SIXTH DIVISION March 19, 2010
1-09-0502 CONTINENTAL CASUALTY COMPANY, ) Appeal from Plaintiff-Appellee, ) the Circuit Court ) of Cook County v. ) ) 07 CH 25529 DONALD T. BERTUCCI, LTD., and DONALD T. BERTUCCI, ) Defendants-Appellants ) Honorable ) Nancy J. Arnold, (Lourdes Rodriguez, ) Judge Presiding Defendant). )
JUSTICE McBRIDE delivered the opinion of the court:
This is an insurance coverage dispute involving a lawyer’s professional liability policy
and allegations that counsel retained an excessive amount of attorney fees from the settlement
proceeds of a medical malpractice action. The lawyer has been sued in state court and named in
attorney disciplinary proceedings. On cross-motions for summary judgment, the circuit court of
Cook County found the insurer owed no duty to defend or cover the lawsuit, but owed coverage
in the disciplinary action. Both sides appeal.
The construction of an insurance contract and a determination of the rights and
obligations of the contracting parties are questions of law and suitable for resolution by summary
judgment. Zurich Insurance Co. v. Raymark Industries, Inc., 118 Ill. 2d 23, 58, 514 N.E.2d 150,
166 (1987). We address the trial court’s determinations de novo. Pekin Insurance Co. v. Wilson,
391 Ill. App. 3d 505, 509-10, 909 N.E.2d 379, 385 (2009) (construction of insurance policy is
reviewed de novo); City of Collinsville v. Illinois Municipal League Risk Management Ass’n, 385
Ill. App. 3d 224, 229, 904 N.E.2d 70, 75 (2008) (entry of summary judgment is reviewed de 1-09-0502
novo).
In order to determine whether the insured has a duty to defend the insured, we consider
the allegations of the underlying pleadings and compare those allegations to the relevant
provisions of the insurance contract. Pekin Insurance Co., 391 Ill. App. 3d at 510, 909 N.E.2d at
385. If the facts alleged in the underlying complaint fall within or potentially within the policy’s
coverage, the insurer is duty bound to defend. Pekin Insurance Co., 391 Ill. App. 3d at 510, 909
N.E.2d at 385. The threshold a complaint must meet to present a claim for potential coverage
and raise a duty to defend is minimal, and any doubts are to be resolved in favor of the insured.
City of Collinsville, 385 Ill. App. 3d at 230, 904 N.E.2d at 75-76.
On May 11, 2007, Continental Casualty Company (Continental Casualty), the plaintiff in
this insurance coverage dispute, issued a $2 million lawyers professional liability policy to
Chicago attorney Donald T. Bertucci and his solo law practice, on a claims-made-and-reported
basis. The written contract tendered for our consideration specifies that all words and phrases
appearing in bold font are defined in the contract. The “INSURING AGREEMENT” of the
policy indicates there is “Coverage” for “all sums in excess of the [$5,000] deductible that the
Insured shall become legally obligated to pay as damages and claim expenses because of a
claim that is both first made against the Insured and reported in writing to the Company during
the policy period by reason of any act or omission in the performance of legal services by the
Insured.”
The policy defines “Claim” as “a demand received by the Insured for money or services
arising out of an act or omission, including personal injury, in the rendering of or failure to
2 1-09-0502
render legal services.” “Legal services” are “those services performed by an Insured for others
as a lawyer, arbitrator, mediator, title agent or as a notary public.” “Damages” are limited to
“judgments, awards and settlements” and do not include “legal fees, costs and expenses ***
charged by the Insured *** and injuries that are a consequence of any of the foregoing.”
“Claim expenses” consist of “fees charged by attorneys designated by the Company or by the
Insured with the Company’s written consent” and “all other all other reasonable and necessary
fees, costs and expenses resulting from the investigation, adjustment, defense and appeal of a
claim if incurred by the Company, or by the Insured with the written consent of the Company.”
The section of the contract concerning the policy’s limits of liability and deductible,
indicates “[a]lthough not [considered] Damages,” the Company will make “Supplementary
payments” “up to $10,000.00 for any Insured and in the aggregate for attorney fees and other
reasonable costs, expenses, or fees *** resulting from a Disciplinary Proceeding *** arising out
of an act or omission in the rendering of legal services by such Insured.” Again, “legal
services” consist of “those services performed by an Insured for others as a lawyer, arbitrator,
mediator, title agent or as a notary public.” Further, “In the event of a determination of No
Liability of the Insured against whom the Disciplinary Proceeding has been brought, the
Company shall reimburse such Insured for Disciplinary Fees, including those in excess of the
$10,000 cap set forth above, up to $100,000.”
