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ALPS Property & Casualty Insurance Co. v. Murphy

United States District Court, N.D. West Virginia

October 11, 2019

ALPS PROPERTY & CASUALTY INSURANCE COMPANY, Plaintiff,
v.
S. SEAN MURPHY, ESQUIRE and S. SEAN MURPHY, PLLC, Defendants.

          MEMORANDUM OPINION AND ORDER DENYING DEFENDANT'S MOTION TO DISMISS [Dkt. No. 10] AND STAYING CASE

          IRENE M. KEELEY UNITED STATES DISTRICT JUDGE

         Pending before the Court is a motion by the defendants S. Sean Murphy, Esq. and S. Sean Murphy, PLLC (collectively, “Murphy”) to dismiss the complaint filed by the defendant, ALPS Property & Casualty Insurance Company (“ALPS”) (Dkt. No. 10). For the following reasons, the Court DENIES the motion, and for good cause STAYS the case pending further development in the state court action.

         I. BACKGROUND

         The Court's recitation of the facts is taken from the complaint. As it must, at this early stage of the proceedings, the Court construes those facts in the light most favorable to the non-moving party, ALPS. See De'Ionta v. Johnson, 708 F.3d 520, 524 (4th Cir. 2013).

         On July 1, 2019, ALPS filed a complaint against Murphy seeking a declaratory judgment that its insurance policy does not afford coverage to Murphy with respect to a potential claim. In addition, ALPS seeks a declaration that it has no duty to defend or indemnify Murphy under the policy with respect to a potential claim (Dkt. No. 1).

         A. The Wire Transaction

         This dispute arises from Murphy's representation of Betty Parmer (“Parmer”) in a collection action involving United Bank, Inc. (“United Bank”), styled United Bank, Inc. v. Parmer, Civil Action No. 17-C-210 (Cir. Ct. Monongalia Cty., W.Va.) (“the United Bank case”) (Dkt. No. 1 at 2). On April 4, 2019, Parmer and United Bank settled their dispute, with Parmer agreeing to pay United Bank a confidential settlement amount. Id.

         On April 11, 2019, at 7:06 A.M., based on custom and practice of counsel in the state case, Murphy requested wire instructions via email for the settlement payment from counsel for United Bank, Sean P. George (“George”). Id. At 9:39 A.M. the same day, George responded to Murphy's email, stating “Will request them and forward on receipt.” Id. at 3. At 2:41 P.M. the same day, a person or persons posing as George provided Murphy with wire instructions indicating that the payment should be transferred to Chase Bank. Id.

         Murphy provided the Chase Bank instructions to Parmer's bank, Fulton Bank in Harrisburg, Pennsylvania. Id. On April 15, 2019, Fulton Bank, on behalf of Parmer, wired the settlement payment according to the wire instructions provided by Murphy. Id. Thereafter, on May 3, 2019, George informed Murphy that United Bank had never received the payment. Id. The settlement payment was not recovered, and the loss was reported to Fulton Bank, Chase Bank, and the Federal Bureau of Investigation. Id. at 4.

         On May 23, 2019, George asserted that the wire instructions sent by Murphy to Fulton Bank were incorrect, stating he had not provided Murphy with “bogus instructions” and alleging that “Ms. Parmer's bank and [Murphy] had a duty to verify the instructions as accurate before acting upon them.” Id. That same day, George demanded that Murphy contact law enforcement and participate in a status conference in the United Bank suit. Id.

         B. The Insurance Policy

         ALPS issued Lawyers Professional Liability Insurance Policy No. APLS15426-7 to the Murphy Law Firm for the policy period August 31, 2018 to August 31, 2019. Id. The policy provides coverage on a claims made and reported basis. Id. at 5. Under the policy, a “claim” is defined as “a demand for money or services including, but not necessarily limited to, the service of suit or institution of arbitration or alternative dispute resolution proceedings against the Insured[.]” Id. at 6. A claim does not mean nor does it include any demand, service or proceeding arising from or in connection with any actual or alleged:

4. Security breach, unauthorized access, unauthorized use or misuse of any Computer Systems; [or]
5. Theft, unauthorized use or misuse of any login information, access information or identification, or personally identifiable information including, but not necessarily limited to, any password, username, social security number or other code or identified intended for use in accessing any Computer System, account, website or the internet[.]

Id.

         “Computer systems” is defined as “computers, information systems, servers, hardware, software, and associated input and output devices, data storage devices, networking equipment, back up facilities and any other associated or ...


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