Is Travelers liable for the $2 million settlement?

Malpractice Insurance Donald Barker, a wealthy Oregon resident, went to the law firm Winokur, Schoenberg, Maier, Hamerman& Knudson to have his estate planned. An attorney at the firm repeatedly told Barker that he could convey half of his $20-million estate to his wife tax free under Oregon’s marital deduction. Barker had his will drawn based on the law firm’s advice. It was not until after Barker died three years later that Barker’s family learned that Oregon does not recognize the marital deduction. As a result, the will’s beneficiaries were subject to significant estate taxes. The beneficiaries sued the law firm for negligence, and the case was settled for $2 million. At the time Barker was being advised by the law firm, it had a professional malpractice insurance policy with the Travelers Insurance Company (Travelers) that covered “all sums which the insured shall become legally obligated to pay as damages because of any act or omission of the insured arising out of the performance of professional services for others in the insured’s capacity as a lawyer.” The policy expired one year prior to Barker’s death. Is Travelers liable for the $2 million settlement? Travelers Insurance Company v. National Union Fire Insurance Company of Pittsburgh, 207 Cal. App.3d 1390, 255 Cal.Rptr. 727, Web 1989 Cal.App. Lexis 130 (Court of Appeal of California)

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