KENNETH M. HOYT, District Judge.
Pending before the Court are the defendant's, Lexington Insurance Company ("Lexington"), motions for summary judgment (Dkt. Nos. 341 & 342) and the plaintiffs', John M. O'Quinn, P.C. d/b/a O'Quinn & Laminack, John M. O'Quinn & Associates, L.L.P. d/b/a O'Quinn & Laminack, John M. O'Quinn Law Firm, P.L.L.C. and O'Quinn & Laminack (the "plaintiffs" or "the O'Quinn Firm"), cross-motion for summary judgment (Dkt. No. 353). After having carefully considered the motions, responses, all other matters of record in this case and the applicable authorities, the Court determines that Lexington's motions for summary judgment should be GRANTED; and the plaintiffs' cross-motion for summary judgment should be DENIED.
This is an insurance coverage dispute emanating from two lawsuits previously filed against the O'Quinn Firm — the Wood
On or about September 26, 1998, National Union Fire Insurance Company of Pittsburgh, Pa. ("National Union") issued to the O'Quinn Firm a claims-made and reported Lawyer's Professional Liability Policy, Policy Number 861-88-44, covering the policy period from September 26, 1998 to September 26, 1999 ("1998 Primary Policy"). The 1998 Primary Policy contains a $150,000 self-insured retention with a $5,000,000 limit of liability. (See Dkt. No. 345, Ex. 1 at APP00002.) National Union also issued a second claims-made Lawyers' Professional Liability Policy, Policy Number 874-18-89, to the O'Quinn Firm covering the policy period from September 26, 2001 to September 26, 2002 ("2001 Primary
On or about September 26, 1998, Lexington issued to the O'Quinn Firm an Excess Professional Liability Insurance Policy, Policy Number 599/UP981639, covering the policy period of September 26, 1998 to September 26, 1999 (the "1998 Excess Policy"). The 1998 Excess Policy has a $10,000,000 limit of liability. (Dkt. No. 349, Ex. 48 at APP01025). A second Excess Professional Liability Insurance Policy, issued by Lexington, Gulf Insurance Company U.K. Limited ("Gulf"), Hiscox Dedicated Corporate Member, Ltd. for Underwriters at Lloyd's ("Hiscox"), and Zurich Specialties London Limited ("Zurich"), Policy Number 599/UP011639, covering the policy period from September 26, 2001 to September 26, 2002 was also issued to the O'Quinn Firm (the "2001 Excess Policy"). (Dkt. No. 349, Ex. 49). The Excess Policies "follow form" to the underlying Primary Policies and thus, incorporate the same terms, exclusions, conditions and definitions as the Primary Policies.
The events germane to the underlying dispute began several years prior to the issuance of the policies.
In 1995, the O'Quinn Firm's "BI General Expense" account first noted a surplus — the amount reserved from each client's recovery to cover expenses exceeded the amount of expenses incurred — and maintained a continuous surplus from May 2000 thereon. (Dkt. No. 345, Ex. 12 at APP00239). Despite this surplus, no attempt was made by the O'Quinn Firm to segregate the withheld funds, inform its clients or dispense a refund "until January 2007 — almost seven years later." (Id.) In fact, it was not until the filing of the Wood lawsuit that the O'Quinn Firm's former breast implant clients were even informed that it intended to refund any surplus. (Id.).
By letter dated July 26, 1999, National Union agreed to provide the O'Quinn Firm with a defense to the claims alleged in Wood subject to a full and complete reservation of rights. (Dkt. No. 345, Ex. 2). Shortly thereafter, on July 31, 2000, National Union filed the instant action seeking a declaration of its rights under the 1998 Primary Policy. (Dkt. No. 1). On August 31, 2000, the O'Quinn Firm filed a counterclaim against National Union due to its alleged refusal to pay defense costs, seeking to recover all costs incurred in defending the Wood lawsuit. (Dkt. No. 9). On or about September 14, 2001, this Court entered a Memorandum Opinion and Order granting, in part, the O'Quinn Firm's motion for partial summary judgment on National Union's duty to defend. More specifically, the Court ruled that National Union owed a duty to defend the O'Quinn Firm in the Wood lawsuit, but stayed the indemnity issue pending resolution of the underlying litigation. Afterward, the case was administratively closed. (See Dkt. No. 43.)