A few weeks after purchasing the policy, Bertucci requested defense and coverage of a
lawsuit filed against him by a woman he represented in a medical malpractice case that settled in
2002 for $2.25 million, Rodriguez v. Illinois Masonic Medical Center and Curtis Whisler, M.D.,
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No. 97-L-16741. Bertucci characterized the suit against him, Rodriguez v. Bertucci, No. 07-L-
06247, as a claim for damages as defined by the insuring agreement. He subsequently requested
defense and coverage of related proceedings being conducted by the Attorney Registration and
Disciplinary Commission (ARDC), Donald Thomas Bertucci, in relation to Lourdes Rodriguez,
No. 07-CI-2293.
According to the verified pleading filed in state court and correspondence sent to the
disciplinary agency, Bertucci’s former client, Lourdes Rodriguez, is a native Spanish speaker
with little formal education, who returned to Mexico while her medical malpractice suit was
pending. She did not take issue with Bertucci’s handling of her claim or with the settlement
figure he secured. But based on Bertucci’s retention of $750,000 of the proceeds and subsequent
representation about his right to retain them, Rodriguez brought claims of breach of contract,
unjust enrichment, conversion, breach of fiduciary duty, fraud, and violation of the Illinois statute
which limits contingent legal fees in medical malpractice actions, section 2-1114 of the Code of
Civil Procedure. 735 ILCS 5/2-1114 (West 1996). The statute, which took effect in 1985, limits
the total contingent fee for a plaintiff’s attorney or attorneys in a medical malpractice action to
33.33% of the first $150,000 of the sum recovered, 25% of the next $850,000, and 20% of any
amount over $1 million. 735 ILCS 5/2-1114(a) (West 1996). The statute also provides that,
“[i]n special circumstances, where an attorney performs extraordinary services involving more
than usual participation in time and effort the attorney may apply to the court for approval of
additional compensation.” 735 ILCS 5/2-1114(c) (West 1996). Rodriguez alleged that the fee
statute and her written agreement with Bertucci executed on December 23, 1996, limited his
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compensation to no more than $512,500, and that he had taken an additional $237,500 without
getting her consent and the court’s approval. Furthermore, he had given her an amended
settlement statement in which he “represented and implied” that he had obtained judicial
approval for the enhanced fees. She began to uncover his misconduct when she returned to
Chicago in approximately June 2006 for further medical treatment and was advised by the
medical provider that she still owed money for her previous care -- services which Bertucci told
her had been satisfied from the settlement proceeds. She telephoned Bertucci, and when his
initial reaction was to use profanity and exclaim “what are you doing in Chicago?” she became
suspicious and reviewed her records. She further alleged that she retained new attorneys who
telephoned and corresponded with Bertucci several times in April and May 2007, but Bertucci
did not explain the discrepancy or return the unauthorized fees to Rodriguez. Her new attorneys
sent a letter to the ARDC which referenced their mandatory duties to report attorney misconduct,
outlined Rodriguez’s concerns, and indicated they had been in communication with Bertucci but
had not received a satisfactory response. See In re Himmel, 125 Ill. 2d 531, 533 N.E.2d 79
(1988) (lawyer suspended one year for failure to report his unprivileged knowledge of an
attorney’s conversion of client’s settlement funds). A few days after counsel notified the ARDC,
Rodriguez asked the agency to investigate the matter and substitute her name as the complainant.
The state court action was filed after that, seeking the unauthorized fees, interest accruing as of
the settlement on February 12, 2002, her new legal expenses, and in the four equitable counts,
punitive damages. See 815 ILCS 205/2 (West 1998) (authorizing equitable award of 5%
prejudgment interest); see also Krantz v. Chessick, 282 Ill. App. 3d 322, 668 N.E.2d 77 (1996)
5 1-09-0502
(former client entitled to prejudgment interest on settlement proceeds).
Continental Casualty denied coverage for the two proceedings. It then filed this action to
obtain a judicial declaration of the parties’ rights and obligations under the policy, Bertucci
counterclaimed, and as summarized above, on cross-motions for summary judgment, the circuit
court ruled in part for Continental Casualty and in part for Bertucci. The court ruled there was no
coverage for the civil action because it did not seek “damages” as that term was defined in the
policy; however, the ARDC investigation was a “Disciplinary Proceeding *** arising out of an
act or omission in the rendering of legal services” which triggered the policy’s “Supplementary
payments” obligation of up to $10,000 for attorney fees and other expenses, and additional
reimbursement up to $100,000 upon Bertucci’s vindication.
