Anthony P. DeMichele obtained a declaratory judgment for an insurance company in a coverage dispute involving its insureds. The insureds, an attorney and his law firm, were sued in two separate state court actions based upon their involvement in gold futures investments. In the underlying litigation, ten plaintiffs filed two separate actions against the insureds claiming that the insureds were professionally negligent, that the insureds misrepresented information, and that the insureds breached their fiduciary duty to the plaintiffs. The plaintiffs’ claims stemmed from the insureds’ solicitation of the plaintiffs to investment money with a third party. Each of the plaintiffs claimed to have been represented by the insureds prior to the solicitation of the investments, and therefore, the plaintiffs alleged that the insureds represented them in the investment transactions that formed the basis of their claims. The plaintiffs invested approximately $9,000,000 through the insureds to a third party. The plaintiffs argued that the money was not used for investments but rather the money was used for loans, which were secured by notes and mortgages prepared by the insureds. The insureds also argued that the money was used for loans. Based upon the allegations of professional negligence, the insureds submitted the claims to their insurance company for coverage.
Mr. DeMichele initiated a declaratory judgment action in the United States District Court for the Middle District of Pennsylvania seeking a declaration from the court as to the parties’ rights under the insurance policy at issue. In the declaratory judgment complaint, Mr. DeMichele asserted that certain exclusions in the insurance policy did not provide coverage for the plaintiffs’ claims, and therefore, the insurance company did not have a duty to defend its insureds or a duty to indemnify its insureds with regard to the claims that were asserted in the underlying state court actions. At the close of the pleadings phase of the litigation, the plaintiffs moved for judgment on the pleadings arguing, among other things, that the exclusions in the insurance policy did not preclude coverage of the claims. Mr. DeMichele responded to the plaintiffs’ motions and argued that the policy exclusions did apply, and based upon the allegations in the plaintiffs’ complaints in the underlying litigation, there was no coverage under the insurance policy. The court agreed with Mr. DeMichele’s position and denied the plaintiffs’ motions for judgment on the pleadings. At the same time, the court declared that the insurance company did not have a duty to defend or a duty to indemnify its insureds in the plaintiffs’ underlying state court actions.