One Claim Can’t Be “Deemed Made” Twice, Minnesota Court Holds
The Minnesota Court of Appeals has held that a malpractice claim was “deemed made” against an insured law firm when it received from its former client’s new counsel a letter directing the law firm to preserve records related to representation of the former client. Minn. Lawyers Mut. Ins. Co. v. Bradshaw & Bryant Law Off. PLLC, 2025 WL 747385 (Minn. Ct. App. Mar. 10, 2025). Once “deemed made” under the terms of the claims-made-and-reported lawyers professional liability insurance policy, the claim could not be “deemed made” again by receipt of another letter asserting the same claim.
The insured law firm had represented its former client as the plaintiff in a wrongful-death action and lost at trial in July 2019. In September 2019, the law firm filed a posttrial motion on behalf of the client but was replaced by new counsel later that month. In October 2019, the new counsel emailed the insured law firm a letter stating that it had been retained “to investigate and handle potential legal action which may involve your law firm in connection with your representation [of the former clients] in their wrongful death action.” The October 2019 letter directed the insured law firm “to preserve all documents and records” related to the representation, identifying this preservation of records as a “litigation hold.” The insured law firm’s managing partner replied to acknowledge receipt. About three hours later, the new counsel emailed back, indicating that the previously sent “litigation hold letter concerns a potential malpractice action” and advising the law firm’s managing partner to “please notify your malpractice carrier of this potential claim.” The insured law firm’s managing partner supposedly missed the new counsel’s subsequent email and did not notify the malpractice carrier at that time.
Three years later, in October 2022, the former client, through other counsel, sent the insured law firm a notice-of-claim letter referencing a “legal malpractice action” in connection with the wrongful-death representation. This time, the insured law firm notified its malpractice carrier under its 2022–2023 policy, which provided coverage for claims deemed made and reported within the policy period or 60 days after its end. The policy provided that “a claim is deemed made when: (1) a demand is communicated to an insured for damages resulting from the rendering of or failure to render professional services; or (2) an insured first becomes aware of any actual or alleged act, error or omission by any insured with could support or lead to a claim.” After an investigation, the insurer denied coverage because the claim had been deemed made in 2019 when the firm initially received the “litigation hold” letter and was never reported then. The insurer then filed suit seeking a declaratory judgment that it owed no coverage, and the district court granted summary judgment in its favor.
On appeal, the insured law firm first argued that the coverage action was not justiciable because the insurer had not made the former client and the individual insured attorneys—who all had “claimed interests” in the outcome of the declaratory judgment action, according to the law firm—parties to the lawsuit. The court disagreed that any additional parties were necessary: the former client had an interest only in recovering from the law firm and individual attorneys, not the insurer directly; and the individual attorneys’ interests aligned with the law firm. The court concluded that the “straightforward coverage dispute” between insurer and insured was justiciable.
The insured firm further argued that summary judgment was improper because (1) the claim could be “deemed made” twice under the two alternative methods in the policy’s “deemed-made clause”; (2) the 2019 communications did not constitute a claim “deemed made” at that time because damages were not yet fixed, as the wrongful-death action was still ongoing, the policy was ambiguous, or there existed a factual dispute over the insured’s awareness that its representation in the wrongful-death action could lead to a claim; and (3) the insurer had failed to show that it was prejudiced by a delay in reporting the claim under the policy in effect in 2019.
The court disagreed on all three fronts. First, the court read the “deemed-made clause” in the policy as indicating that “the claim is made when either of two options occurs,” such that once “deemed made,” a claim could not be “deemed made” again. Second, noting that the policy contained no requirement that damages be fixed for a claim to be made, the court held that the policy was unambiguous that when an insured becomes aware of allegations that could lead to a claim for damages—as indisputably happened when the insured law firm received the 2019 “litigation hold” letter—the claim was “deemed made.” Finally, the court observed that notice was a condition precedent to coverage, so the insurer need not show prejudice to deny coverage.
