284 F.3d 489 | 3rd Cir. | 2002
BRIGHT, Circuit Judge.(cid:13) This dispute concerns the coverage afforded appellee,(cid:13) Ronald Jay Bayer, under the lawyer’s professional liability(cid:13) insurance policy issued to him by Westport Insurance(cid:13) Corporation (Westport). In 1997, Morton Laken, Evelyn(cid:13) Laken and Alan Laken (the Lakens) sued Bayer, alleging(cid:13) fraud and misrepresentation, among other things. Westport(cid:13) subsequently brought this action against Bayer and the(cid:13) Lakens seeking a declaratory judgment that Westport was(cid:13) not obliged to pay any judgment rendered against Bayer in(cid:13) the Lakens’ action. In the underlying suit, Morton Laken,(cid:13) Evelyn Laken, and Alan Laken v. Fryer Group of Cos., et al.,(cid:13) No. 97-4413 (E.D. Pa. Nov. 17, 2000) [hereinafter Lakens v.(cid:13) Fryer Group], the district court found for the Lakens on(cid:13) their negligent misrepresentation claims against Bayer and(cid:13) entered judgment for over $678,000.1 The district court(cid:13) then entered judgment in the instant case. The court(cid:13) declared Westport liable to the extent of the policy limits for(cid:13) payment of the Lakens’ judgment against Bayer. The court(cid:13) determined that the policy’s aggregate claims limit of(cid:13) _________________________________________________________________(cid:13) 1. Bayer has appealed the district court’s judgment in the underlying(cid:13) case to this court. We affirm the district court’s judgment in an(cid:13) unpublished opinion that we file contemporaneously with this opinion.(cid:13) See Laken v. Fryer Group of Cos., No. 00-4302 (3d Cir. Mar. 27, 2002).(cid:13) 2(cid:13) $500,000, rather than the single claim limit of $250,000,(cid:13) applied to this case.(cid:13) On appeal, Westport argues that the district court erred(cid:13) in concluding that Bayer’s Westport policy covers the(cid:13) Lakens’ claims. Westport also argues that the district court(cid:13) improperly addressed the question of the amount of(cid:13) coverage provided by the policy, and erred in determining(cid:13) that amount. We affirm the district court’s judgment that(cid:13) Bayer’s Westport policy covers the Lakens’ claims to the(cid:13) extent of the applicable policy limit. However, we vacate the(cid:13) district court’s determination as to the dollar amount of(cid:13) coverage and remand to the district court for further(cid:13) consideration.(cid:13) I. Introduction(cid:13) A. The Underlying Case, Lakens v. Fryer Group(cid:13) In July 1997, the Lakens filed suit against attorney(cid:13) Ronald Bayer and several other defendants to recover(cid:13) money lost in a Ponzi-type confidence scheme, in which the(cid:13) perpetrators of the fraud paid interest to early investors(cid:13) using money received from later investors.2 In February(cid:13) 2000, Westport filed the instant declaratory judgment(cid:13) action. After some initial confusion resulting from(cid:13) Westport’s failure to note that its declaratory judgment(cid:13) action was related to the Lakens’ suit against Bayer, both(cid:13) cases proceeded separately before the same district court(cid:13) judge. In September 2000, after the conclusion of the(cid:13) nonjury trial in Lakens v. Fryer Group, but before the(cid:13) district court issued its decision, the court ordered that(cid:13) Westport’s declaratory judgment action would be(cid:13) determined on the basis of the record in Lakens v. Fryer(cid:13) Group.3 A brief recitation of the factual background of that(cid:13) underlying case is therefore a necessary part of our opinion(cid:13) here.(cid:13) _________________________________________________________________(cid:13) 2. The district court found that Bayer was not criminally involved in the(cid:13) fraudulent scheme.(cid:13) 3. The order provided that Westport counsel receive a transcript of the(cid:13) trial testimony in Lakens v. Fryer Group and that Westport have ten days(cid:13) to request leave to produce additional testimony. Westport made no such(cid:13) request.(cid:13) 3(cid:13) In November 1990, Leonard Brown, a friend and(cid:13) sometime client of Bayer’s, invested $500,000 with Keith(cid:13) Fryer, who claimed to run a secondary mortgage business(cid:13) in England. Fryer gave Brown a ten-year promissory note(cid:13) bearing twenty-seven percent interest. Fryer told Brown(cid:13) that the very high second-mortgage financing rates in(cid:13) England allowed him to pay investors high rates of interest.