A reminder (for you) about the importance of coverage issues and (for me) that there is a second side to most stories.

This is an update on the California lawyer who successfully compelled arbitration of a client’s salacious claims that he treated her as essentially a “sex slave” that I wrote about here.

While I talked about that case as an example of the growing power of arbitration provisions in the arena of attorney-client contracts, I did not mention two things that could have, should have, been mentioned.  One was shortsighted in a way I strive not to be — which is that I failed at the time to acknowledge explicitly that nothing had been proven and that there may well be a second side to the story that the accused lawyer had not yet told.  The second thing I failed to mention was just an ancillary point at the time — the opportunity to note that if the lawyer had lost on the arbitration argument it might have meant he would be looking at his carrier claiming not to have to provide coverage.

A lawsuit filed in federal court by the lawyer’s carrier seeking a declaratory judgment and rescission of an insurance policy gives me an opportunity to address both things.  Law360 had an initial story about this that prompted me to find and read the federal declaratory judgment suit brought by the carrier.  Unlike your run-of-the-mill declaratory judgment suit, it makes for an interesting read.

In addition to arguing — relatively undaunted by the fact that court hearing the underlying suit decided the allegations arose from the attorney-client relationship — that there should be no coverage for the claim because it does not involve the delivery of any legal services, the declaratory judgment action seeks rescission of the insurance policy on the basis that the lawyer failed to disclose known circumstances that amounted to a claim, or could have amounted to a claim, at the time the firm applied for the insurance policy.

It is the carrier’s pleading setting out those circumstances that the potential second side to this lawyer’s story comes to the fore.

The lawyer and his law firm put in their application with their insurance carrier for coverage on January 12, 2015, resulting in a claims-made policy period commencing on February 28, 2015.  The insurance company fills us in on the fact that they have now learned that a woman – who may or may not be Jane Doe, the insurance company will not say definitively — had filed a bar complaint against the lawyer and that, in connection with that, back on March 25, 2014 the lawyer pursued a court ordered domestic violence restraining order against the woman.  The declaratory judgment action suit details 8 aspects of what was in the lawyer’s request for the restraining order that appear to indicate knowledge of a potential claim by someone that should have been disclosed in the insurance application, but was not.

  • The lawyer had a “dating relationship” with a woman described as an “ex-girlfriend” but the lawyer had “broken it off three times.”
  • The lawyer alleged the woman “had previously attempted to extort me.”
  • The woman had filed a bar complaint on March 20, 2014 that indicated she had quit being lawyer’s client because she “no longer felt [lawyer] was negotiating the best deals for me.”
  • The woman had demanded $40,000 and an apology from the lawyer and, in an email to her before the bar complaint, the lawyer agreed to pay $30,000 and make a written apology.  But then the woman said lawyer must go on a trip with her for 10 days or she would “go to the bar on me.”
  • The lawyer says the woman then made demands for sex.  And the lawyer had his lawyer send a “cease and desist letter.”
  • The woman then sent mass e-mails to other lawyers at lawyer’s firm with “false and malicious statements intended to hurt me professionally and personally, and damage my relationship with my colleagues, and in the entertainment community generally.”
  • According to the lawyer, the woman also said “we would be at war.”

In light of those accusations, made by the lawyer himself in court filing seeking a restraining order, and the fact that he was seeking to have a court bar the woman from coming within 100 yards of him, his home, and his workplace, the insurance carrier makes the point that, regardless of whether this woman happens to be “Jane Doe” or a different woman that the lawyer failed to disclose the existence of these circumstances, and the carrier seeks rescission of the insurance contract on the basis of the failure to disclose.  Of course, if the two women are really just one woman, then the insurance company’s argument seems significantly stronger.  The “Jane Doe” lawsuit filed against the lawyer started on April 10, 2015,

Yet, if the two women are really just one woman, then the flavor of the underlying lawsuit changes a good bit.  If the woman who filed the bar complaint is the same woman who has made the “sex slave” claims, then there is now a plausible basis for significant questions about the suit.  This second side of the story would merit watching — for while there would still be underlying ethical concerns for the lawyer in terms of having admitted had a sexual relationship with a client, this alternate version of events makes him seem a lot more sympathetic than the picture painted in the lawsuit — but the second side of the story may not play out publicly any time soon because … wait for it … lawyers for the firm (as explained in the Law360 article) indicate a belief that there is an arbitration provision in the underlying insurance contract and that the coverage dispute should be arbitrated.

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