On June 21, 2002, Leslie Snipes and Sandra Templeton filed a subsequent suit against the O'Quinn Firm ("Snipes") in the 133rd Judicial District Court, Harris County, Texas, asserting allegations nearly identical to those alleged in Wood. (Dkt. No. 349, Ex. 30). On August 2, 2002, National Union formally acknowledged receipt of information concerning the Snipes lawsuit and further stated that since the allegations asserted in Snipes were the same as those alleged in Wood, Snipes would be deemed one "Claim" with Wood, "first made" during the 1998 policy period when Wood was filed and subject to the 1998 Primary Policy limits.
Subsequently, in the Snipes lawsuit, plaintiff Leslie Snipes, filed a motion for continuance and plea in abatement, seeking to have the Snipes lawsuit abated in favor of the Wood lawsuit. Specifically, she alleged the following:
(Dkt. No. 346, Ex. J.) (emphasis added). On April 10, 2002, the Court entered an Order granting the motion for continuance
In 1999, the O'Quinn Firm sought an order compelling arbitration. (Dkt. No. 345, Ex. 6). The Texas Supreme Court eventually decided that the class arbitration issue was for the arbitrators to decide, not the trial court. In re Wood, 140 S.W.3d 367, 368 (Tex.2004). On November 15, 2004, the 4th Judicial District Court, Rusk County, ordered Wood to arbitration pursuant to the Federal Arbitration Act and the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). (Dkt. No. 345, Ex. 9).
Subsequent to the issuance of its Class Determination Award, the Panel entered a series of orders establishing the following: (1) the O'Quinn Firm's contingent fee contracts were "unambiguous", "do not allow for the deduction of BI General Expenses", and "a reasonable person in the circumstances of [the Wood] Plaintiffs would [not] have construed the Fee Agreements at the time of their execution as providing for such a deduction" (Dkt. No. 345, Ex. 12 at APP00234); (2) "there could not have been an expectation by [the O'Quinn Firm] — much less the pre-1993 [Wood] Plaintiffs — that the Fee Agreements would cover BI General Expenses when they were drafted because that category of expense did not exist (Dkt. No. 345, Ex. 12 at APP00235); (3) "despite the creation of the BI General [Expense] category in mid-1993, the Fee Agreements were not altered in any manner explaining such a significant change" (Id.); (4) Mr. Laminack, one of the O'Quinn Firm's lawyers primarily responsible for handling the breast implant litigation, "candidly agreed that `some of the charges on the list [of expenditures posted as BI General Expenses were] not appropriate'" (Dkt. No. 345, Ex. 12 at APP00237; Dkt. No. 345, Ex. 18A at APP00306-307); (5) the Majority of the Panel remained unpersuaded by the O'Quinn Firm's position that BI General Expenses "were never actually `charged' to the [Wood] Plaintiffs" and that "the firm had always planned to go back and audit BI General Expenses and remove any inappropriate charges" (Dkt. No. 345, Ex. 12 at APP00238); (6) "the BI General Expense account first had a surplus in 1995" and maintained a continuous one from May 2000 thereon (Id. at
Further, the Panel held that: (1) for the O'Quinn Firm's improper deduction of BI General Expenses "an appropriate remedy is the return by [the O'Quinn Firm] of all BI General Expenses improperly deducted from the Class Members' settlement distributions" (Dkt. No. 345, Ex. 14 at APP00261); and (2) for its breach of fiduciary duty "[the O'Quinn Firm] should forfeit $25 million of the fees" out of "about $263.4 million" in fees received by it. (Id. at APP00268-271).
On September 26, 2007, the Panel issued a final arbitration award (the "Final Award"). (Dkt. No. 345, Ex. 16).
Thereafter, this action was reopened for further proceedings. Discovery has been conducted and is now closed. The O'Quinn Firm and all of the other defendant insurers, save Lexington, have settled.