(cid:13) Fryer did not, in fact, run a mortgage business. Rather, he(cid:13) used some of Brown’s money to make the interest(cid:13) payments to Brown and kept the rest for himself.(cid:13) Brown was pleased with the payments he received on his(cid:13) investment and proposed to Fryer that Brown bring in other(cid:13) investors in return for a commission. Brown recruited(cid:13) another "finder" and retained Bayer as his attorney to(cid:13) negotiate a commission arrangement with Fryer. Bayer(cid:13) negotiated an agreement that paid the finders a five percent(cid:13) commission each year on the additional money invested(cid:13) with Fryer as a result of the finders’ activities. Bayer(cid:13) received one-third of the commissions. Bayer himself(cid:13) invested heavily with Fryer.(cid:13) For the next several years Fryer maintained the pretense(cid:13) that he ran a real mortgage business. Brown hosted(cid:13) gatherings to which he invited prospective investors and at(cid:13) which Fryer would present his nonexistent business as an(cid:13) investment opportunity. Bayer attended these gatherings,(cid:13) sometimes introduced Fryer, and generally promoted the(cid:13) investment.(cid:13) Morton and Alan Laken, father and son, attended such a(cid:13) gathering. They each purchased installment notes issued(cid:13) by one of Fryer’s dummy corporations, Park Securities, Ltd.(cid:13) They made their initial investments at Bayer’s law office.(cid:13) Together they purchased a total of $678,009.59 worth of(cid:13) installment notes.4(cid:13) Fryer’s confidence scheme lasted until 1996, when some(cid:13) new investors insisted on an independent audit of Fryer’s(cid:13) accounts. This audit exposed Fryer’s fraud.(cid:13) _________________________________________________________________(cid:13) 4. Morton Laken purchased installment notes totaling $425,540.84.(cid:13) These notes were made out variously to Morton Laken, to Morton and(cid:13) Evelyn Laken (his wife), and to Morton Laken in trust for a third party.(cid:13) Alan Laken purchased installment notes totaling $252,468.75.(cid:13) 4(cid:13) The Lakens sued Bayer, the Fryer Group of Companies,(cid:13) and several other defendants for misrepresentation and(cid:13) fraud, among other things. Over time the Lakens learned(cid:13) that all defendants except Bayer were fictitious, bankrupt,(cid:13) or otherwise judgment proof. Bayer himself filed for(cid:13) bankruptcy before the Lakens’ action against him reached(cid:13) trial. The bankruptcy filing automatically stayed the trial in(cid:13) the Lakens’ suit against Bayer. The Lakens eventually(cid:13) obtained an order lifting the stay when they agreed to limit(cid:13) any damages they might receive to those available under(cid:13) Bayer’s professional liability insurance policy with(cid:13) Westport. Westport then filed this action seeking a(cid:13) declaratory judgment that Bayer’s Westport policy provides(cid:13) no coverage for the Lakens’ claims against Bayer.(cid:13) The Lakens’ suit against Bayer finally came to trial before(cid:13) the district court on September 11, 2000. On November 16,(cid:13) 2000, the court issued its decision. The court found for the(cid:13) Lakens and against Bayer on the Lakens’ negligent(cid:13) misrepresentation claims and entered judgment in the(cid:13) Lakens’ favor for $678,009.59.(cid:13) In its decision, the district court found the following facts(cid:13) regarding Bayer’s actions and his relationship to the(cid:13) Lakens. Bayer was Fryer’s point of contact in America.(cid:13) Bayer introduced Fryer to potential investors at investment(cid:13) presentations. Bayer enthusiastically endorsed the(cid:13) investment opportunity offered by Fryer. He received funds(cid:13) from American investors and forwarded them to Fryer in(cid:13) England. Bayer received one-third of the finders’(cid:13) commissions on investments they solicited. He was(cid:13) authorized to draw checks on Fryer’s American business(cid:13) account in emergencies. At one point, Bayer suggested that(cid:13) arrangements be made to give investors greater security in(cid:13) their loans, such as blanket debentures covering all assets(cid:13) of the Fryer Companies, but the idea was dropped when(cid:13) Fryer said that any such arrangement would require a(cid:13) reduction in the interest rates paid to the investors.