                NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 12a0629n.06
                                                                                          FILED
                                           No. 11-3989
                                                                                     Jun 15, 2012
                          UNITED STATES COURT OF APPEALS                       LEONARD GREEN, Clerk
                               FOR THE SIXTH CIRCUIT


SCHWARTZ MANES                RUBY
                           AND )
SLOVIN, L.P.A.,                  )
                                 )
     Plaintiff-Appellant,        )
                                 )                 ON APPEAL FROM THE UNITED
v.                               )                 STATES DISTRICT COURT FOR THE
                                 )                 SOUTHERN DISTRICT OF OHIO
MONITOR LIABILITY MANAGERS, LLC; )
CAROLINA CASUALTY INSURANCE )
COMPANY,                         )                         OPINION
                                 )
     Defendants-Appellees.


       Before: COOK and STRANCH, Circuit Judges; LAWSON, District Judge.*

       JANE B. STRANCH, Circuit Judge. Plaintiff-Appellant Schwartz Manes Ruby & Slovin,

L.P.A. (“SMRS”) appeals the district court’s grant of summary judgment in favor of SMRS’s

malpractice liability insurance carrier Carolina Casualty Insurance Company and Monitor Liability

Managers, LLC (collectively “Carolina”).1 SMRS challenges the district court’s holding that

Carolina had no obligation to defend or indemnify SMRS for an underlying claim asserted against

it by a former client because SMRS should have reasonably foreseen prior to the policy inception



       *
       The Honorable David M. Lawson, United States District Judge for the Eastern District of
Michigan, sitting by designation.
       1
         Carolina Casualty Insurance Company provides malpractice insurance to Ohio law firms.
Monitor Liability Managers, LLC is a claims administrator that manages claims. Because this
distinction is not relevant to the issues before this Court, this opinion will address their actions
collectively.
No. 11-3989
Schwartz Manes Ruby & Slovin v. Monitor Liability Managers, et al.

date that the former client might bring a claim against SMRS. For the following reasons, we

AFFIRM the judgment of the district court.

                                      I. BACKGROUND

       The undisputed facts—as summarized by the district court in Schwartz Manes Ruby, &

Slovin, L.P.A. v. Monitor Liability Managers, LLC, No. 1:09cv790, 2011 WL 3627287, at *1-2 (S.D.

Ohio Aug. 17, 2011)—are as follows:

              In April of 2002, Plaintiff Schwartz Manes Ruby & Slovin, L.P.A. (“SMRS”)
       was retained to represent Barbara Kissel in connection with a property dispute filed
       by her stepmother, Clara Kissel; that case was captioned Kissel v. Kissel, Kenton
       County Circuit Court, 02 CI 0792 (the “Kissel matter”). SMRS associate Harry
       Sudman originated the Kissel matter. Because Sudman was not licensed to practice
       law in Kentucky, he assigned the Kissel matter to another SMRS associate, David
       Snyder. (Levin Aff. ¶ 18.) Snyder left SMRS in 2003. (Id. ¶ 15.) Sudman left
       SMRS in October of 2005. (Id.) From April 5, 2002 through September 15, 2004,
       SMRS billed 11.96 hours to the Kissel matter. (Doc. 26-1, Ex. L.) And after
       September 15, 2004, no SMRS attorney performed work on the Kissel matter.

               In 2005, SMRS failed to appear at the scheduled trial in the Kissel matter.
       On March 14, 2006, the Kentucky court entered judgment in favor of Clara Kissel
       and against Barbara Kissel. On March 17, 2008, SMRS returned the remainder of
       Barbara Kissel’s retainer. Upon receiving the check from SMRS, Barbara Kissel
       retained new counsel, Paul Vesper. On May 29, 2008, Vesper requested a copy of
       Kissel’s file from SMRS. On June 15, 2008, Vesper informed SMRS that the Kissel
       file contained a notice notifying SMRS of the 2005 trial date. He further informed
       SMRS that the Kentucky court had entered judgment in Clara Kissel’s favor. Vesper
       then asked for an explanation as to why SMRS failed to represent Barbara Kissel in
       the 2005 trial.