Federal Rule of Civil Procedure 56 authorizes summary judgment against a party who fails to make a sufficient showing of the existence of an element essential to that party's case and on which that party bears the burden at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc). The movant bears the initial burden of "informing the Court of the basis of its motion" and identifying those portions of the record "which it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323, 106 S.Ct. 2548; see also, Martinez v. Schlumberger, Ltd., 338 F.3d 407, 411 (5th Cir.2003). Summary judgment is appropriate if "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).
If the movant meets its burden, the burden then shifts to the nonmovant to "go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Stults v. Conoco, Inc., 76 F.3d 651, 656 (5th Cir.1996) (citing Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir.1995); Little, 37 F.3d at 1075). "To meet this burden, the nonmovant must `identify specific evidence in the record and articulate the `precise manner' in which that evidence support[s][its] claim[s].'" Stults, 76 F.3d at 656 (quoting Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir.1994), cert. denied, 513 U.S. 871, 115 S.Ct. 195, 130 L.Ed.2d 127 (1994)). The nonmovant may not satisfy its burden "with some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence." Little, 37 F.3d at 1075 (internal quotation marks and citations omitted). Instead, it "must set forth specific facts showing the existence of a `genuine' issue concerning every essential component of its case." American Eagle Airlines, Inc. v. Air Line Pilots Ass'n, Int'l, 343 F.3d 401, 405 (5th Cir.2003) (quoting Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir.1998)).
"A fact is material only if its resolution would affect the outcome of the action ... and an issue is genuine only `if the evidence is sufficient for a reasonable jury to return a verdict for the [nonmovant].'" Wiley v. State Farm Fire and Cas. Co., 585 F.3d 206, 210 (5th Cir.2009) (internal citations omitted). When determining whether the nonmovant has established a genuine issue of material fact, a reviewing court must construe "all facts and inferences... in the light most favorable to the [nonmovant]." Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir.2005) (citing Armstrong v. Am. Home Shield Corp., 333 F.3d 566, 568 (5th Cir. 2003)). Likewise, all "factual controversies [are to be resolved] in favor of the [nonmovant], but only where there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Boudreaux, 402 F.3d at 540 (citing Little, 37 F.3d at 1075 (emphasis omitted)). Nonetheless, a reviewing court may not "weigh the evidence or evaluate the credibility
Under Texas law, which governs this diversity suit, the same general rules that govern the interpretation of contracts govern the interpretation of insurance policies, and a policy must be interpreted to effectuate the intent of the parties at the time the policy was formed.
If an insurance contract is worded such that it "can be given a definite or certain legal meaning," then it is unambiguous and enforceable as written. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI Indus., 907 S.W.2d 517, 520 (Tex. 1995). Only if an insurance contract is susceptible to multiple reasonable interpretations must a court adopt the interpretation most favorable to the insured. Nat'l Union Fire Ins. Co., 907 S.W.2d at 520. Nevertheless, a court will not find a contract ambiguous merely because the parties offer contradictory interpretations. See, Cent. States, Se. & Sw. Areas Pension Fund v. Creative Dev. Co., 232 F.3d 406, 414 n. 28 (5th Cir.2000) (quoting Wards Co. v. Stamford Ridgeway Assocs., 761 F.2d 117, 120 (2d Cir.1985) (internal quotation marks and citation omitted)) ("A Court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity, and words do not become ambiguous simply because lawyers or laymen contend for different meanings."); see also, Kelley-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 465 (Tex. 1998).
"The insured bears the initial burden of showing that there is coverage, while the insurer bears the burden of proving the applicability of any exclusions in the policy" that permit the insurer to deny coverage. Guar. Nat'l Ins. Co. v. Vic Mfg. Co., 143 F.3d 192, 193 (5th Cir.1998) (citing Telepak v. United Servs. Auto. Ass'n, 887 S.W.2d 506, 507 (Tex.Civ.App.-San Antonio 1994, writ denied)); Venture Encoding Serv., Inc. v. Atl. Mut. Ins. Co., 107 S.W.3d 729, 733 (Tex.App.-Fort Worth 2003, pet. denied) (stating that the Texas Insurance Code places the burden on the insurer to prove any exception to coverage). Once the insurer has established that an exclusion applies, the burden shifts back to the insured to prove that an exception to the exclusion applies. Guar. Nat'l Ins. Co., 143 F.3d at 193 (internal citation omitted).
