A Chubb Ltd. unit does not have to compensate a law firm for the costs associated with a federal search and seizure warrant because there was no claim, a federal appeals court said Thursday in affirming a lower court decision.
In 2014, the government began investigating attorney Kenneth Ravenell in connection with a federal racketeering case and he hired Baltimore law firm Brown Goldstein Levy LLP to represent him, according to the ruling by the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, in Brown Goldstein Levy LLP; Joshua Treem v. Federal Insurance Co.
In January 2019, the government sent Brown Goldstein partner Joshua Treem a letter telling him he was a subject of the investigation and that there were multiple conflicts of interest that prevented him from continuing to represent Mr. Ravenell.
Upon the letter’s receipt, Mr. Treem obtained counsel to represent him, and the law firm obtained ethics counsel.
In June 2019 the government executed a search warrant for the law firm’s offices and seized thousands of documents, including all of Mr. Treem’s emails.
It later sent Mr. Treem another letter, stating his representation of his client presented a possible conflict of interest with his personal interests because his client was cooperating with the government.
The law firm sought coverage from Chubb Ltd. unit Federal for the losses incurred in the search warrant litigation and the defense costs associated with defending Mr. Treem in connection with the criminal investigation, maintaining it had incurred more than $230,000 in defense costs.
When Federal refused to provide coverage, the law firm sued the insurer in U.S. District Court in Baltimore. The court granted the insurer’s motion to dismiss the case.
There is no coverage for either claim, a three-judge appellate court panel ruled in affirming the lower court. The “warrant itself is not a ‘claim’ because it is not a written demand or request,” the ruling said.
The ruling said also the conflict letters make “no demand or request for relief against an insured” and are not claims.
Attorneys in the case had no comment or did not respond to a request for comment.