               SMRS received Vesper’s letter on June 18, 2008. Based on this letter, SMRS
       attorney Debbe Levin undertook an internal investigation into the firm’s
       representation of Barbara Kissel. (Levin Aff. ¶ 11.) Levin obtained a copy of the
       docket for the Kissel matter from the Kenton County Circuit Court. (Id. ¶ 12.) Levin
       was unable to determine whether any attorney at SMRS received notice from the
       court regarding the 2005 trial date. (Id. ¶ 17.) Levin’s investigation revealed the
       following: Snyder returned the Kissel file to Sudman when Snyder left SMRS in

                                              -2-
No. 11-3989
Schwartz Manes Ruby & Slovin v. Monitor Liability Managers, et al.

       2003; Sudman asked Cincinnati attorney Geoffrey Damon to take the Kissel matter
       when Sudman left SMRS in October of 2005 (id. ¶ 20); and Damon had no
       recollection of talking with Sudman about the Kissel case and denied that he had
       agreed to take over the file. (id. ¶ 21). On July 10, 2008, SMRS notified its
       insurance agent, Fred Wittenbaum of SP Agency, that Barbara Kissel might assert a
       legal malpractice claim against it.

              On July 24, 2008, Carolina issued Lawyers Professional Liability Policy
       Number 9849712 to SMRS for the policy period of June 29, 2008 to June 29, 2009
       (the “Carolina Policy”). Although SMRS did not receive a written copy of the
       Carolina Policy until on or about August 6, 2008 (Levin Aff. ¶ 25), SMRS was
       informed in documents dated June 12, 2008 and June 24, 2008 that a “copy of the
       Proposal Forms and a specimen copy of the Policy Form” could be downloaded from
       Defendants’ website (doc. 26-1 at 17-30).

....

               On January 18, 2009, Barbara Kissel filed suit against SMRS, Sudman, and
       Snyder in Kenton County Circuit Court; that case was captioned Kissel v. Schwartz
       Ma[n]es & Ruby Co., L.P.A., et al, Kenton County Circuit Court, 09 CI 165. In that
       case, Barbara Kissel claims that SMRS committed legal malpractice by, inter alia,
       failing to appear at her 2005 trial and failing to disclose the resulting adverse
       judgment. [Carolina] initially undertook defense of the malpractice action under a
       reservation of rights, and later withdrew representation and denied coverage on
       SMRS’s claim. (Doc. 2-1 at 17.)

(footnotes omitted) (brackets added).

       On September 30, 2009, SMRS filed a complaint against Carolina in state court seeking a

declaratory judgment that Carolina was obligated to provide SMRS with a defense and coverage in

Kissel’s malpractice suit against SMRS. Carolina removed the suit to federal court and moved for

summary judgment, asking the district court to declare that Carolina had no obligation to defend or

cover the malpractice suit filed by Kissel because, prior to the effective date of the Carolina Policy,

SMRS could have reasonably foreseen that Barbara Kissel might make a malpractice claim against

the firm, and therefore the claim fell outside the scope of coverage defined by the insuring

                                                 -3-
No. 11-3989
Schwartz Manes Ruby & Slovin v. Monitor Liability Managers, et al.

agreement. The district court agreed and granted summary judgment in favor of Carolina. SMRS

timely appealed.

                                          II. ANALYSIS

A.     Standard of Review

       The district court’s grant of summary judgment is reviewed de novo. Travelers Prop. Cas.

Co. of Am. v. Hillerich & Bradsby Co., 598 F.3d 257, 264 (6th Cir. 2010). Summary judgment is

appropriate if there is no genuine issue as to any material fact and the movant is entitled to judgment

as a matter of law. Fed. R. Civ. P. 56(a) (2010). There is no genuine issue of material fact when no

“reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248 (1986).

B.     Scope of Policy Coverage

       A court sitting in diversity applies the law of the forum state and, in the absence of direct

state court precedent, must make its best prediction as to how the highest state court would resolve

the issues presented. Stalbosky v. Belew, 205 F.3d 890, 893-94 (6th Cir. 2000). Ohio law governs

the Carolina Policy. Under Ohio law, an insurance policy is a contract whose interpretation is a

matter of law. City of Sharonville v. Am. Emp’rs Ins. Co., 846 N.E.2d 833, 836 (Ohio 2006).

