In Wesco Insurance Co v Layton, Texas attorney Ledford E White took out an attorney malpractice insurance policy with Wesco for the policy term of March 14, 2014 to March 14, 2015. White had maintained malpractice insurance coverage since 1997 through various malpractice insurers. Wesco had not written the prior policy term for attorney White.
On August 16, 2013, attorney White’s client, the Laytons, filed suit against attorney White alleging fraud and attorney malpractice. This complaint was amended on May 30, 2014. This suit alleged among other things that attorney White had defrauded the Laytons out of over $800,000. The Laytons ultimately prevailed at trial and were awarded $680,000 by a jury.
Attorney White first presented the claim to Wesco on May 8, 2014, seeking malpractice insurance coverage for the Laytons lawsuit.
Wesco had originally denied coverage for attorney White for the Laytons claim because among other things attorney White had prior knowledge of the claim that was not disclosed to Wesco before the policy was written. Wesco had notified the Laytons previously that Wesco had denied coverage for White. After the verdict the Laytons had attempted to collect from Wesco.
Wesco went to Federal District Court to obtain a declaratory judgement stating that the Wesco policy provided no coverage and Wesco was not liable. The Laytons appealed to the 5th Circuit and the 5th Circuit AFFIRMED the lower court Summary Judgement that the Wesco policy provided no coverage for this claim.