However, when Stormo sued Clark for legal malpractice in October 2014 for his representation of her in connection with the purchase and sale agreement with KGM, State National denied coverage and refused to defend Clark. The attorney declined to comment when reached by Law.com.

The insurance company argued that Clark did not report the action against him until Dec. 1, 2015. Once filed, the insurance company denied coverage of Stormo's claims against Clark pursuant to the policy's "prompt-written-notice requirement and the prior-knowledge exclusion," the opinion said.

In January 2019, Stormo filed the present action against State National, arguing that it breached the insurance contract with Clark by refusing to defend and indemnify him in the malpractice action and that it violated Massachusetts General Laws Chapter 93A, regarding unfair business practices and consumer protection laws.

Following a trial in February, a jury awarded the plaintiff $1.1 million on her breach of contract claim.

State Insurance argued that Stormo was not entitled to recover under the malpractice-insurance policy because Clark failed to give timely notice of his malpractice clam, as required by the policy.

In an order issued Aug. 25, Chief Judge F. Dennis Saylor IV agreed, noting that Clark didn't give notice to State National that he was being sued for malpractice until nearly 14 months after Stormo filed the claim.

The policy at issue "is a claims made" policy, which provides coverage for claims made against the insured within the relevant period, and the "prompt written notice" policy, which requires that notice of such a claim be given to the insurer during the policy period or within 60 days thereafter, the opinion said.

"Unfortunately for plaintiff, Massachusetts law provides for strict enforcement of specific notice requirements in a 'claims made' policy. That is true even if the insurer had actual notice of the claim; even if it suffered no prejudice from the late notice; and without regard to the possibility that strict enforcement might lead to an unfair result," Saylor wrote.

Zaheer A. Samee, a senior attorney at Frisoli Associates in Burlington, Massachusetts, who represented the plaintiff questioned when to report the 2014 claim.

"The judge didn't really address how if there's more than one claim and they're related, the subsequent claim is deemed made at the same time as the earliest claim," Samee said. "In this case, we had two claims. There was a claim by KGM in 2010 and then there was my client's claim in 2014, which was related. There's no dispute that it was related."

It appears that a recent U.S. Court of Appeals for the First Circuit may have swayed the court's decision, too.

Just weeks ago, on Aug. 8, the U.S. Court of Appeals for the First Circuit affirmed the district court's principles of Massachusetts law in President and Fellows of Harvard College v. Zurich American Insurance Co., in which Harvard was sued in November 2014, but failed to notify the excess carrier until May 2017 following the 90-day window had expired. In that case, Zurich American denied coverage and Harvard filed suit.

The district court sided with the Zurich American Insurance. On appeal, Harvard argued "(1) that 'the district court misapplied Massachusetts law when it determined that strict compliance with the excess policy's notice requirement was a prerequisite to coverage,' and (2) 'as a fall back … propose[d] an alternative interpretation of the notice requirement and contend[ed] that issues of material fact remain as to whether that requirement was satisfied.'"

The First Circuit disagreed, finding that under Massachusetts law, "'an insurer is not required to show prejudice before denying coverage due to an insured's failure to comply with the notice requirement of a claims-made policy,'" the opinion said.

"In light of that legal framework—and particularly in light of the First Circuit's opinion in Harvard—it is difficult to see how the jury verdict here can stand," Saylor wrote.

"Under the circumstances, the court sees no alternative but to grant the motion for judgment notwithstanding the verdict. While that is not an obviously sensible result, it is required by the terms of the policy and by Massachusetts law," he continued. "In short, because Clark's notice to the insurer of the malpractice action was too late, the policy does not provide coverage. By extension, plaintiff Stormo, as his assignee, cannot claim the benefits of the policy. Defendant is therefore entitled to judgment notwithstanding the verdict."

Samee respectfully disagreed with the court's reliance on the Harvard ruling because it dealt with a different ruling and didn't involve the same policies.

"I think this case, because of those two different type of reporting requirements, is different from the Harvard case," Samee told Law.com. "The Harvard case was simply that there was a primary insurer and then an excess insurer, and the excess insurance policy said, 'You have to give us notice at the same time you give notice to your primary insurer.' Harvard didn't do that. … there was nothing about multiple claims which relate back to an earlier claim, nothing like that."

Among other cases, Saylor further relied on Johnson Controls v. Bowes, in which the insured waited seven months after being sued to notify his insurer of the claim. The Johnson Controls court did not distinguish between claims-made and occurrence-based policies, or between different types of notice requirements, the opinion said.

Kennedys partner, Sean P. Mahoney, of the Philadelphia office, led the defense, along with Joanna L. Young and Erica R. Sanders, both based out of New York. Messages seeking comment were not immediately returned.