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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

Law Firm Sues ACE Group Unit Westchester Fire Insurance to Force Coverage

June 12, 2012 - A Boston law firm has sued Westchester Fire Insurance Co. to try to get it to pay for defense and potential indemnity costs in a malpractice suit against the firm and one of its attorneys.

Andrew Aloisi, doing business as Aloisi & Aloisi, sued the ACE Group insurer along with co-defendant State National Insurance Co. in Massachusetts State Court. Westchester has petitioned to remove the matter to U.S. District Court in Boston.

Westchester had in place with Aloisi & Aloisi a malpractice policy when the law firm and one of its attorneys were sued for legal malpractice. Westchester agreed to provide a defense under a reservation of rights.

The original suit, filed in 2008, was amended in 2010 and added new allegations. Westchester reportedly said it would provide a defense going forward only if the claims asserted in the original complaint were kept in the suit.

A section in Westchester’s policy that discussed its limits of liability said that because the amended claims did not arise out of the same or related error as the original complaint, they could not be considered a single claim for the purpose of its coverage. And it did not agree to provide indemnity for the new claim.

So Westchester suggested that Aloisi & Aloisi tender that matter to its current insurer, State National. But State National has told the law firm that it will not provide a defense or indemnity for the new claim because its policy had an exclusion for prior and pending litigation.

Trial on the malpractice suit is slated for October. Faced with the fact that neither insurer will provide indemnity for the 2010 claims, Aloisi & Aloisi has sued to obtain a declaratory judgment that either Westchester or State National owes it both a defense and indemnity.

Aloisi & Aloisi accused Westchester and State National of breach of contract and dealing in bad faith, and said it also is entitled to lawyers’ fees and unspecified damages.

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