(cid:13) The court also found that the Lakens never retained(cid:13) Bayer to act as their attorney, but Bayer (a longtime(cid:13) attorney of the Lakens’ friend, Brown) created the(cid:13) impression that he was "looking out for" the Lakens’(cid:13) interests. He permitted the Lakens to believe that he had(cid:13) 5(cid:13) "checked out" Fryer’s activities and claimed to have(cid:13) performed a "due diligence" investigation. He let it be(cid:13) known that he had gone to England as part of the(cid:13) investigation. The Lakens relied on the information they(cid:13) received from Bayer.(cid:13) The trial court concluded that these facts provided a(cid:13) basis for Bayer’s liability:(cid:13) In my view, the circumstances give rise to the legal(cid:13) obligation on the part of Mr. Bayer, either to make(cid:13) clear that he was not protecting plaintiffs’ interests and(cid:13) that they should seek legal advice elsewhere, or to(cid:13) exercise reasonable care to avoid misrepresentations to(cid:13) them. Since he did neither, he is liable for their losses(cid:13) if their reliance upon his misrepresentations was(cid:13) reasonable.(cid:13) The issue of justifiable reliance is a close one, but I(cid:13) believe the balance tips in favor of the plaintiffs on that(cid:13) issue. Although they did no independent investigation(cid:13) of their own, they were led to believe, by persons they(cid:13) trusted, that the proposed investment had been(cid:13) thoroughly investigated by others more knowledgeable(cid:13) than themselves.(cid:13) Lakens v. Fryer Group, slip op. at 9.(cid:13) B. The Policy(cid:13) Bayer is the named insured on his "Lawyers Professional(cid:13) Liability Insurance" policy with Mt. Airy Insurance(cid:13) Company, a predecessor to Westport. Mt. Airy issued the(cid:13) policy pursuant to Bayer’s application. That application(cid:13) included a "Supplemental Practice Application" which(cid:13) directed Bayer to describe any financial planning or(cid:13) investment counseling that formed part of his practice. On(cid:13) this form, Bayer answered "no" to questions asking whether(cid:13) his practice involved "money management activities" or(cid:13) recommending investment in "specific securities." However,(cid:13) he described his activities regarding the Park Securities(cid:13) investments in an addendum he attached to his(cid:13) application:(cid:13) [K]indly be advised that Park Securities, Ltd., a(cid:13) mortgage company in Manchester, England, borrows(cid:13) 6(cid:13) money from individuals to be used in its mortgage(cid:13) portfolio. I prepare the Notes from the investors to Park(cid:13) Securities, Ltd. The distribution of the investment(cid:13) income was, for a period of time, in 1991, being wired(cid:13) to me, in bulk, and thereafter sent to the individual(cid:13) parties by my personal check. The current method of(cid:13) distribution [of investment income] is by wire to the(cid:13) mortgage company’s bank i[n] Philadelphia with(cid:13) distribution being made by checks signed by the(cid:13) principal of the company. I do have deputy authority(cid:13) on the checking account for use in emergencies. I do(cid:13) not counsel the investors except to advise them to pay(cid:13) income tax on the funds since the mortgage company(cid:13) does not send 1099’s. I do receive compensation for my(cid:13) work in cabling the funds and preparing the(cid:13) documents in the form of an override.(cid:13) App. at A-2-26.(cid:13) The insuring agreement of the policy issued to Bayer(cid:13) declares that the policy provides coverage for claims against(cid:13) Bayer "arising out of services rendered or which should(cid:13) have been rendered by any insured . . . and arising out of(cid:13) the conduct of the insured’s profession as a lawyer."(cid:13) The policy contains two exclusions that are relevant to(cid:13) this lawsuit. Exclusion E states that the policy does not(cid:13) apply to "any claim arising out of any insured’s activities as(cid:13) an officer, director, partner, manager or employee of any(cid:13) company, corporation, operation, organization or(cid:13) association other than [the] named insured." Exclusion G(cid:13) precludes claims "arising out of or in connection with the(cid:13) conduct of any business enterprise other than the named(cid:13) insured . . . which is owned by any insured or in which any(cid:13) insured is a partner, or which is directly or indirectly(cid:13) controlled, operated or managed by any insured either(cid:13) individually or in a fiduciary capacity."