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July 1, 2013

Case Report
William L. Boesch

Win for Sugarman Rogers’s insurer-client in lawyer check-scam case

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Partner William Boesch has obtained a summary judgment ruling from a New Hampshire federal judge on behalf of a professional liability insurer for lawyers, in a case involving a common e-mail check scam. A lawyer sought coverage under his malpractice policy after he fell victim to a scam in which someone posing as an overseas client persuaded him to deposit a check (which proved to be forged) into his client-funds account, and to wire funds to an offshore account specified by the “client.” The scammer obtained nearly $190,000, and the lawyer’s bank looked to him to repay the funds.

The lawyer, in turn, looked to his professional liability insurer. But the insurer, Attorneys Liability Protection Society, Inc. (ALPS), responded that the bank’s claim was not one arising from the lawyer’s professional services as an attorney, within the specific terms of the policy. The insurer also argued that coverage was barred based on an exclusion in the policy for claims involving misappropriation of money.

In a ruling on cross-motions for summary judgment in the ensuing declaratory judgment action, the U.S. District Court for the District of New Hampshire agreed with SRBC client ALPS. Without reaching the question of whether the claim involved professional legal services, the court held that the misappropriation exclusion unambiguously barred coverage. Thus, the court granted summary judgment for ALPS, ending the case.

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