Brown Goldstein Levy LLP v. Federal Insurance Company, No. 22-1023 (4th Cir. 2023)
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The law firm of Brown Goldstein Levy LLP (“BGL”) and one of its partners (collectively, “Appellants”) filed suit against their insurer, Federal Insurance Company (“Appellee”), when it refused to provide coverage for costs Appellants incurred after the Government investigated the partner, executed a search warrant at BGL’s office, and notified the partner that his representation of certain clients may present a conflict of interest. The district court dismissed Appellants’ complaint, holding that there was no “Claim,” as that term is defined in the insurance policy, and alternatively that any costs Appellants incurred were excluded from the policy’s definition of “loss.”
The Fourth Circuit affirmed, concluding that there is no “Claim.” Neither the search warrant application nor the resulting search warrant is “written demand[s] or written request[s] for . . . nonmonetary relief . . . against an Insured” as required by the Policy. Therefore, the Search Warrant Claim fails because Appellants cannot state a claim for relief. The Target Conflict Letter makes no demand or request for relief against an Insured. The Government’s request to be notified promptly as to how the partner intends to proceed is not a request for “the redress or benefit, esp. equitable in nature (such as an injunction or specific performance), that a party asks of a court.” The Conflict Letters are not “Claims.” The court explained that despite Appellants’ attempts to characterize them as “demands,” they are not. Therefore, Appellants cannot state a claim as to the Partner Claim.
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