(cid:13) C. Proceedings in Westport’s Declaratory Judgment(cid:13) Action(cid:13) In its declaratory judgment action, Westport asserted(cid:13) that the Lakens’ claims arose from Mr. Bayer’s activities in(cid:13) a business enterprise separate from his law practice, an(cid:13) enterprise in which he solicited investors and served as a(cid:13) 7(cid:13) local representative for Fryer. Westport argued that the(cid:13) insuring agreement in the policy, or either of the exclusions(cid:13) mentioned above, precluded coverage for the Lakens’ claims(cid:13) against Bayer.(cid:13) Relying on the evidentiary record from the Lakens’ suit(cid:13) against Bayer, the federal district court found the following(cid:13) facts relevant to Westport’s action for declaratory judgment:(cid:13) (1) in all his contacts with the Lakens, Bayer considered(cid:13) himself to be practicing law as an attorney representing(cid:13) Fryer in the United States and receiving contingency fees(cid:13) based on the results he obtained for Fryer; (2) the Lakens(cid:13) regarded Bayer as engaged in performing legal services in(cid:13) his capacity as an attorney; (3) in all relevant activities,(cid:13) Bayer held himself out to the Lakens as a practicing(cid:13) attorney and realized that they dealt with him on that(cid:13) basis; and (4) Bayer was never an officer, director, partner,(cid:13) manager or employee of anyone other than himself.(cid:13) Based upon these findings, the court concluded that,(cid:13) although there "probably was not an actual attorney client(cid:13) relationship" between Bayer and the Lakens, Bayer’s policy(cid:13) covered the claims against him by the Lakens. The district(cid:13) court also stated that the addendum to Bayer’s application(cid:13) removed any doubt that Bayer’s policy with Westport(cid:13) covered the Lakens’ claims. "Having issued its policy(cid:13) pursuant to [Bayer’s] application, Westport cannot now(cid:13) disclaim coverage for liabilities arising from the precise(cid:13) activities thus described." The court ordered Westport liable(cid:13) to pay the $678,009.59 judgment rendered against Bayer in(cid:13) Lakens v. Fryer Group "to the extent of policy limits," which(cid:13) in the body of the opinion it determined to be $500,000.5(cid:13) II. Discussion(cid:13) The district court sat as fact finder in this case. We(cid:13) review the court’s findings for clear error. See Fed. R. Civ.(cid:13) P. 52(a). In their briefs to this court, both parties profess to(cid:13) _________________________________________________________________(cid:13) 5. The district court’s order declares Westport liable for payment of the(cid:13) judgment rendered against Bayer in Lakens v. Fryer Group "to the extent(cid:13) of policy limits." In its opinion, however, the court states that the(cid:13) question before it is whether Westport must pay the judgment against(cid:13) Bayer "to the extent of the policy limit ($500,000)."(cid:13) 8(cid:13) accept and rely upon the district court’s findings of fact. We(cid:13) note, however, that in places their representations of those(cid:13) facts are quite different from one another and from those of(cid:13) the district court. We consider it important, therefore, to(cid:13) state clearly that our review of the record in this case,(cid:13) including the Lakens v. Fryer Group trial transcript, shows(cid:13) no clear error in the district court’s findings of fact.(cid:13) Interpretation of the insurance policy’s coverage is a(cid:13) question of law and our review is plenary. Pacific Indem. Co.(cid:13) v. Linn, 766 F.2d 754, 760 (3d Cir. 1985). Pennsylvania law(cid:13) governs our interpretation of this insurance policy and the(cid:13) extent of its coverage. We read policies to avoid ambiguities,(cid:13) if possible. Northbrook Ins. Co. v. Kuljian Corp., 690 F.2d(cid:13) 368, 372 (3d Cir. 1982).(cid:13) A. The Insuring Agreement(cid:13) The insuring agreement states that the policy covers(cid:13) claims "arising out of services rendered or which should(cid:13) have been rendered by any insured . . . and arising out of(cid:13) the conduct of the insured’s profession as a Lawyer."