On appeal from the Superior Court of New Jersey, Law Division, Middlesex County.
Bischoff, Petrella and Brody. The opinion of the court was delivered by Bischoff, P.J.A.D. Brody, J.A.D., dissenting.
There is only one issue in this appeal; whether it was error to grant plaintiff summary judgment on the ground that his "claims made" lawyers professional liability policy covered him even though he made no claim until after the policy had expired.
Plaintiff, Edward K. Zuckerman, is an attorney whose firm purchased a professional liability policy from defendant, National Union Fire Insurance Company. The original policy ran from February 25, 1980 to February 25, 1981. The policy was renewed for one year and expired on February 25, 1982.
The "insuring agreement" of the policy provided as follows with respect to coverage:
To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as money damages because of any claim or claims first made against the insured and reported to the Company during the policy period, arising out of any act or omission of the insured in rendering or failing to render professional services for others in the insured's capacity as a lawyer or Notary Public. . . [Emphasis added]
And also provided for a defense in the following terms:
The Company shall defend any suit based on a claim of personal injury first made against the insured and reported to the Company during the policy period if such claim arises out of an act of the insured in rendering professional services . . . and if such claim is caused by the insured or other person for whose acts or omissions the insured is legally responsible. . . [Emphasis added]
The policy, by its terms, applied to acts or omissions "if claim is first made during the policy period or an extended reporting period purchased in accordance with Condition IV." The policy continues:
A claim is first made during the policy period or extended reporting period if:
a) during the policy or extended reporting period the insured shall have knowledge or become aware of any act or omission which could reasonably be expected to give rise to a claim under this policy and shall during the policy period or extended reporting period give written notice thereof to the Company in accordance with Condition VII.
A claim shall be considered to be first made when the Company first receives written notice of the claim or of an event which could reasonably be expected to give rise to a claim. [Emphasis added]
There is no contention there is any "extended reporting period" applicable to this case.
"Policy period" is defined to mean "the period of time between the inception date shown in the Declaration and the effective date of termination, expiration or cancellation. . ."
Condition VII, entitled Notice of Claim or Suit, provides:
Upon the insured becoming aware of any act or omission which could reasonably be expected to be the basis of a claim or suit covered hereby, written notice shall be given by or on behalf of the insured to the Company or any of its authorized agents as soon as practicable, together with the fullest information obtainable. If claim is made or suit is brought against the insured, the insured shall immediately forward to the Company every demand, notice, summons or other process received by him or his representative.
At the top of the first page of the policy there is a box which is set off from the text which contains, on one side, the name and address of the company, and on the other, the following:
"Except to such extent as may otherwise be provided herein, the coverage of this policy is limited generally to liability for only those claims that are first made against the insured and reported to the Company while the policy is in force. Please review the policy carefully and discuss the coverage thereunder with your insurance agent or broker." [Emphasis added]
Finally, attached to the printed policy was a form issued by the agent, Herbert L. Jamison & Co., containing the name of the insured and terms of the policy such as premium and "Policy Period." Immediately under the insurance company's name at the top of this page the following words are printed: "LAWYERS PROFESSIONAL LIABILITY POLICY (THIS IS A CLAIMS-MADE POLICY -- READ CAREFULLY)"
The facts respecting the claim are undisputed. On April 13, 1978, Barbara Katz was exposed to a loud noise from a telephone message recording device used by her employer. She went to plaintiff Edward K. Zuckerman to ask him to represent her in a "third-party claim", apparently against the manufacturer of the recording device. Plaintiff agreed to represent ...