In pursuit of coverage for the civil action, appellant Bertucci raises two contentions. He
first argues that Continental Casualty prevailed in the trial court by mischaracterizing the former
client’s lawsuit as a fee dispute, which is outside the scope of coverage. He contends his
professional liability coverage was triggered because Rodriguez alleged he committed an error or
omission while representing her, when despite having her authorization to retain $750,000 of her
settlement proceeds, he failed to comply with the statutory requirement that he also obtain court
approval for retaining enhanced fees for providing extraordinary services in a medical
malpractice action. See 735 ILCS 5/2-1114(c) (West 1996). He also contends that settling a
malpractice matter, paying outstanding liens, and distributing the remaining settlement funds to
the client is a traditional, customary, and ordinary function “performed by an Insured for others
as a lawyer,” and, therefore, was the rendering of “Legal services” within the meaning of the
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policy. He further contends that Continental Casualty Co. v. Law Offices of Melvin James
Kaplan, 345 Ill. App. 3d 34, 801 N.E.2d 992 (2003), an Illinois case involving the same insurer
and identical contract language, is factually similar, but the circuit court erroneously rejected it
and chose to rely on a California case which is distinguishable, Tana v. Professionals Prototype I
Insurance Co., 47 Cal. App. 4th 1612, 55 Cal. Rptr. 2d 160 (1996).
Continental Casualty responds that the court ruled correctly that there is no coverage for
the Rodriguez civil action because the insuring agreement covers “damages” but the suit
concerns “legal fees” and “injuries that are a consequence [thereof],” which are outside the scope
of the policy. The insurer also emphasizes that coverage is limited to “an act or omission in the
performance of legal services by the Insured,” which are defined as “those services performed
by an Insured for others as a lawyer,” and that Bertucci’s retention of excessive fees was in no
one’s interest but his own and had nothing to do with the practice of law.
Insurance contracts are subject to the same rules of construction as are applicable to other
types of contracts. Cincinnati Insurance Co. v. Gateway Construction Co., 372 Ill. App. 3d 148,
151, 865 N.E.2d 395, 398 (2007). When construing a contract, the court’s primary objective is to
ascertain the true intent of the parties as expressed in their written agreement. Cincinnati
Insurance Co., 372 Ill. App. 3d at 151, 865 N.E.2d at 398. Accordingly, the court reads the
contract as a whole, giving effect to every provision and taking into account the type of
insurance, the nature of the risks undertaken, and the overall purpose of the policy. Cincinnati
Insurance Co., 372 Ill. App. 3d at 151-52, 865 N.E.2d at 398-99. Terms used are given their
plain, ordinary, and generally accepted meaning, unless the contract indicates in some way that
7 1-09-0502
particular definitions are used to replace that meaning. See, e.g., Sims v. Allstate Insurance Co.,
365 Ill. App. 3d 997, 1001, 851 N.E.2d 701, 704 (2006). Definite and clear provisions, upon
which the risk and premium calculations of the insurer were based, must be enforced as stated,
unimpaired by ill-considered or unreasonable interpretation. Sims, 365 Ill. App. 3d at 1001, 851
N.E.2d at 704.
The complaint and plain, unambiguous language of the policy lead us to find that the
insurer’s interpretation of the coverage is the only reasonable one. The first numbered paragraph
in Bertucci’s professional liability contract contains the “INSURING AGREEMENT.” An
insuring agreement is “[a] provision of an insurance policy *** reciting the risk assumed by the
insurer and establishing the scope of the coverage.” Black’s Law Dictionary 811 (7th ed. 1999).
This particular insuring agreement expressly limits the scope of coverage to legal proceedings
which allege both covered “damages” and “an act or omission in the performance of legal
services.” The state court action does not meet either requirement for coverage.
“Damages” are defined in the policy as “judgments, awards and settlements” and they “do
not include” “legal fees *** charged by the Insured, no matter whether claimed as restitution of
specific funds, forfeiture, financial loss, set-off or otherwise, and injuries that are a consequence
of any of the foregoing.” Rodriguez’s legal action indisputably seeks (1) restitution for legal fees
which Bertucci improperly charged against her settlement proceeds from the medical malpractice
case and (2) consequential expenses for his impropriety, including statutory interest and her new
attorney fees, as well as punitive damages. Therefore, the Rodriguez action alleges only
noncovered, direct and consequential injuries from the excessive legal fees Bertucci charged
8 1-09-0502
against her assets; it does not allege “damages” within the meaning of the policy.
Our opinion is influenced by California, Idaho, and Massachusetts cases which analyze
similar attorney-client disputes and conclude the injuries are not the type covered by the
attorney’s professional liability insurance.
The client in Tana filed a complaint alleging his San Francisco attorney misrepresented or
failed to explain a fee-splitting agreement in litigation with an entity known as Kikkoman and
expected unconscionably high bonuses from his $7.6 million settlement proceeds. Tana, 47 Cal.
App. 4th at 1617-18, 55 Cal. Rptr. 2d at 163. Faced with competing claims to the $7.6 million,
the Kikkoman defendant deposited the money with the court. Tana, 47 Cal. App. 4th at 1615, 55
Cal. Rptr. 2d at 161. The client sued for declaratory relief and indemnification, compensatory
damages, attorney fees, and punitive damages from his former attorney. Tana, 47 Cal. App. 4th
at 1618, 55 Cal. Rptr. 2d at 163. The attorney’s professional liability insurer declined to defend
him, in part because the only damages the client sought pertained to the legal fees. Tana, 47 Cal.