With these principles in mind, the Court now turns to the relevant policy language.
(Dkt. No. 345, Ex. 1 at APP00001; Dkt. No. 349, Ex. 42 at APP00957.) Section A of each of the Primary Policies' Insuring Agreements states, in pertinent part, the following:
(Dkt. No. 345, Ex. 1 at APP00003; Dkt. No. 349, Ex. 42 at APP00959.).
The following pertinent definitions are contained in the Primary Policies:
(Dkt. No. 345, Ex. 1 at APP00004-6; Dkt. No. 349, Ex. 42 at APP00960-62.).
The Primary Policies also contain the following relevant exclusion:
This policy excludes coverage for any Loss in connection with a Claim:
(Dkt. No. 345, Ex. 1 at APP00007; Dkt. No. 349, Ex. 42 at APP00963.) Relevant endorsements included in the Primary Policies provide:
(Dkt. No. 345, Ex. 1 at APP00017; Dkt. No. 349, Ex. 42 at APP00974.)
The Excess Policies state, in relevant part, as follows:
(Dkt. No. 349 at APP01027 at ¶ 1; APP01049 at ¶ 1; APP01193 at ¶ 1.). Additionally, the Excess Policies expressly state that the O'Quinn Firm is required to obtain the excess insurer's consent prior to any settlement of a claim. More specifically, the Excess Policies provide the following:
(APP01027 at ¶ 4; APP01049 at ¶ 4; APP01193 at ¶ 4.). The Excess Policies further state that "[e]xcept as otherwise provided herein this Policy is subject to the same terms, exclusions, conditions and definitions as the Policy of the Primary Insurers...." (Dkt. No. 349 at APP01028 at ¶ 7; APP01050 at ¶ 7; APP01194 at ¶ 7.)
As a threshold matter, the parties do not dispute that the plaintiffs and/or the O'Quinn Firm qualify as "Insureds" under the Primary Policies.
Pursuant to Condition D of the Primary Policies, however, "[a]ll Claims alleging a Wrongful Act or Interrelated Wrongful Acts regardless of the number of Claims, Insureds, or claimants
The Wood and Snipes lawsuits both alleged that the O'Quinn Firm had improperly billed its clients by means of a BI General Expense deduction taken from each client's settlement disbursement.
When determining whether two lawsuits allege interrelated wrongful acts under Texas law, a court "must read the underlying petitions in light of the insurance policy's provisions, and focus the analysis on the `origin of the damages.'" Reeves Cty. v. Hous. Cas. Co., 356 S.W.3d 664, 670 (Tex.App.-El Paso 2011). Here, under the plain language of the Primary Policies, all claims alleging the same or interrelated wrongful acts are considered one claim first made when the first claim is filed. When employing the reasoning set forth in Reeves coupled with the plain language of the Primary Policies, the Court determines that while Snipes was filed in 2002, for purposes of determining which policy period applies, it constitutes a single claim first made when Wood — the suit encompassing the first claim alleging the same and/or Interrelated Wrongful Acts-was first filed during the 1998 policy period. Therefore, Snipes is subject to the 1998 Primary Policy and not the 2001 Primary Policy. The O'Quinn Firm's argument that the Wood and Snipes lawsuits are not related is specious at best, especially in light of the overwhelming evidence to the contrary. Hence, the Court determines that no genuine issue of material fact exists regarding whether the Wood and Snipes lawsuits allege the same and/or Interrelated Wrongful Acts or constitute a single Claim first made during the 1998 policy period. Further, since the Snipes suit was non-suited in 2004, no evidence has been adduced establishing that the O'Quinn Firm incurred expenses in excess of its deductible on Snipes during its pendency.
