Call Us Today For A Free Quote | 866.940.1101
Professionals Insuring Professionals

In Continental Casualty Company (CNA) v Joseph J Boughton Jr, CNA was allowed to rescind coverage even after CNA agreed to pay $12,500 to reimburse one of the accounting firm’s owners for his legal costs.

The CPA firm Marshall Granger & Co LLP was jointly owned by Mr. Laurence M Brown & Ronald J Mangini.  In April 2010 Mr. Brown completed an Accountant Professional Liability Insurance application for CNA. According to the court record:

“As part of that application, Brown provided a number of answers that were false, including that no one from his firm had promoted or solicited on behalf of investment ventures. (Id. at 3-4.) At the time he submitted the application, however, Brown was in the midst of perpetrating a securities fraud scheme, convincing several of his accounting clients to participate in a nonexistent investment opportunity.”

Obviously none of this was disclosed on the CNA Attorney Malpractice application.

In 2011 Mr. Brown pleaded guilty to criminal charges including security fraud, wire fraud and money laundering in connection with selling fictitious stock and promissory notes. 

In November 2011, Mr. Boughton, president and CEO of Northstar and a Granger client and his firm intervened in the litigation after Mr. Mangini assigned them all of his rights under the policy.

The District Court granted CNA summary judgment as to being able to rescind the policy because of material misrepresentations, but denied summary judgment as to whether CNA had forfeited rights by the unreasonable delay of seeking the rescission.  A jury ruled in CNA’s favor in June 2016.  The 2nd US Circuit Court unanimously affirmed CNA in both issues on appeal.

Posted 8:54 AM

Share |

No Comments

Post a Comment
Required (Not Displayed)

All comments are moderated and stripped of HTML.
Submission Validation
Change the CAPTCHA codeSpeak the CAPTCHA code
Enter the Validation Code from above.
NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive

View Mobile Version
Quick Contact
We love referrals! And thank you even more for your continued business.
Customer Service
Self policy service any time of the day, directly from our website.
Join Our Newsletter
Stay in touch with the latest events, news and offers we have.
From Our Blog From Our Customers
Read More Read More
Stay In Touch With Us Helpful Site Links Read the News
Sign up now to receive new and updates Stay up-to-date with the latest industry, community and agency news through our newscenter. We also provide handy hints on how to save on your insurance.

Read More
We have the expertise to find you the right coverage at the right price 
Powered by Insurance Website Builder