Contract terms are to be given their plain and ordinary meaning. Id. However, if provisions are

susceptible of more than one interpretation, they must be construed strictly against the insurer and

liberally in favor of the insured. Westfield Ins. Co. v. Hunter, 948 N.E.2d 931, 935 (Ohio 2011).

“[A]n exclusion in an insurance policy will be interpreted as applying only to that which is clearly

intended to be excluded.” Sharonville, 846 N.E.2d at 836 (emphasis in original) (citation omitted).

                                                 -4-
No. 11-3989
Schwartz Manes Ruby & Slovin v. Monitor Liability Managers, et al.

       SMRS switched legal malpractice insurance carriers in 2008. From June 29, 2007 through

June 28, 2008, SMRS utilized American Guarantee & Liability Insurance Company, but effective

June 29, 2008 SMRS switched to a new carrier, Carolina. The relevant portion of the Carolina

Policy reads as follows:

       I. Insuring Agreement

       This Policy shall pay on behalf of the Insured all Damages and Claims Expense
       that the Insured shall become legally obligated to pay, arising from any Claim first
       made against an Insured during the Policy Period and reported to the Insurer in
       writing during the Policy Period or within 60 days thereafter, for any Wrongful Act,
       provided that prior to the inception date of the first Lawyers’ Professional Liability
       Insurance Policy issued by the Insurer to the Named Insured, which has been
       continuously renewed and maintained in effect to the inception of this Policy Period,
       the Insured did not know, or could not reasonably foresee that such Wrongful Act
       might reasonably be expected to be the basis of a Claim.

The Policy defines “Claim” as “a written demand for monetary or non-monetary relief, including,

but not limited to, a civil, criminal, administrative or arbitration proceeding. . . . A Claim shall be

deemed to have been first made at the time notice of the Claim is first received by any Insured.”

“Wrongful Act” is defined as “any actual or alleged act, omission, or Personal Injury arising out

of Professional Services rendered by an Insured or by any person for whose acts or omissions the

Insured is legally responsible.”

       Carolina contends that under Ohio law there is no policy coverage for Kissel’s suit against

SMRS because SMRS could “reasonably foresee” that its representation of Kissel “might reasonably

be expected to be the basis of a Claim,” and therefore Kissel’s claim was not covered by the insuring

agreement. By the Policy effective date, June 29, 2008, SMRS was aware that it was counsel of



                                                 -5-
No. 11-3989
Schwartz Manes Ruby & Slovin v. Monitor Liability Managers, et al.

record listed on the court docket in a lawsuit pending against its client; that SMRS failed to appear

at a scheduled trial; that its failure to appear resulted in the entry of an adverse judgment against its

client; and that its client had retained new counsel, who was aware of the judgment. Carolina argues

that, on these facts, no reasonable jury could find that SMRS should not have been able to foresee

that Kissel might bring a claim against SMRS.

        The plain language of the insuring agreement employs a mixed subjective-objective analysis

to determine whether an insured could “reasonably foresee” that particular acts “might reasonably

be expected to be the basis of a Claim.” The question of what facts SMRS knew is a subjective

inquiry, while the question of whether SMRS could reasonably foresee that these facts might give

rise to a claim is an objective inquiry based on a “reasonable insured” standard. See, e.g., Prof’l

Direct Ins. Co. v. Wiles, Boyle, Burkholder & Bringardner Co., No. 2:06-CV-240, 2009 WL

4281263 at *10-11 (S.D. Ohio Nov. 24, 2009).

        SMRS argues that the policy language “reasonably be expected” is ambiguous and should

be construed in favor of coverage. See Hunter, 948 N.E.2d at 935 (ambiguous language is to be

liberally construed in favor of the insured). SMRS cites Professionals Direct Insurance Co. v. Wiles,

Boyle, Burkholder & Bringardner Co., in which a district court found the language “reasonably be

expected” ambiguous. See 2009 WL 4281263, at *11-13. There, the court found the language

“reasonably be expected” could require reporting under the policy when there was any possibility

of or potential for a claim or it could require reporting only when a claim was reasonably probable.