App. 4th at 1618, 55 Cal. Rptr. 2d at 163. Interpreting the same contract language at issue here,
the court agreed, reasoning:
“A commonsense reading of the complaint reveals that it
was entirely a fee dispute, not a malpractice claim. [The client] did
not complain of anything [the attorney] did or failed to do in
representing him in the Kikkoman litigation. *** [The client
alleged acts or omissions with respect to attorney fees only. All of
the damages the client sought were either the return of or reduction
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of attorney fees, or were in some way a consequence of those fees.]
***
Even if [the client] might have been seeking [compensatory
damages and attorney fees, which are] more than just a reduction in
his attorney's fee liability, [the attorney arguing for coverage]
cannot avoid the inevitable conclusion that such damages are
‘injuries’ caused by (i.e., ‘a consequence of’) a dispute over legal
fees. Fee disputes do not become covered damages merely because
the damages are called ‘compensatory’ or are sought under a claim
of ‘negligence’ or ‘breach of fiduciary duty.’ [Citation.] Reading
the complaint as a whole, it is clear the relief [the client] seeks is
limited to a judicial resolution of the fee dispute, indemnity from
payment of fees, and damages and costs associated with the
controversy.” Tana, 47 Cal. App. 4th at 1617-18, 55 Cal. Rptr. 2d
at 163.
Accordingly, the California court found there was no possibility of coverage and therefore no
duty to defend. Tana, 47 Cal. App. 4th at 1619, 55 Cal. Rptr. 2d at 164.
Bertucci attempts to distinguish Tana by arguing Rodriguez is essentially alleging she
was injured by his failure to comply with the Illinois statute regarding enhanced fees. He
contends that in contrast to Tana, his client complains that he “failed in the litigation to obtain a
court order at the termination of litigation approving his enhanced fee.” In reality, however,
10 1-09-0502
Tana’s client complained that counsel “failed” at the same point in the litigation, following the
successful negotiation and funding of the settlement, by claiming entitlement to an excessive
portion of the settlement dollars. Bertucci also contends that because Rodriguez refers to the
statute, her suit is really about an error or omission in his representation of her as a client, rather
than a disagreement about his compensation. Continental Casualty correctly points out, however,
that the cited statute concerns legal fees only and has nothing to do with client representation in a
medical malpractice action. The statute is entitled “Contingent fees for attorneys in medical
malpractice actions.” Emphasis added. 735 ILCS 5/2-1114 (West 1996). In its entirety, the
statute provides:
“Contingent fees for attorneys in medical malpractice
actions. (a) In all medical malpractice actions the total contingent
fee for plaintiff's attorney or attorneys shall not exceed the
following amounts:
33 1/3 % of the first $150,000 of the sum recovered;
25% of the next $850,000 of the sum recovered; and
20% of any amount recovered over $1,000,000 of the sum
recovered.
(b) For purposes of determining any lump sum contingent
fee, any future damages recoverable by the plaintiff in periodic
installments shall be reduced to a lump sum value.
(c) The court may review contingent fee agreements for
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fairness. In special circumstances, where an attorney performs
extraordinary services involving more than usual participation in
time and effort the attorney may apply to the court for approval of
additional compensation.
(d) As used in this Section, “contingent fee basis” includes
any fee arrangement under which the compensation is to be
determined in whole or in part on the result obtained.” 735 ILCS
5/2-1114 (West 1996).
Allegations of Bertucci’s violation of a statue dealing exclusively with legal fees are allegations
about “legal fees *** paid or incurred or charged by the Insured” or “injuries that are a
‘consequence of” [legal fees paid or incurred or charged by the Insured].” Under a reasonable
construction of the policy and complaint, the injuries alleged are not “damages” within the scope
of the insuring agreement.
Like Bertucci, the personal injury attorney named in the Idaho case Continental Casualty
Co v. Brady, 127 Idaho 830, 832, 907 P.2d 807, 809 (1995), successfully negotiated a settlement
for his clients, following the near drowning of their son. However, the $393,000 settlement
proceeds were divided in such a manner that only $216,930 was attributed to the personal injury
claim addressed by their fee agreement. Brady, 127 Idaho at 832, 907 P.2d at 809. The
remaining $176,070 was for a different claim and arguably belonged entirely to the clients, until,
the day after the settlement, when the attorney persuaded them to enter into a second fee
agreement entitling him to $122,500 of the $176,070. Brady, 127 Idaho at 832, 907 P.2d at 809.