(cid:13) Westport argues that the Lakens’ claims did not arise out(cid:13) of Bayer’s conduct as a lawyer and, therefore, the policy(cid:13) does not cover Bayer’s liability for those claims. 6(cid:13) Citing a Ninth Circuit appellate decision, General(cid:13) Accident Ins. Co. v. Namesnik, 790 F.2d 1397 (9th Cir.(cid:13) 1986), and a federal district court case from North(cid:13) Carolina, H.M. Smith v. Travelers Indem. Co., 343 F. Supp.(cid:13) 605 (M.D.N.C. 1972), Westport contends that Bayer’s policy(cid:13) covers only those claims that arise from acts or omissions(cid:13) unique to the practice of law. Westport argues that the(cid:13) _________________________________________________________________(cid:13) 6. Westport makes repeated reference to the fact that the Lakens were(cid:13) not in an attorney-client relationship with Bayer. We note that(cid:13) professional liability can arise out of an attorney’s activities with those(cid:13) other than his own client. See Harad v. Aetna Cas. & Surety Co., 839(cid:13) F.2d 979, 984 (3d Cir. 1988) (stating that the plain meaning of the term(cid:13) "professional service," does not of itself require an attorney-client(cid:13) relationship); Humphreys v. Niagara Fire Ins. Co., 590 A.2d 1267, 1270(cid:13) n.9 (Pa. Super. Ct. 1991) (noting that policy language similar to that in(cid:13) the instant case "does not state that it will only cover claims brought by(cid:13) clients of the attorney or third party beneficiaries to the attorney-client(cid:13) relationship. . . . [or] that it will only cover claims for malpractice.")(cid:13) 9(cid:13) district court’s findings in Lakens v. Fryer Group(cid:13) demonstrate that Bayer’s liability to the Lakens does not(cid:13) stem from "failure to do anything related to uniquely legal(cid:13) skill or training." Thus, according to Westport, Bayer’s(cid:13) liability is not covered by the insuring agreement.(cid:13) We reject this argument. We note, as an initial matter,(cid:13) that neither Namesnik nor H.M. Smith applies Pennsylvania(cid:13) law. In addition, Namesnik does not stand for the(cid:13) proposition that a lawyer’s professional liability insurance(cid:13) policy covers only claims arising from acts unique to the(cid:13) practice of law. H.M. Smith better supports Westport’s(cid:13) argument, but we ultimately find it unpersuasive.(cid:13) In Namesnik, an attorney had recommended to his clients(cid:13) that they invest in corporations which he formed, operated,(cid:13) and for which he performed legal work. At the same time,(cid:13) the attorney continued to perform legal services for the(cid:13) clients. He billed the clients for that legal work, but not for(cid:13) any work performed in the financial ventures. When the(cid:13) clients lost the money they had invested, they brought a(cid:13) legal malpractice claim against the attorney and the insurer(cid:13) sought a declaratory judgment of noncoverage. The district(cid:13) court granted summary judgment to the insurer and the(cid:13) Ninth Circuit Court of Appeals affirmed. The Ninth Circuit(cid:13) determined that "the lack of fees directly traceable to the(cid:13) [investments], at a time when fees were billed for legal(cid:13) services" supported the insurer’s contention that the(cid:13) clients’ claims against the attorney stemmed from his(cid:13) actions as a business agent rather than a lawyer.(cid:13) Namesnik, 790 F.2d at 1399. The court held that the(cid:13) clients’ failure to respond directly to this evidence left no(cid:13) genuine issues of material fact, making summary judgment(cid:13) for the insurer appropriate.(cid:13) Namesnik does not require that the Lakens’ claims stem(cid:13) from an act by Bayer that required "uniquely legal skill or(cid:13) training." If Namesnik is applicable at all to the case before(cid:13) us, it merely requires that the Lakens present evidence that(cid:13) Bayer provided professional services from which the(cid:13) Lakens’ claims arise. The facts found by the district court(cid:13) support the conclusion that the Lakens presented such(cid:13) evidence.(cid:13) 10(cid:13) In H.M. Smith, a federal district court, citing a "helpful"(cid:13) New Jersey Supreme Court case, determined that an(cid:13) attorney did not act in a legal capacity when he solicited,(cid:13) and then invested, funds from a non-client. 