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TRANSAMERICA INS. CO. v. KEOWN

March 27, 1978

TRANSAMERICA INSURANCE COMPANY, Plaintiff,
v.
WILLIAM S. KEOWN, Defendant, and MARGUERITE BOSSLE, Executrix of Estate of W. Louis Bossle, Intervening Defendant, and C. EDWIN MUNGER, F. MORSE ARCHER, JR., Guardian ad litem, GEORGE MUNGER and CAROL L. OBER, Intervening Defendants



The opinion of the court was delivered by: BROTMAN

 Plaintiff, Transamerica Insurance Company, instituted this action against defendant, William S. Keown, Esq., seeking a declaratory judgment, 28 U.S.C. § 2201, determining the rights and liabilities of the parties under the terms of the insurance policies issued to defendant. There is over $10,000 in controversy. Jurisdiction is conferred upon this court by diversity of citizenship, 28 U.S.C. § 1332. This matter is before the court on the motion for summary judgment of intervenors, C. Edwin Munger, F. Morse Archer, Jr., Guardian ad litem, George Munger, Carol L. Ober, Marguerite Bossle, and defendant William S. Keown, Fed. R. Civ. P. 56. Intervenors are beneficiaries of the will and trust of Clarence A. Munger.

 FACTS

 Mr. Keown is the Succeeding Trustee of a trust created by the will of Clarence A. Munger. The will empowered the trustee to invest the corpus

 
in such securities as may, in the judgment and discretion of my said Trustee, seem proper, whether or not such securities shall be of the type prescribed by law for the investment of trust funds . . . .

 Prior to October 1968, Mr. Keown filed his accounts as Succeeding Executor of the will and as Succeeding Trustee. Supplemental accounts were filed on September 30, 1970.

 Exceptions were filed by the beneficiaries of the Trust and the Will, intervenors herein. The central contention of the exceptions was that the will did not give the Succeeding Trustee the power to invest in real estate. The Camden County Court, Probate Division, found for the beneficiaries. This decision was affirmed by the Appellate Division of the Superior Court of New Jersey and by the Supreme Court of New Jersey. In re Munger, 63 N.J. 514, 309 A.2d 205 (1973). On July 30, 1974, Judge Brown of the Camden County Court surcharged defendant Keown in the amount of $199,142.46, including amounts for unauthorized investments in real estate and other charges.

 The intervenors and Succeeding Trustee Keown contend that the terms of the policy require the plaintiff to provide coverage for the judgment of the Probate Court.

 CONSTRUCTION OF THE INSURANCE POLICY

 Clause I of the policy, "Individual Coverage," requires the company to pay:

 
all sums which the insured shall become legally obligated to pay as damages because of any act or omission of the insured, or of any other person for whose acts or omissions the insured is legally responsible, and arising out of the performance of professional services for others in the insured's capacity as a lawyer. . . .

 Intervenors contend that this clause is ambiguous in defining the scope of acts arising out of the performance of professional services for others and that the clause should be read expansively to include the work of Mr. Keown as a fiduciary.

 There are certain "grey areas" which are difficult to classify as "the professional services" of a lawyer. See, Bancroft v. Indemnity Insurance Co. of North America, 203 F. Supp. 49 (W.D. La.), affirmed, 309 F.2d 959 (5th Cir. 1962). Bancroft, a case cited by the intervenors, involved an insurance policy for an accountant with a provision very similar to Clause I of the instant policy. The court held that the term "professional services" of an accountant was broad enough to include quasi-legal advice on taxes, which fell within a "twilight zone" where both accountants and lawyers find some common ground. It went on to say:

 
We ask this pertinent question: Had defendant not undertaken to insure against the risk of professional liability for negligence in rendering an opinion as to tax consequences, knowing full well that C.P.A.'s give such opinions every day, why was this not made a specific exception or exclusion in the insurance contract here in view of continuing disagreement between the ...

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