The United States Court of Appeals for the Third Circuit, applying Pennsylvania law, has held that a single lawsuit alleging three causes of action and up to eight discrete wrongful acts constituted a single claim under a professional liability insurance policy.  Westport Ins. Corp. v. Mylonas, 2017 WL 3327798 (3d Cir. Aug. 4, 2017).

The insured, a law firm, was sued in connection with its work in forming a corporation on behalf of the claimant.  The lawsuit alleged that the insured negligently transferred the corporation’s stock without shareholder consent, in violation of the corporate documents that the insured had prepared.  As a result, the claimant lost his company and its assets.  The complaint pleaded three causes of action for negligence, breach of fiduciary duties, and breach of contract.  The insurer paid $420,000 in defense costs, and the jury awarded the claimant damages totaling $525,000.  However, the policy limited coverage, inclusive of defense costs, to $500,000 per claim or $1 million in the aggregate.  In arguing that the per-claim limit of liability applied, the insurer referred to the policy’s definition of “claim” as a “demand made upon any INSURED for LOSS . . . including, but not limited to, service of suit or institution of arbitration proceedings or administrative proceedings against any INSURED.”  The district court determined that, under the terms of the policy, the single suit constituted a single claim.

On appeal, the Third Circuit affirmed and held that the policy unambiguously stated that the lower, per-claim limit applied because the lawsuit constituted a single claim.  The court explained that a “claim” is not the underlying wrong or wrongs, but rather the demand for loss made upon the insured.  As such, the court found that “one demand for loss is one claim.”  Because the claimant had served the insured with one suit, the claimant made only one demand for redress of his losses and thus one claim.  Although the court acknowledged that the form of pleading does not determine what constitutes a claim, it emphasized that it would consider only the number of demands for loss made upon the insured, as required by the policy.