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Upon reflection, the clients filed a five-count lawsuit in Idaho state court, alleging the second fee
agreement was unenforceable, amounted to breach of fiduciary duty, unjust enrichment, and
violation of the Idaho Consumer Protection Act, and also warranted punitive damages. Brady,
127 Idaho at 833, 907 P.2d at 810. The attorney seeking coverage argued the complaint went
beyond a mere fee dispute, because it addressed the consumer protection statute and his fiduciary
duty, in addition to the claims directly concerning the enforceability or actual terms of the second
fee contract. Brady, 127 Idaho at 833, 907 P.2d at 810. He also argued that because, under his
reading of the original fee agreement, the clients were entitled to only a portion of the $122,000
they were claiming in damages as a return of fees, the excess must represent damages beyond a
return of fees. Brady, 127 Idaho at 833, 907 P.2d at 810. The court rejected this argument,
stating:
“If the party is requesting a ‘return of fees,’ it is immaterial what
the actual theory of recovery is since the [lawyer’s professional
liability] policy flatly excludes ‘all claims’ for the return of fees.
[Citation.] Furthermore, whether the [clients] are actually entitled
to recover $122,000 is not the issue. The issue is simply whether
this amount represents fees paid to [the attorney].
[Ultimately], all of the factual allegations in the complaint
center on a dispute over attorney fees, and the $122,000 sum
requested as damages is tied directly to that fee dispute. ***
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In short, with the exception of the claim for punitive
damages [which is excluded from coverage under the policy], the
Duvalls’ complaint simply does not support a claim for any
damages unrelated to the return of fees.” (Emphasis omitted.)
Brady, 127 Idaho at 833-34, 907 P.2d at 810-11.
The language excluding the “ ‘return of fees’ ” in Brady appeared in the policy’s exclusions
section, instead of in the insuring agreement. Brady, 127 Idaho at 832, 907 P.2d at 809. The
effect of the language is the same, however, regardless of where it appears in the insurance
contract. Continental Casualty has also correctly noted that the Brady exclusion was narrower
and only excluded “ ‘return of fees’ ” from coverage (Brady, 127 Idaho at 832, 907 P.2d at 809),
in contrast to the broader language at issue here, which precludes coverage for “legal fees ***
charged by the Insured” and “injuries which are a consequence thereof.”
Like the courts in Tana and Brady, we compare the language of the policy with the facts
alleged in the complaint, rather than examine whether the client has pled any particular theory of
relief such as the attorney’s breach of a legal duty, violation of a statute, or disregard for an
equitable duty. Pekin Insurance Co., 391 Ill. App. 3d at 510-11, 909 N.E.2d at 385 (where
intentional infliction of emotional distress, assault, and battery were repled in negligence terms in
attempt to trigger coverage, court disregarded plaintiff’s labeling and found facts alleged were
inconsistent with negligence); Norman Shabel, P.C. v. National Union Fire Insurance Co., 923
F. Supp. 681, 683-84 (D. N.J. 1996) (where attorney allegedly failed to give client correct
percentage of settlement, court disregarded assorted legal theories pled by client, focused on
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nature of claim, which was retention of excessive legal fees, and found claim was not covered);
Gregg & Valby, L.L.P. v. Great American Insurance Co., 316 F. Supp. 2d 505, 512-13 (S.D. Tex.
2004) (where real estate closing documents misrepresented amount of attorney fees to be paid to
law firm, characterizing the firm’s fee-setting and billing practices as legal work or advice would
not conceal true nature of claim, court found no coverage). Upon doing so, we conclude that
Rodriguez’s lawsuit is a fee dispute and does not allege “damages” within the meaning of the
policy Bertucci obtained from Continental Casualty Company.
The Rodriguez lawsuit not only fails to alleged covered “damages,” it also fails to allege
“an act or omission in the performance of legal services by the Insured” within the meaning of
the insuring agreement. According to the policy’s definitions section, legal services are “those
services performed by an Insured for others as a lawyer, arbitrator, title agent or as a notary
public.” Bertucci’s retention of money cannot be construed as the provision of any type of
service for another person and is a business practice independent of the lawyer-client
relationship.
In Gregg & Valby, a Texas court rejected the contention that a law firm’s misconduct
with respect to its fees were client services. Gregg & Valby, 316 F. Supp. 2d 505. The legal
malpractice policy at issue covered “Professional services,” which were defined as “ ‘services
you perform for a client in your capacity as: (a) a lawyer; (b) a mediator or arbitrator; (c) a notary
public; or (d) as an administrator, conservator, executor, guardian trustee, receiver, or in any
similar capacity. ’ ” Gregg & Valby, 316 F. Supp. 2d at 510-11. Practically speaking, this
definition is identical to the definition operating here. The Houston firm was hired to draft forms
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for two mortgage lenders to use at real estate closings. Gregg & Valby, 316 F. Supp. 2d at 511.
