United States District Court, D. Kansas
MEMORANDUM AND ORDER
W. Lungstrum United States District Judge
matter comes before the Court on the parties’
cross-motions for summary judgment (Doc. ## 42, 58). For the
reasons set forth below, the Court denies
following facts are undisputed for purposes of these motions.
Plaintiff Bridgebuilder Tax Legal Services, P.A.
(“Bridgebuilder”), located in Kansas, is a
professional services firm comprised of attorneys and
certified public accountants. Bridgebuilder is owned by Kevan
Acord, a licensed and practicing attorney. Defendant insurer
StarStone Specialty Insurance Company
(“StarStone”) issued a professional liability
insurance policy to Bridgebuilder.
August 2015, during the policy period, Bridgebuilder and Mr.
Acord were sued in Kansas state court by their client, John
Grissinger (individually and as trustee of a trust). Mr.
Grissinger alleged that Bridgebuilder and Acord were
negligent in advising him with respect to transactions in
2012 in which he loaned $6,000,000 to Northrock, LLC
(“Northrock”). Bridgebuilder gave timely notice
of the suit to StarStone, but StarStone denied coverage under
the policy. Bridgebuilder defended the suit by Grissinger,
which the parties settled after mediation in October 2015. In
the settlement, Bridgebuilder paid in excess of the policy
limit of $1,000,000.
present action, which was removed from state court,
Bridgebuilder seeks to recover from StarStone the amount it
paid in the settlement of the Grissinger suit and
the amount of the attorney fees it incurred in defending that
suit. The case is presently set for a bench trial in April
Summary Judgment Standards
judgment is appropriate if the moving party demonstrates that
there is “no genuine dispute as to any material
fact” and that it is “entitled to a judgment as a
matter of law.” See Fed. R. Civ. P. 56(a). In
applying this standard, the court views the evidence and all
reasonable inferences therefrom in the light most favorable
to the nonmoving party. See Burke v. Utah Transit Auth.
& Local 382, 462 F.3d 1253, 1258 (10th Cir. 2006).
An issue of fact is “genuine” if “the
evidence allows a reasonable jury to resolve the issue either
way.” See Haynes v. Level 3 Communications,
LLC, 456 F.3d 1215, 1219 (10th Cir. 2006). A fact is
“material” when “it is essential to the
proper disposition of the claim.” See id.
Application of Exclusion Q
seeks summary judgment based on its argument that the
Grissinger claim against Bridgebuilder was excluded
from coverage by the subject policy’s Exclusion Q. At
the same time, Bridgebuilder seeks partial summary judgment
to the effect that Exclusion Q does not preclude coverage
here as a matter of law. Exclusion Q provides that the policy
does not apply to any claim against the insured
based upon, arising out of, directly or indirectly resulting
from, or in any way involving any actual or alleged
investment advice, promotion, sale, solicitation, or
recommendation of any securities, real estate or other
investments by any insured.
in original.) Under Kansas law, the insurer bears the burden
of establishing that a policy exclusion applies, and
exclusions are narrowly construed. See Fidelity
& Dep. Co. of Md. v. Hartford Cas. Ins.
Co., 189 F. Supp. 2d 1212, 1224 (D. Kan. 2002)
(Lungstrum, J.) (citing Kansas cases).
Court concludes that a question of fact remains for trial, as
a reasonable factfinder could decide the applicability of
Exclusion Q for either party. Bridgebuilder argues that Mr.
Acord provided only legal advice to Mr. Grissinger concerning
the Northrock transactions, not investment advice, for
instance regarding the legality of the transactions and the
risk involved in light of guarantees that Mr. Grissinger
received. StarStone, however, has provided evidence to the
contrary, including the following: Bridgebuilder’s
bills to Mr. Grissinger over time indicate that Mr. Acord
routinely gave him investment advice; Mr. Acord was an
investor in Northrock, and he brought the investment to Mr.
Grissinger’s attention; Mr. Acord told Mr. Grissinger
that he would receive a 20 percent return on his investment
in Northrock, that his investment was guaranteed and he would
not lose money, and that the investment was a
“no-brainer”. Such facts, which must be
considered true for purposes of Bridgebuilder’s motion,
would allow a reasonable factfinder to conclude that Mr.
Acord gave investment advice to Mr. Grissinger or promoted or
solicited the investment by Mr. Grissinger, within the plain
and express terms of Exclusion Q. Accordingly, the Court
denies Bridgebuilder’s motion for partial summary
judgment concerning the applicability of Exclusion Q.
same time, Mr. Acord insists that he provided only legal
advice and not investment advice to Mr. Grissinger, that he
did not make the statements attributed to him by Mr.
Grissinger, and that he did not recommend or promote or
solicit the Northrock investment. Such evidence, taken in the
light most favorable to Bridgebuilder for purposes of
StarStone’s motion, creates a question of fact for
trial. The Court also rejects StarStone’s argument that
Exclusion Q applies as a matter of law because Mr.
Grissinger’s state-court petition alleges that Mr.
Acord “convinced” him to make the investments.
The Court agrees with Bridgebuilder that it is possible for
one to be convinced to act by a person even without ...