Lancia v. State National Insurance Company
Although the burden to prove that a claim falls within a policy's coverage is on the insured, the insurer has the burden of proving that the claim for which coverage is sought falls within a policy's exclusion. State National Insurance Company issued a professional liability insurance policy to the Law Office of Maurizio D. Lancia, P.C. Lancia was sued in four civil actions stemming from his involvement in allegedly fraudulent real estate transactions. State National and First Mercury Insurance Company, the claims adjuster for the policy, refused to provide a defense. Lancia brought this action against State National and First Mercury alleging that at least some of the claims in each underlying action arose out of his alleged conduct as a lawyer and, thus, the defendants breached their contract by refusing to defend him. The defendants filed a counterclaim seeking a declaratory judgment, that, pursuant to an exclusion in the policy they were not obligated to defend Lancia in the underlying actions because the claims therein were alleged to have arisen out of his activities as owner or principal of an entity other than the named insured. The trial court granted Lancia's partial motion for summary judgment and denied the defendants' motions for summary judgment. The defendants appealed. The Appellate Court reversed the judgment and remanded the matter agreeing with the defendants that all claims pending against Lancia in the underlying actions were excluded from coverage because, as pleaded, they unquestionably arose out of his activities as owner of Royal Financial Services, LLC, a mortgage brokerage company. The complaints were devoid of any allegations against Lancia that were not predicated on his role as a mortgage broker. Even if the allegations were construed as the rendering of legal services, for which Lancia might otherwise be covered under the policy, any such conduct, as alleged, arose out of and was inextricably intertwined with his conduct as the owner or principal of Royal and his role as a mortgage broker. Thus, the policy exclusion unambiguously established that the defendants did not have a duty to defend Lancia in the underlying actions.