K2 Inv. Group, LLC v. Am. Guar. & Liab. Ins. Co.

Plaintiffs were two limited liability companies that made loans to Goldan, LLC. Goldan failed to repay the loans. Plaintiffs later discovered that their mortgages had not been recorded as agreed upon. Plaintiffs sued Goldan and its two principals, Mark Goldman and Jeffrey Daniels, alleging a number of claims. One claim was asserted against Daniels, a lawyer, for legal malpractice for failing to record the mortgages. Daniels' malpractice carrier, American Guarantee and Liability Insurance Company (American) refused to provide defense or indemnity coverage. Daniels defaulted in Plaintiffs' action against him. Daniels assigned to Plaintiffs his rights against American. Plaintiffs subsequently brought an action against American for breach of contract and bad faith failure to settle the underlying lawsuit. Supreme Court granted Plaintiffs' motions as to the breach of contract claims and dismissed the bad faith claims. The Appellate Division affirmed. The Court of Appeals affirmed, holding (1) by breaching its duty to defend Daniels, American lost its right to rely on policy exclusions to escape its duty to indemnify; and (2) the lower courts properly dismissed Plaintiffs' bad faith claims. View "K2 Inv. Group, LLC v. Am. Guar. & Liab. Ins. Co." on Justia Law