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Miller v. Triad Adoption and Counseling Services2/6/2003
This is an appeal of a summary judgment granted to The Reciprocal Alliance Group (TRA), the third-party defendant-appellee, and against Triad Adoption and Counseling Services (Triad) and Choices Adoption and Counseling Services (Choices), the defendants/third-party plaintiffs-appellants. The trial court held that the language of the insurance policy at issue did not require either coverage or a duty to defend. We affirm.
FACTS
The history of this case is best described by starting with a chronology of events. On November 27, 1996, Steve and Diane Miller (not parties to this appeal) asserted claims against Triad alleging negligence because of a failed adoption attempt. Although there may have been insurance coverage for the Millers' damages, such coverage was provided to the professional staff of Triad, and not Triad itself. Although apparently aware of this fact, the Millers' attorney did not amend the original suit to include the professional staff.
TRA issued a Professional Liability Occurrence Insurance Policy to Triad with an effective date of February 1, 2000. On February 17, 2000, the trial court found for the Millers in the 1996 claim, and ordered a judgment against Triad. The trial court also determined that the Millers were entitled to costs and reasonable attorney fees, which were awarded later. On February 28, 2000, the Triad board of directors met to discuss the judgment against it. At that meeting, they decided to form a new corporation called Choices Adoption and Counseling Services and leave Triad sitting, inactive, with a judgment against it. On March 6, 2000, TRA issued a Change Endorsement, transferring the policy from Triad to Choices. On July 28, 2000, the Millers filed a complaint against Triad, Choices, and the CEO of both corporations, Vonda Cheshire, to enable them to recover the judgment and awards that Triad had not yet paid, which the Millers calculated to be $63,755.18. The complaint alleged that Triad fraudulently transferred its assets to Choices with the intent to hinder, delay, or defraud the Millers of their judgment, contrary to NMSA 1978, ยงยง 56-10-18 and -19(A) (1989). The complaint also alleged successor corporate liability and civil conspiracy.
Pursuant to the policy issued in February 2000, Triad/Choices sought a defense and indemnity from TRA regarding the Millers' July 28, 2000, complaint. TRA Senior Claims Consultant James Kochuk denied both the defense and indemnity, stating that the professional liability policy was an occurrence policy, and the acts in the original lawsuit occurred prior to the inception of the current policy, and were not covered. The factual basis for the claims in the complaint filed on July 28, 2000, did occur during the policy period, but coverage was denied for those claims because the facts alleged by the Millers did not come within the definition of "incident" as defined in the policy, and the damages alleged in the complaint did not arise out of the "'rendering of or failure to render professional services'" as required by the policy. Therefore, TRA denied a defense in the July 28, 2000, action because the policy provided that TRA had "'no duty to defend the Insured against any Claim or Suit for Damages to which this Policy does not apply.'" In response to this letter, Triad/Choices' counsel sent a detailed letter to TRA outlining additional facts and law in another request for a defense and for indemnity. The request was again denied, this time in a letter from TRA's counsel. Triad/Choices then filed a third-party complaint against TRA alleging breach of contract, bad faith, and violation of New Mexico Unfair Claims Practices Act for TRA's failure to defend and indemnify Triad/Choic
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