343 F.Supp. at(cid:13) 609-610. The court based its decision, in part, on its(cid:13) determination that "the transaction itself is one that(cid:13) requires no legal skill or training." We conclude, however,(cid:13) that whatever persuasive authority that case provides is(cid:13) overcome by the following analysis which applies(cid:13) Pennsylvania law.(cid:13) Bayer’s policy does not define what it means for an injury(cid:13) to "aris[e] out of the conduct of the insured’s profession as(cid:13) a lawyer." The Pennsylvania appellate courts have(cid:13) determined that "use of the undefined phrase‘professional(cid:13) services’ may well give rise to a finding of ambiguity" in an(cid:13) insurance policy. Biborosch v. Transamerica Ins. Co., 603(cid:13) A.2d 1050, 1056 (Pa. Super. Ct. 1992). Likewise, language(cid:13) in a professional liability policy stating that the insurer will(cid:13) cover all injuries "arising out of " the rendering or failure to(cid:13) render professional services, and will defend "any" suit(cid:13) against the insured seeking such damages, signals that the(cid:13) coverage is to be broadly construed. Danyo v. Argonaut Ins.(cid:13) Cos., 464 A.2d 501, 502 (Pa. Super. Ct. 1983). We therefore(cid:13) broadly construe the coverage afforded by the insuring(cid:13) agreement of Bayer’s policy.(cid:13) A policy provision is ambiguous if reasonably intelligent(cid:13) people would honestly differ as to its meaning when(cid:13) considering it in the context of the entire policy. Northbrook,(cid:13) 690 F.2d at 372. Under a broad construction of the(cid:13) coverage in Bayer’s policy, reasonably intelligent people(cid:13) would differ as to whether the provision covering claims(cid:13) "arising out of services rendered or which should have been(cid:13) rendered . . . and arising out of the conduct of the insured’s(cid:13) profession as a Lawyer" includes Bayer’s actions in(cid:13) preparing installment notes, transferring money, and(cid:13) generally advising investment in Fryer’s companies while(cid:13) holding himself out as an attorney who is watching over the(cid:13) Lakens’ investments. See Home Ins. Co. v. Law Offices of(cid:13) Jonathan DeYoung, P.C., 32 F. Supp. 2d 219, 230 (E.D. Pa.(cid:13) 1998) (denying summary judgment to attorney’s liability(cid:13) insurer and concluding that under Pennsylvania law,(cid:13) 11(cid:13) "[b]ecause the term ‘professional services’ is undefined in(cid:13) the policy, it is possible for reasonable minds to reach(cid:13) varying conclusions" as to whether an attorney who had(cid:13) invested funds on client’s behalf had rendered professional(cid:13) services). That policy provision is therefore ambiguous.(cid:13) Where a policy provision is ambiguous, we construe the(cid:13) provision in favor of the insured in a manner consistent(cid:13) with the reasonable expectations insured had when(cid:13) obtaining coverage. Standard Venetian Blind Co. v.(cid:13) American Empire Ins. Co., 469 A.2d 563, 566 (Pa. 1983);(cid:13) Danyo, 464 A.2d at 502. The addendum Bayer attached to(cid:13) his application for coverage indicates his reasonable(cid:13) expectation that his work concerning Park Securities, Ltd.(cid:13) would be covered. We therefore construe the policy’s(cid:13) language in favor of coverage. We conclude that the policy’s(cid:13) insuring agreement provides coverage to Bayer for the(cid:13) Lakens’ claims against him.(cid:13) B. The Exclusions(cid:13) For Exclusion E of Bayer’s policy to apply to this case,(cid:13) Bayer must have been an officer, director, partner, manager(cid:13) or employee of some entity other than his firm. The district(cid:13) court found that Bayer never served as an officer, director,(cid:13) partner, manager or employee of any entity other than his(cid:13) firm. Westport disputes this finding, but offers no direct(cid:13) evidence to the contrary. We have reviewed the record and(cid:13) conclude that the district court did not clearly err in finding(cid:13) that Bayer never held any such position. Our acceptance of(cid:13) that finding precludes application of Exclusion E to the(cid:13) facts of this case.(cid:13) That same finding by the district court makes(cid:13) inapplicable the terms in Exclusion G regarding ownership,(cid:13) partnership, and management. As a result, in order for(cid:13) Exclusion G to apply to this case, the Lakens’ claims must(cid:13) "aris[e] out of or in connection with the conduct of any(cid:13) business enterprise other than the named insured . ..