Id. at *11. Having identified an ambiguity, the court interpreted the language in favor of the insured

and held that, as used in the policy before the court, “reasonably be expected” only required the

                                                  -6-
No. 11-3989
Schwartz Manes Ruby & Slovin v. Monitor Liability Managers, et al.

insured “to report claims that were reasonably probable, reasonably likely to happen, or reasonably

certain.” Id. at *13. We need not decide whether the undefined language in the Carolina

Policy—which precludes coverage for wrongful acts that “might reasonably be expected to be the

basis of a Claim”—is ambiguous, because even under a more favorable interpretation, a reasonable

insured would have expected a malpractice claim by Kissel against SMRS to be reasonably probable.

       SMRS was aware of facts that might reasonably be expected to be the basis of a claim by

Kissel against SMRS. As Carolina points out, it is notable that the adverse judgment obtained

against Kissel at the missed trial has preclusive effect on Kissel’s potential claims against her step-

mother. Cf. Coregis Ins. Co. v. Baratta & Fenerty, Ltd., 264 F.3d 302, 307 (3d Cir. 2001) (where

case was dismissed due to alleged attorney negligence and client wrote a letter expressing his

dissatisfaction with his representation, “[a] reasonable attorney also ‘would have realized that he had

a dissatisfied client who would undoubtedly take further legal action absent a miraculous and

unlikely turnaround’ in events.” (citation omitted)). SMRS was aware that it was counsel of record

listed on the court docket in a lawsuit pending against its client; that SMRS failed to appear at a

scheduled trial; that its failure to appear resulted in the entry of an adverse judgment against its

client; and that its client had retained new counsel, who was aware of the judgment. In our view,

a reasonable attorney in possession of these facts would have realized that a claim by Kissel against

SMRS was reasonably probable.

       SMRS argues that, even if it should have reasonably foreseen Kissel’s suit based on the

firm’s failure to appear at her trial, it could not have reasonably foreseen her malpractice claims

based on insufficient representation, including SMRS’s failure to properly research Kissel’s case,

                                                 -7-
No. 11-3989
Schwartz Manes Ruby & Slovin v. Monitor Liability Managers, et al.

its failure to file a counterclaim for expenses, and its failure to perform any work on her behalf after

September 15, 2004. Therefore, SMRS argues, Kissel’s claims against SMRS should be covered

under the Carolina Policy to the extent the claims rely on alleged failures in representation separate

from SMRS’s failure to appear at Kissel’s trial.

        We are not persuaded that Kissel’s claims can be separated in this manner. Although Kissel

brought multiple claims against SMRS—professional negligence, breach of contract, breach of

fiduciary duties, gross negligence, and breach of the covenant of good faith and fair dealing—all

claims were based on SMRS’s alleged deficient representation of Kissel in her property-dispute

matter and each claim encompasses all SMRS’s alleged failures. We do not believe SMRS’s failure

to attend Kissel’s trial can be divorced from the substance of these claims. Further, the Carolina

Policy precludes SMRS’s proposal. Where a particular “Wrongful Act” falls outside the scope of

coverage based on reporting requirements, Section IV(K) of the Policy also excludes coverage for

“Related Wrongful Acts.” The Policy defines “Related Wrongful Acts” as “Wrongful Acts

which are logically or causally connected by reason of any common fact, circumstance, situation,

transaction, casualty, event or decision.” SMRS’s alleged failure to comprehensively research and

litigate Kissel’s lawsuit and potential countersuit against her step-mother is certainly logically

connected to its alleged failure to attend her trial in the same matter. For these reasons, all Kissel’s

claims alleged in her 2009 malpractice suit against SMRS based on its failed representation of her

property-dispute matter are not included within the scope of coverage under the Carolina Policy.




                                                 -8-
No. 11-3989
Schwartz Manes Ruby & Slovin v. Monitor Liability Managers, et al.

                                       III. CONCLUSION

       For the foregoing reasons, we AFFIRM the judgment of the district court granting summary

judgment in favor of the Defendants.




                                             -9-
