Thomas Edwards v. Continental Casualty Company
2016 U.S. App. LEXIS 19753
| 5th Cir. | 2016Background
- Edwards, a lawyer, represented commercial diver Andrew Schmidt in a personal-injury suit against his employer, Cal Dive; the case settled with payment to Schmidt and attorney’s fees to Edwards paid via annuity.
- About a year later, Cal Dive sued Schmidt and Edwards alleging Schmidt had exaggerated or fabricated injuries and seeking restitution/unjust enrichment of settlement funds, including payments to Edwards.
- Continental, Edwards’s firm professional-liability insurer, declined coverage and defense for the Cal Dive suit; Edwards sued Continental for a declaratory judgment that Continental had a duty to defend.
- The district court granted Edwards’s motion for partial summary judgment ordering Continental to defend; Continental appealed to the Fifth Circuit.
- The Fifth Circuit majority reversed: it held Cal Dive’s complaint did not allege an "act or omission" by Edwards in rendering legal services and therefore the policy’s coverage was not triggered; Continental had no duty to defend.
- Judge Edith Brown Clement dissented, arguing the policy’s "arising out of" language is broad and Cal Dive’s claims were at least incidentally related to Edwards’s legal representation, thus triggering the duty to defend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Continental had a duty to defend Edwards in Cal Dive II | Edwards: Cal Dive’s allegations arise out of his representation of Schmidt and thus trigger the policy’s "arising out of" coverage | Continental: Cal Dive’s claims do not allege any act or omission by Edwards in providing legal services, so they are not covered | Reversed district court; no duty to defend — claims did not arise from Edwards’s acts/omissions in rendering legal services |
| How broadly to read "arising out of" in the policy | Edwards: term should be read expansively (but-for/connexity) to require defense where claims relate to his representation | Continental: the phrase must be tied to an actual act/omission in rendering legal services; mere receipt of fees is not enough | Court: although Louisiana reads "arising out of" broadly, the policy here unambiguously requires an act/omission in rendering legal services and that is absent |
Key Cases Cited
- Boone v. Citigroup, Inc., 416 F.3d 382 (5th Cir.) (standard of review for summary judgment cited)
- Lawyers Title Ins. Corp. v. Doubletree Partners, L.P., 739 F.3d 848 (5th Cir.) (duty-to-defend analysis and interpretation of petition allegations)
- Hardy v. Hartford Ins. Co., 236 F.3d 287 (5th Cir.) (Louisiana duty-to-defend rule and contract interpretation)
- Red Ball Motor Freight, Inc. v. Emps. Mut. Liab. Ins. Co. of Wis., 189 F.2d 374 (5th Cir.) ("arising out of" construed broadly in prior Fifth Circuit precedent)