(cid:13) which is directly or indirectly controlled [or] operated . . . by(cid:13) any insured."(cid:13) Westport cites Coregis Ins. Co. v. LaRocca, 80 F. Supp. 2d(cid:13) 452 (E.D. Pa. 1999), and Coregis Ins. Co. v. Bartos,(cid:13) Broughal & Devito, LLP, 37 F. Supp. 2d 391 (E.D. Pa.(cid:13) 12(cid:13) 1999), which address policies containing language similar(cid:13) to Exclusion G. These cases are distinguishable. In each of(cid:13) these cases, the insured attorney was a partner in a(cid:13) business enterprises other than his law practice. The(cid:13) opinions in these cases focus on the meaning of the terms(cid:13) "arise out of " and "in connection with." The applicability of(cid:13) Exclusion G in the case before us, in contrast, turns on(cid:13) whether Bayer exerted the influence suggested by the terms(cid:13) "operate" and "control."(cid:13) The facts as found by the district court in Lakens v. Fryer(cid:13) Group indicate that Bayer’s influence on Park Securities(cid:13) extended only to preparing the installment notes, passing(cid:13) investments and interest payments back and forth between(cid:13) the investors and Fryer, and possessing authority to use(cid:13) the entity’s checking account in emergencies. He was, as(cid:13) the district court put it, a "point of contact." The district(cid:13) court implicitly rejected the view that this constituted(cid:13) control or operation of Park Securities, and we explicitly(cid:13) reject it now. We conclude that Bayer’s activities, while(cid:13) professional services broadly construed, do not bespeak(cid:13) control or operation of Park Securities.7 We hold that(cid:13) Exclusion G in Bayer’s policy does not apply to the(cid:13) circumstances of this case.(cid:13) C. Policy Limits(cid:13) The district court determined that the Lakens’ claims(cid:13) against Bayer triggered the policy’s $500,000 limit for(cid:13) aggregate claims rather than the $250,000 single claim(cid:13) limit. Westport contends that the issue of policy limits is(cid:13) beyond the scope of the declaratory judgment action, and(cid:13) urges us to vacate the district court’s determination on that(cid:13) issue. Westport further argues that, in any case, the(cid:13) applicable policy limit is $250,000.(cid:13) Westport’s declaratory judgment complaint requests a(cid:13) declaration of no coverage for the Lakens’ claims"along(cid:13) _________________________________________________________________(cid:13) 7. "[C]overage clauses are interpreted broadly so as to afford the greatest(cid:13) possible protection to the insured. Exceptions to an insurer’s general(cid:13) liability are accordingly to be interpreted narrowly against the insurer."(cid:13) Eichelberger v. Warner, 434 A.2d 747, 750 (Pa. Super. Ct. 1981)(cid:13) (citations omitted).(cid:13) 13(cid:13) with such other and further relief in its favor and against(cid:13) the defendants as is just and proper." Westport never(cid:13) requested a declaration of the applicable limits of coverage.(cid:13) Nor did the Lakens’ answer to the declaratory judgment(cid:13) request such a declaration. The Lakens made no(cid:13) counterclaim; they simply listed affirmative defenses and(cid:13) requested a dismissal of the declaratory judgment action.(cid:13) The parties did not put the question of limits before the(cid:13) district court. Westport argues that under these(cid:13) circumstances, the district court improperly went beyond(cid:13) the scope of the declaratory judgment action by deciding(cid:13) the applicable limit of coverage under the policy.(cid:13) The Lakens reply that the Declaratory Judgment Act(cid:13) provides the district court with authority to grant further(cid:13) relief based on a declaratory judgment: "Further necessary(cid:13) or proper relief based on a declaratory judgment or decree(cid:13) may be granted, after reasonable notice and hearing,(cid:13) against any adverse party whose rights have been(cid:13) determined by such judgment." 28 U.S.C. S 2202. However,(cid:13) Westport correctly points out that in this case the district(cid:13) court offered no notice and held no hearing after the(cid:13) declaratory judgment before granting further relief to the(cid:13) Lakens by determining the applicable policy limits.