As set forth above, the Insuring Agreement of the Primary Policies, to which the Excess Policies follow form, provide, in relevant part, that "[t]his policy will pay on the behalf of the Insured Loss arising from a Claim first made against the Insured during the Policy Period." (Dkt. No. 345, Ex. 1 at APP00003; Dkt. No. 349, Ex. 42 at APP00959.) (emphasis added). The term
(Dkt. No. 345, Ex. 1 at APP00006; Dkt. No. 349, Ex. 42 at APP00962.) (emphasis added).
In this case, the O'Quinn Firm maintains that based on the definition of the term "Loss" as defined in the Primary Policies, it incurred an actual covered Loss in the amount of $46 million. (Dkt. No. 53 at 11-14.). The O'Quinn Firm allocates its Loss as follows: (1) $30,724,462.50 for breach of contract and breach of fiduciary duty damages; (2) $10,241,487.50 for an award of attorneys' fees; and (3) $5,000,000.00 for accrued post-judgment interest. Specifically, it contends that $30,724,462.50 was distributed to the Wood and Snipes plaintiffs for actual damages awarded for breach of contract, breach of fiduciary duty and pre-judgment interest accrued on the breach of contract damages. It contends that "[t]his $30,724,462.50 payment falls within the plain meaning of damages, which is included in the [Primary Policies'] definition of Loss." (Dkt. No. 353 at 13). Additionally, it avers that the $10,241,487.50 payment, which was awarded to the Wood and Snipes plaintiffs for attorneys' fees, falls within the plan meaning of damages as well because it is merely a percentage of the breach of contract and breach of fiduciary duty damages Award. It further insists that since "the award of attorneys' fees was part of the Judgment and paid in the Settlement, this amount falls within the meaning of judgment and settlement." (Id.) Lastly, the O'Quinn Firm argues that the $5,000,000.00 payment made by it to the Wood and Snipes plaintiffs for accrued postjudgment interest is a Defense Cost, falls within the meaning of damages, and thus, constitutes a Loss.
Lexington, in contrast, maintains that the Primary Policies' definition of the term "Loss" distinctly does not include within its coverage any matter "deemed uninsurable under the law.
In Nortex, Humble Oil & Refining Co., sued Nortex for using slant drilling techniques that crossed the boundary lines of its leases and extended into adjacent leases jointly owned by it and Texaco, claiming that Nortex converted its property by wrongfully appropriating and selling oil belonging to it. Nortex, 456 S.W.2d at 490. Texaco intervened in the actions to protect its interest. Id. The parties eventually settled and Nortex, thereafter, made demand for payment upon its insurer seeking indemnity on the basis that the settlement amounted to a "Loss" under its excess liability insurance policy. Id. at 490-91. Its insurer denied the claim and refused payment. Afterward, Nortex initiated a lawsuit in a Texas state court, which rendered judgment for Nortex's insurer. Nortex appealed. The Texas appellate court rejected its argument, reasoning:
Id. at 493-94.
In In re TransTexas Gas Corp., the Fifth Circuit, in examining the Nortex and Level 3 Commc'ns, Inc. v. Fed. Ins. Co., 272 F.3d 908 (7th Cir.2001)
The O'Quinn Firm attempts to distinguish the cases relied upon by Lexington by contending that the cases are inapposite because there was never any question that the contingent fee contracts authorized them to recoup all court costs and expenses of litigation, but rather that the contingent fee contracts did not specifically authorize recoupment through BI General Expenses. (Dkt. No. 353 at 32) (emphasis added). It contends that the aforementioned fact is "critical because it negates any argument that the O'Quinn Firm's breach was for stealing any property or for wrongfully-receiving any sort of benefit." Id. It also argues that: (1) the Wood and Snipes plaintiffs never sued them for restitution and never sought restitution; (2) the Panel did not enter an award for restitution, but damages for breach of contract and breach of fiduciary duty; and (3) the Award and Settlement do not reference the words restitution or restitutionary. While the Court agrees that the O'Quinn Firm suffered a Loss in the colloquial sense that the Panel awarded damages against it, the Court, nevertheless, remains unpersuaded by the O'Quinn Firm's attempts to differentiate the cases proffered as support by Lexington.
