Appeals court says insurer correctly voided legal malpractice policy
- July 23, 2025
- Posted by: Web workers
- Category: Finance
A New Jersey appeals court said Friday that a Fairfax Financial Holdings Ltd. unit was correct when it voided a law firm’s malpractice policy for failing to disclose in a renewal application that it had been investigated by the state’s Office of Attorney Ethics.
The three-judge panel in Schibell Mennie & Kentos LLC et al. v. Allied World Insurance Co. et al. said the insurer did not err when denying coverage to Richard D. Schibel against a claim accusing him of fraudulently converting life insurance policy proceeds intended for his former partner, Mark Kentos. The insurer made its decision in August 2019 and later rescinded the policy in October 2019 after discovering a long history of disciplinary action against Mr. Schibell, according to court documents.
Mr. Schibell’s firm applied for legal malpractice insurance from Allied in June 2016 but said nothing in the original application or subsequent renewals about investigations into his handling of the firm’s trust account that began in July 2012.
The New Jersey OAE first began investigating Mr. Schibell and his law firm after a check from the firm’s trust account was returned for insufficient funds. A subsequent investigation led to the OAE’s filing of a complaint against Mr. Schibell in December 2013 for violating the rules of professional conduct. A special ethics master recommended suspending Mr. Schibell’s law license for six months, court records show.
In March 2017, a disciplinary review board issued a 36-page opinion saying “clear and convincing evidence” showed that Mr. Schibell engaged in unethical conduct. The New Jersey Supreme Court adopted the board’s decision and censured Mr. Schibell instead of suspending him from practicing law.
Mr. Schibell and his firm sued Allied in April 2020, alleging breach of contract and violation of the New Jersey Consumer Fraud Act. The parties filed competing motions for summary judgment, and the trial judge found in favor of the insurer. Mr. Schibell and his firm appealed.
Representatives for the parties did not respond to requests for comment.
