Background
Lauren Bridges filed a medical-malpractice suit in Alaska in January 2017 on behalf of her daughter, alleging birth injuries caused by negligent care during delivery. Her counsel, Michigan law firm McKeen & Associates, P.C., failed to timely respond to summary judgment motions, resulting in dismissal of the case in January 2022 after the Alaska Supreme Court reversed a lower court’s reinstatement order. Bridges subsequently asserted a legal-malpractice claim against McKeen and assigned her rights under McKeen’s three legal-malpractice insurance policies—issued by Maxum Indemnity Company, StarStone Specialty Insurance Company, and Landmark American Insurance Company—to herself. All three insurers declined coverage. Bridges sued for declaratory judgment and breach of contract.
The Maxum policy covered the period May 2, 2018 to May 2, 2019, with an optional extended reporting period from July 2, 2019 to July 2, 2021. The StarStone and Landmark policies covered May 2, 2019 to May 2, 2020, with Landmark serving as excess coverage. McKeen notified Maxum and StarStone of the potential claim in April and May 2020, respectively. The actual claim was asserted in February 2022, well after all policy periods had expired. The district court dismissed Bridges’s claims against Maxum and Landmark, finding the policy language unambiguously precluded coverage.
The Court’s Holding
The Sixth Circuit affirmed the dismissal of Bridges’s claims against both insurers. Regarding Maxum, the court held that Section VII.B. of the policy required notice of a potential claim to be given during the Policy Period (May 2018 to May 2019) for an actual claim to be deemed timely even if reported later. Because McKeen notified Maxum of the potential claim in April 2020—during the Extended Reporting Period rather than the Policy Period—the exception to the notice requirement did not apply. The plain language of the policy twice specified that potential claims must be reported “during the ‘Policy Period'” and did not include the Extended Reporting Period within that definition. The court rejected Bridges’s argument that a discrepancy between “Supplemental Extended Reporting Period” (in an endorsement) and “Optional Extended Reporting Period” (in the main policy text) created ambiguity, characterizing it as a scrivener error that did not alter the clear meaning of the notice requirements.
As to Landmark, the court affirmed dismissal based on the policy’s exclusion of claims arising from wrongful acts before the retroactive date of May 2, 2019. The Landmark policy was a “follow-form” policy that incorporated the StarStone Policy’s terms, including that exclusion. McKeen’s failure to respond to summary judgment motions occurred in 2018, before the retroactive date, placing the wrongful act outside the scope of coverage. The court rejected Bridges’s newly raised argument—not presented to the district court—that determining Landmark’s exposure would require interpretation of the StarStone Policy. The court noted that contract interpretation is a question of law and that unambiguous policy language must be applied according to its plain meaning without resort to extrinsic evidence.
Key Takeaways
- Notice provisions in legal-malpractice policies must be strictly complied with; reporting a potential claim during an extended reporting period does not satisfy a requirement to report during the original policy period.
- Scrivener errors and inconsistent terminology do not create contractual ambiguity when the parties’ intent is clear and can be discerned from reading the contract as a whole.
- Follow-form policies fully incorporate the underlying policy’s terms, conditions, and exclusions, including retroactive date limitations.
- Courts will not manufacture ambiguity where policy language is clear and unambiguous, and ambiguities cannot be created by inconsistencies in other portions of the policy unrelated to the provision at issue.
Why It Matters
This decision reinforces critical principles governing legal-malpractice insurance coverage disputes. For law firms, it demonstrates the paramount importance of timely notice of potential claims—firms cannot satisfy notice requirements by reporting during an extended period if the policy explicitly requires notice during the original period. The ruling also clarifies that insurers’ reliance on narrow notice windows and retroactive dates will be enforced strictly by courts interpreting policies under Michigan law. The distinction between Policy Period and Extended Reporting Period is not mere formality but carries binding legal consequences for coverage eligibility.
For insurers and policyholders alike, the decision underscores that courts will not relieve parties of contractual obligations based on scrivener errors or isolated inconsistencies. Unless competing provisions create an irreconciable conflict, plain language governs. Additionally, follow-form policies present no escape valve—the excess carrier is bound by the same exclusions and limitations as the primary carrier. Practitioners should note that arguments not raised in the district court may be waived on appeal and that procedural timing matters; Bridges’s late assertion of a new argument on appeal failed to overcome the presumption against raising new issues for the first time on appeal.