The prepared forms indicated the firm would receive a $175 document preparation fee, but the
firm had allegedly agreed to share the collected fees with the mortgage lenders, in violation of
federal laws prohibiting fee-splitting and kickbacks in real estate settlements involving federal
funds and requiring truth in lending. Gregg & Valby, 316 F. Supp. 2d at 511. The firm was
named in two class-action lawsuits and sought defense and coverage from its legal malpractice
insurer, arguing that the alleged wrongdoing occurred early on when the lawyers drafted the
forms and advised the mortgage lenders on the legality of the fee-sharing arrangement. Gregg &
Valby, 316 F. Supp. 2d at 512. The court rejected the contention that the suits concerned legal
work or advice, pointing out that “the home buyers did not complain about the amount of the
‘Document Preparation Fee,’ nor its existence, but only what happened to that fee after it was
paid at closing.” Gregg & Valby, 316 F. Supp. 2d at 513.
After boiling the allegations down to the facts and determining they concerned the law
firm’s fee-setting and billing practices only, the court considered whether the actions were
“professional services” triggering coverage under the policy. Gregg & Valby, 316 F. Supp. 2d at
513. The court consulted considerable authority and concluded professional services within the
context of insurance contracts were only “ ‘those acts which use the inherent skills typified by
that profession, not all acts associated with the profession.’ ” (Emphasis in original.) Gregg &
Valby, 316 F. Supp. 2d at 513, quoting Atlantic Lloyds Insurance Co. of Texas v. Susman
Godfrey, L.L.P., 982 S.W.2d 472, 477 (Tex. App. 1998).
“When determining whether a particular act is a ‘professional
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service,’ the court ‘must look not to the title or character of the
party performing the act, but the act itself.’ [Citation.] Thus, even
tasks performed by lawyers are not considered ‘professional
services’ if they are ordinary activities that can be completed by
those lacking legal knowledge and skill.” Gregg & Valby, 316 F.
Supp. 2d at 513, citing Atlantic Lloyd’s, 882 S.W.2d at 476-77.
See also Marx v. Hartford Accident & Indemnity Co., 183 Neb. 12, 13, 157 N.W.2d 870, 872
(1968) (indicating the “widely accepted” standard when determining whether a particular act is a
professional service is to look to the act itself, not the title or character of the party performing
it); Medical Records Associates, Inc. v. American Empire Surplus Lines Insurance Co., 142 F.3d
512, 515 (1st. Cir. 1998) (concluding professional services are “activities that distinguish a
particular occupation from other occupations -- as evidenced by the need for specialized learning
or training -- and from the ordinary activities of life and business”). The Texas court found no
indication that the Houston law firm’s billing or fee-setting required legal skill or knowledge, or
was specific to the legal profession. Gregg & Valby, 316 F. Supp. 2d at 513. Instead, setting a
price and billing the client were “merely administrative tasks inherent to all businesses.” Gregg
& Valby, 316 F. Supp. 2d at 514.
The billing/professional services dichotomy also appears in Reliance National Insurance
Co. v. Sears, Roebuck & Co, 58 Mass. App. 645, 792 N.E.2d 145 (2003), a Massachusetts case
involving an attorney who billed his client for legal services that were never performed. The
client did not realize the discrepancy until it had overpaid $833,409. Reliance National, 58
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Mass. App. Ct. 646, 792 N.E.2d at 146. It sued for an accounting and to recover the legal fees
and its consequential legal fees and costs. Reliance National, 58 Mass. App. at 646, 792 N.E.2d
at 146. The lawyer’s professional liability policy covered claims “ ‘caused by any act, error, or
omission of the insured ... which arise[s] out of the rendering or failure to render professional
services for others in the insured’s capacity as a lawyer.’ ” (Emphasis in original.) Reliance
National, 58 Mass. App. at 646-47, 792 N.E.2d at 147. Predictably, the Massachusetts court
found that billing a client for legal services did not implicate the legal malpractice policy:
“[Professional acts or services require] specialized knowledge and
skill that is acquired through rigorous intellectual training.
[Citation.] The setting for the intellectual training is often an
academic one, as in architectural school, engineering school, law
school, or medical school.
Against those criteria we decide that the billing function of
a lawyer is not a professional service. Billing for legal services
does not draw on special learning acquired through rigorous
intellectual training. We are not aware that courses in billing
clients appear in law school curricula. The billing function is
largely ministerial. There are elements of experience and judgment
in billing for legal services, but the same goes for pricing shoes.
As billing is not a professional service, it does not come with the
coverage of a professional liability insurance policy ***.”
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Reliance National, 58 Mass. App. at 648, 792 N.E.2d at 148.
It has also been observed:
“The professional aspect of a law practice obviously involves the
rendering of legal advice to and advocacy on behalf of clients for
which the attorney is held to certain minimum professional and
ethical standards. [This is distinct from the] *** commercial
aspect [of a law practice, which] involves the setting up and
running of a business, i.e., securing office space, hiring staff,
paying bills and collecting on accounts receivable ***.” Harad v.