Moreover, under the Primary Policies, "Loss" expressly does not include "reimbursement of legal fees, costs or expenses" or "fines, penalties, [or] sanctions." Undoubtedly, even a cursory review of the petitions filed in the Wood and Snipes lawsuits indicates that the plaintiffs, by way of their suits, sought the reimbursement of expenses the O'Quinn Firm had improperly deducted from their settlement disbursements along with legal fees that it had collected. (Dkt. No. 345, Ex. 14 at APP00271). The Final Award entered against the O'Quinn Firm expressly required "the return by O'Quinn of all BI General Expenses improperly deducted from the Class members' settlement distributions," together with prejudgment interest and attorneys' fees, as well as the forfeiture of "$25 million of the fees [received from] the Class." (Id.). Thus, the Court concludes that the O'Quinn Firm has failed to establish that it sustained a "Loss" within the meaning of the Policies. Accordingly, because the Panel's Final Award against it does not qualify as a "Loss" under the Primary Policies and because the O'Quinn Firm has failed to satisfy its burden to prove a covered "Loss" under the Policies, Lexington is entitled to a summary judgment.
The plaintiffs in both the Wood and Snipes lawsuits alleged the same and/or similar claims. In Wood, the plaintiffs alleged that the O'Quinn Firm failed to perform its obligations under the contingent fee contract with them "by improperly charging the plaintiffs BI General Expenses and MDL [Fund] deductions that were not specifically provided for in the [contingent fee contract] and by calculating fees and reimbursements in a manner other than as provided by the [contingent fee contract]." (Dkt. No. 204, Ex. 5 at APP0095, ¶ 40). The plaintiffs also alleged
The Insuring Agreement of the Primary Policies, to which the Excess Policies follow form, provides, in pertinent part, as follows:
(Dkt. No. 345, Ex. 1 at APP00003; Dkt. No. 349, Ex. 42 at APP00959.). "Professional Legal Services" is defined within the meaning of the Primary Polices as "legal services and activities [] performed as a lawyer." (Dkt. No. 345, Ex. 1 at APP00006; Dkt. No. 349, Ex. 42 at APP00962).
Lexington argues that the Wrongful Acts alleged in Wood and Snipes arose solely out of the O'Quinn Firm's improper billing practices, which it contends are not "professional legal services." Rather, it maintains that "professional legal services" consist of "only those acts which use the inherent skills typified by that professional, not all acts associated with the profession." Gregg & Valby, LLP v. Great Am. Ins. Co., 316 F.Supp.2d 505, 513 (S.D.Tex. 2004) (citing Atlantic Lloyd's Ins. Co. of Tex. v. Susman & Godfrey, L.L.P., 982 S.W.2d 472, 477 (Tex.App.-Dallas 1998, pet. denied)). In contrast, the O'Quinn Firm, in its motion for summary judgment, maintains that the breaches alleged in Wood and Snipes were committed while rendering "Professional Legal Services" because the O'Quinn Firm was representing the Wood and Snipes plaintiffs in breast-implant litigation when the breaches occurred. (See Dkt. No. 353 at 24). Thus, they surmise that "[b]ecause representing clients in litigation is a legal service and activity that is performed exclusively by lawyers, the O'Quinn Firm was necessarily performing Professional Legal Services. (Id.) Further, the O'Quinn Firm avers that it "performed legal services and activities as [both a lawyer and] a Fiduciary because the Panel found that it breached a fiduciary duty to its clients that arose from the attorney-client relationship." (Id.)
This Court, however, is more inclined to agree with Lexington's depiction of the claims alleged in Wood and Snipes and is not persuaded by the O'Quinn Firm's valiant effort to characterize its billing and/or fee-setting practices as an integral part of the legal representation that it provided to the Wood and Snipes plaintiffs. See Gregg, 316 F.Supp.2d at 512 (citing Tacon Mech. Contractors, Inc. v. Aetna Cas. & Sur. Co., 65 F.3d 486, 488 (5th Cir.1995)) ("A party's particular characterization of a claim cannot conceal its true nature."). This determination is in harmony with multiple other courts that have contemplated this very issue. Such courts have repeatedly held that billing and/or fee-setting practices do not constitute "professional services." See Gregg, 316 F.Supp.2d at 513 (citing Atlantic Lloyd's, 982 S.W.2d
Reliance Nat. Ins. Co. v. Sears, Roebuck & Co., Inc., 58 Mass.App.Ct. 645, 648, 792 N.E.2d 145, 148 (Mass.App.Ct.2003).
