The Illinois Supreme Court has reversed the Illinois Appellate Court in a case centering on an application for legal malpractice insurance. In this case, one of the partners of the law firm of Tuzzolino and Terpinas (T&T) filled out a renewal form for legal malpractice with ISBA Mutual for himself and for the firm. In the application, he was asked whether there were any circumstances that would give rise to an unreported legal malpractice claim. The attorney who filled out the form answered “no.” In fact, a legal malpractice claim had already been brought against one of the firm’s attorneys, Mr. Tuzzolino, but was not yet reported to the firm’s
insurer.
The attorney who filled out the form, Mr. Terpinas, did not sign his name to the form. He claimed to have become aware of the claim against Mr. Tuzzolino about a month later and then reported the claim to ISBA Mutual.
As ISBA was then on notice of the claim and the errant application form, it filed a lawsuit for rescission of the insurance policy in March 2009. There were cross-motions for summary judgment filed and the trial court granted ISBA’s motion for summary judgment. The trial judge found that ISBA was entitled to rescission of the policy in its entirety and that it had no duty to defend Terpinas or the law firm because of the errantly completed form.