insurance company as a party defendant and seeking a determination, in the nature of a declaratory judgment, that St. Paul was liable under its professional insurance policy issued to Yormark to pay for damages resulting from Yormark's negligence. The insurance company denied liability on the ground that there was no coverage in force.
The trial judge, sitting without a jury, after conducting a separate trial on the issue, ruled that coverage was afforded to plaintiffs under Yormark's policy and that the insurance carrier was obligated to defend the action on his behalf. The carrier filed the present appeal from the ensuing final judgment.
It is not disputed that the period of coverage afforded to Yormark ceased on June 30, 1969. The insurance company's basic contention is that since Yormark had until July 15, 1969 to ...