Similarly, this Court concludes that the claims alleged in Wood and Snipes, at their core, do not equate to "Professional Legal Services," but rather to billing practices which do not require specialized knowledge and legal skill inherent to lawyers. Because the O'Quinn Firm's improper billing practices do not constitute "professional legal services", the O'Quinn Firm cannot meet its burden of proving that the Wood and/or Snipes Claim falls within the Policies' Insuring Agreements. Accordingly, a summary judgment in Lexington's favor is appropriate.
Alternatively, this Court determines that Exclusion B also excludes the O'Quinn Firm's claim from coverage under the Policies. Particularly, the Primary Policies exclude coverage for any Loss relating to a Claim:
(Dkt. No. 345, Ex. 1 at APP00007; Dkt. No. 349, Ex. 42 at APP00963.). The parties do not insinuate that the language set forth above is ambiguous. Therefore, because the provision is not ambiguous, the Court will employ the plain meaning of its terms. See Am. States Ins. Co. v. Bailey, 133 F.3d 363, 369 (5th Cir.1998) (when exclusion is susceptible to one interpretation,
Indeed, the series of orders and awards entered by the Panel with respect to the Wood arbitration established that the O'Quinn Firm received a "profit or advantage to which [it] was not legally entitled" by, inter alia: (1) failing to disclose the BI General Expense deduction or even mentioning charging clients for a pro-rata portion of general and/or common expenses; (2) allocating such undisclosed expenses among clients; (3) not segregating the withheld money in any manner and using it to pay down the O'Quinn Firm's breast implant litigation credit line; (4) improperly designating items such as professional association dues, public relations fees, other lawyer's fees, flowers, fundraising and office overhead as BI General Expenses; and (5) making no attempt to refund any client's money until January 2007, despite maintaining a continuous surplus since May 2000. (Dkt. No. 345, Ex. 12 at Ex. APP00237-238.)
The O'Quinn Firm contends that Exclusion B is inapplicable in this case because: (1) the evidence shows that it did not gain any profit or advantage, but merely recouped its expenses through the general-expense methodology; (2) Lexington's interpretation of Exclusion B is unreasonable based on the Primary Policies' language and renders coverage illusory; and (3) Lexington's interpretation is unreasonable and thus, the rules of contract construction prohibit the Court from adopting it. (See Dkt. No. 353 at 37).
Lexington, in opposition, argues that the undisputed facts establish that the Wood/Snipes Claim arose out of the O'Quinn Firm's "gaining profit or advantage to which it was not legally entitled." This Court is inclined to agree. Accordingly, the Court is of the opinion that the Panel's Final Award finding that the O'Quinn Firm's contingent fee contracts did not allow for the deduction of BI General Expenses and requiring them to return all BI General Expenses improperly deducted from the Class members' settlement distributions, together with prejudgment interest, attorneys' fees, and the forfeiture of $25 million in fees received is sufficient to satisfy the "profit or advantage to which [it] was not legally entitled" exclusion.
Based on the foregoing, the Court determines that Lexington has met its burden to show that the O'Quinn Firm is not entitled to coverage under the Excess Policies for the various reasons set forth above. The O'Quinn Firm has not demonstrated a genuine issue of material fact supporting its arguments in support of coverage. Therefore, a summary judgment in Lexington's favor is appropriate. Accordingly, Lexington's motions for summary judgment are GRANTED; and the O'Quinn Firm's cross-motion for summary judgment is DENIED.
It is so
(Dkt. No. 345, Ex. 9 at APP00182-183).
(Dkt. No. 345, Ex. 1 at APP00005-6; Dkt. No. 349, Ex. 42 at APP00961-62, APP00973.)