Aetna Casualty & Surety Co., 839 F.2d 979, 985 (3rd Cir. 1988).
See also Sullivan v. Bickel & Brewer, 943 S.W.2d 477, 481 (Tex. App. 1995) (indicating a cause
of action for legal malpractice arises out of an attorney’s bad legal advice or improper
representation of a client).
Turning again to the allegations against Bertucci, it is apparent that Rodriguez’s claims
concern ordinary, nonlegal services rather than “an act or omission in the performance of legal
services by the Insured” within the meaning of the insuring agreement. Moreover, as we
suggested above, we do not find that Bertucci’s actions were “performed by an Insured for others
as a lawyer.” In our assessment, to construe the policy to cover Bertucci’s retention of an
excessive amount of attorney fees would expand the insurance coverage beyond what was
reasonably contemplated by the parties at the time of contracting. In bargaining for professional
liability insurance coverage, Bertucci could legitimately expect that he would be covered for acts
19 1-09-0502
or omissions in the course of representing his clients but would not be covered with respect to fee
arrangements and other business disputes. Cincinnati Insurance Co., 372 Ill. App. 3d at 151-52,
865 N.E.2d at 398-99 (in order to construe intent at the time of contracting, a court reads the
policy as a whole, giving effect to every provision, and taking into account the type of insurance,
the nature of the risks undertaken, and the overall purpose of the policy).
Moreover, we find the case Bertucci relies upon readily distinguishable in that the alleged
negligence in Kaplan arose during the core representation of the client, when a bankruptcy
lawyer failed to obtain judicial discharge of his client’s prepetition debts, namely the attorney
fees the client owed for legal services rendered prior to the filing of the bankruptcy petition.
Kaplan, 345 Ill. App. 3d at 37, 801 N.E.2d at 994. In that case, the claim against the lawyer
clearly arose from an act or omission in the rendering of legal services and was alleged to be a
consequence of negligence in performing those services. In that case, counsel was retained to do
a job and was sued for failing to do it properly. In contrast, it is alleged in Rodriguez v. Bertucci,
No. 07-L-06247, that Bertucci was retained to file and litigate a case on Rodriguez’s behalf and
that he effectively performed those services. Rodriguez has not made any accusations about the
legal services Bertucci rendered: she has not criticized his preparation or timely filing of the
medical malpractice pleading, she has not questioned his discovery efforts, she has not
challenged his choice of experts, she has not taken issue with his case management, and she has
not disputed the negotiation efforts that ultimately brought the case to a successful conclusion.
While in Kaplan the claim arose because the lawyer incorrectly performed the task he was hired
to perform in the bankruptcy court, the claim in the lawsuit at issue arose only after the lawyer
20 1-09-0502
correctly completed the task he was hired to perform. Thus, we reject Bertucci’s contention that
there is no meaningful distinction between the Kaplan dispute and the lawsuit pending against
Bertucci in the circuit court of Cook County.
Bertucci’s second main argument regarding the Rodriguez action is that the policy’s
dishonesty exclusion contains an exception that is a stand-alone grant of coverage to attorneys
like himself who are defending accusations of a “dishonest, fraudulent, criminal, or malicious act
or omission.” He pled this theory in Count II of his counterclaim and unsuccessfully argued for
summary judgment. He cites the following policy language:
“IV. EXCLUSIONS
This policy does not apply:
A. to any claim based on or arising out of any dishonest,
fraudulent, criminal or malicious act or omission by an Insured
except that this exclusion shall not apply to personal injury. The
Company shall provide the Insured with a defense of such claim
unless or until the dishonest, fraudulent, criminal or malicious act
or omission has been determined by any trial verdict, court ruling,
regulatory ruling or legal admission, whether appealed or not.
Such defense will not waive any of the Company’s rights under
this policy. Criminal proceedings are not covered under this Policy
regardless of the allegations made against the Insured[.]”
He contends that at least three of the five counts in Rodriguez’s pleading include allegations that
21 1-09-0502
are potentially within this coverage and trigger the insurer’s duty to defend. More specifically,
the conversion count includes the allegation, “32. Bertucci’s actions were outrageous and
constitute malice and oppression against Rodriguez.” The breach of fiduciary duty count alleges,
“27. Bertucci breached *** [the attorney-client duty by] paying himself the Unauthorized Fees
without prior court approval or the approval of Rodriguez” and “28. *** by overreaching and
taking advantage of his position.” In addition, the fraud count alleges, “25. By preparing and
delivering the Amended Settlement Statement to Rodriguez with the amount of THIRTY-
THREE AND ONE-THIRD PERCENT (33 1/3%) presented as the correct attorney’s fee,
Bertucci [falsely] represented and implied that he had obtained a court’s authority to the
additional fees and was entitled to [the] additional fees.” Bertucci concludes that if there is any
ambiguity in the meaning of the dishonesty exception, it must be construed in favor of the
insured and against the insurer. See Continental Casualty Co., v. McDowell & Colantoni, Ltd.,
282 Ill. App. 3d 236, 241, 668 N.E.2d 59, 62-63 (1996) (when an exclusionary clause is relied
up on to deny coverage, it must be clear and free from doubt, and construed liberally in favor of
the insured and strongly against the insurer).