(cid:13) Generally, the judgment in a suit for declaratory(cid:13) judgment must be responsive to the pleadings and issues(cid:13) presented. See St. Paul Fire & Marine Ins. Co. v. Lawson(cid:13) Bros. Iron Works, 428 F.2d 929, 931 (10th Cir. 1970). A(cid:13) judgment beyond the issues presented constitutes an(cid:13) advisory opinion. Id. Our own research has failed to(cid:13) uncover any United States Court of Appeals case affirming(cid:13) a district court’s grant of declaratory relief to a defendant(cid:13) beyond that requested in the pleadings, except where the(cid:13) defendant brought a counterclaim. See, e.g., Starter Corp. v.(cid:13) Converse, Inc., 170 F.3d 286, 298 (2d Cir. 1999) (noting(cid:13) that "[c]ourts have also entered injunctions against(cid:13) unsuccessful [declaratory judgment] plaintiffs because(cid:13) either the prevailing party requested such relief, which was(cid:13) granted after notice and hearing, or the defendant had(cid:13) initially sought injunctive relief in its counterclaims")(cid:13) (emphasis added) (citations omitted); Penthouse Int’l, Ltd. v.(cid:13) Barnes, 792 F.2d 943, 950 (9th Cir. 1986) (holding that the(cid:13) 14(cid:13) district court abused its discretion in awarding to(cid:13) declaratory judgment defendant relief beyond the scope of(cid:13) the issues presented in the action).(cid:13) Moreover, we note that even if we were to address the(cid:13) issue of the applicable limit of liability under the policy, we(cid:13) would need further findings of fact by the district court or(cid:13) greater development of the record before we could(cid:13) determine whether the Lakens present a single claim or(cid:13) multiple claims under the policy definitions. Under the(cid:13) heading "Multiple Insureds, Claims and Claimants," the(cid:13) policy states:(cid:13) The inclusion of more than one insured in any claim or(cid:13) the making of claims by more than one person or(cid:13) organization shall not operate to increase the limits of(cid:13) liability and deductible.(cid:13) Two or more claims arising out of a single act, error,(cid:13) omission or personal injury or a series of related acts,(cid:13) errors, omissions or personal injuries shall be treated(cid:13) as a single claim.(cid:13) All such claims whenever made shall be considered(cid:13) first made on the date on which the earliest claim(cid:13) arising out of such act, error, omission or personal(cid:13) injury was first made and all such claims are subject(cid:13) to the same limits of liability and deductible.(cid:13) App. at A-2-12.(cid:13) The policy defines a claim to be "a demand made upon any(cid:13) insured for damages."8(cid:13) We observe that under the Declaratory Judgment Act the(cid:13) Lakens can request that the district court order further(cid:13) relief based on the declaratory judgment. See 28 U.S.C.(cid:13) S 2202. Assuming the Lakens undertake such action, the(cid:13) district court may resolve this issue after notice and(cid:13) hearing either on the present record or, at its option, by(cid:13) _________________________________________________________________(cid:13) 8. For cases addressing similar issues regarding policies with similar(cid:13) language, see Gregory v. Home Ins. Co., 876 F.2d 602 (7th Cir. 1989);(cid:13) Continental Cas. Co. v. Brooks, 698 So.2d 763 (Ala. 1997); and Bay Cities(cid:13) Paving & Grading, Inc. v. Lawyers’ Mut. Ins. Co., 855 P.2d 1263 (Cal.(cid:13) 1993).(cid:13) 15(cid:13) hearing additional evidence. See Edward B. Marks Music(cid:13) Corp. v. Charles K. Harris Music Publ’g Co., 255 F.2d 518,(cid:13) 522 (2d Cir. 1958).(cid:13) We determine that the district court erred by granting(cid:13) relief to the Lakens on an issue outside the scope of the(cid:13) relief requested by Westport and without the notice and(cid:13) hearing required by statute. We therefore vacate the district(cid:13) court’s determination that the applicable policy limit is(cid:13) $500,000.(cid:13) III. Conclusion(cid:13) We affirm the district court’s judgment that Bayer’s policy(cid:13) with Westport covers the Lakens’ claims to the extent of the(cid:13) policy limits as may be determined at a later date. We(cid:13) vacate the district court’s determination of the dollar(cid:13) amount of coverage and remand to the district court for(cid:13) further consideration.(cid:13) A True Copy:(cid:13) Teste:(cid:13) Clerk of the United States Court of Appeals(cid:13) for the Third Circuit(cid:13) 16(cid:13)