Bertucci’s argument fails because an exception to an exclusion does not create coverage
or provide an additional basis for coverage, it only preserves coverage granted in the insuring
agreement. Stoneridge Development Co. v. Essex Insurance Co., 382 Ill. App. 3d 731, 756, 888
N.E.2d 633, 656 (2008). When the allegations do not fall within the scope of the insuring
agreement, some courts are unwilling to even consider the applicability of any exclusions.
Stoneridge Development Co., 382 Ill. App. 3d at 756, 888 N.E.2d at 656. We nonetheless
22 1-09-0502
consider it in light of the overriding principle to construe the policy as a whole (Stoneridge
Development Co., 382 Ill. App. 3d at 756, 888 N.E.2d at 656, citing Outboard Marine Corp. v.
Liberty Mutual Insurance Co., 154 Ill. 2d 90, 108, 607 N.E.2d 1204, 1212 (1992)), but have little
sympathy for the proposition. The argument gives inordinate emphasis to an isolated portion of
one sentence, contrary to the principle that policy provisions are read in light of other relevant
provisions and the contract as a whole. Founders Insurance Co. v. Muñoz, 389 Ill. App. 3d 744,
749, 905 N.E.2d 902, 908 (2009) (all the provisions of a contract, rather than its isolated parts,
should be read together to interpret the parties’ intent); Outboard Marine, 154 Ill. 2d at 108, 607
N.E.2d at 1212. A policy must not be interpreted in a manner that renders provisions of the
contract meaningless. Cincinnati Insurance Co., 372 Ill. App. 3d at 152, 865 N.E.2d at 399. The
fact that Bertucci has suggested a creative possibility or that Continental Casualty Company
disagrees with him does not mean the contract is ambiguous. Young v. Allstate Insurance Co.,
351 Ill. App. 3d 151, 157, 812 N.E.2d 741, 748 (2004). The relevant inquiry is whether the
contract’s provisions are subject to more than one reasonable interpretation. Young, 351 Ill.
App. 3d at 157, 812 N.E.2d at 748. We will not distort the policy and create ambiguity where
none exists. Young, 351 Ill. App. 3d at 157, 812 N.E.2d at 748. Bertucci’s alternate
interpretation is not reasonable. This contract’s insuring agreement and the quoted exclusion
expressly limit coverage to a “claim,” claims are expressly defined in the policy as “act[s] or
omission[s] *** in the rendering of or failure to render legal services,” and we have already
rejected the notion that Bertucci’s alleged conduct involved “legal services.”
For these reasons, we find that there was no possibility of coverage for the Rodriguez
23 1-09-0502
civil action and we affirm the circuit court ruling to that effect.
On cross-appeal, Continental Casualty Company challenges the circuit court’s
determination that the ARDC proceeding triggered the policy’s supplementary payments
provision. Bertucci pled this theory in count III of his counterclaim. The supplementary
payments provision expressly limits coverage to a “Disciplinary Proceeding *** arising out of
an act or omission in the rendering of legal services by such Insured.” The insurer argues that,
like the civil case, the ARDC proceeding is not based on any wrongful acts committed in the
performance of “legal services.” Bertucci responds that the complaint before the ARDC, the sole
body charged with the investigating and prosecuting claims against Illinois attorneys arising out
of the representation of a client in a legal matter, is a “Disciplinary Proceeding” that arises
from his practice of law, and is within the scope of the supplementary payments provision.
We again find the insurer’s construction of the policy to be the only reasonable
construction. As discussed above, this insuring agreement, which is the portion of the policy
“reciting the risk assumed by the insurer or establishing the scope of the coverage” (Black’s Law
Dictionary 811 (7th ed. 1999)) precludes coverage for Bertucci’s retention of excessive attorney
fees from Rodriguez’s settlement proceeds. The supplementary payments provision must be read
within the context of this insuring agreement. In fact, the supplementary payments provision
reiterates that coverage is limited to “legal services,” which we know must be services that draw
upon Bertucci’s specialized knowledge and skill as a lawyer and are provided for others.
Accordingly, we conclude the ARDC proceeding does not come within the terms of the policy
and that Continental Casualty Company was entitled to judgment as a matter of law on count III
24 1-09-0502
of Bertucci’s counterclaim. The circuit court’s ruling with respect to the supplementary
payments provision is reversed.
Affirmed in part and reversed in part.
CAHILL, P.J., and J. GORDON, J., concur.