MEMORANDUM AND ORDER INTRODUCTION Plaintiff Schanker & Hochberg, P.C., Steven Schanker, Esq., and R. Mark Hochberg, Esq. (collectively “S&H”) brought this insurance coverage action against Defendant Berkley Assurance Company (“Berkley”) seeking a declaratory judgment that Berkley must defend and indemnify S&H in an underlying state court litigation, a mandatory injunction requiring Berkley to do so, reimbursement of their defense costs and fees to date in the underlying action, and an award of costs and fees incurred in pursuing this action. Presently before the Court are (i) Berkley’s motion to dismiss S&H’s fourth cause of action for attorney’s fees and costs pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6) and (ii) S&H’s motion for partial summary judgment as to Berkley’s duty to defend pursuant to Rule 56. For the reasons below, Berkley’s motion is granted in part and denied in part, and S&H’s motion is granted in part and deferred in part. BACKGROUND The following facts are taken from the Complaint, the documents incorporated by reference, and the undisputed facts in the parties’ Rule 56.1 statements. [DEs 1, 15-1, 15-16]. Schanker & Hochberg, P.C., is a professional corporation incorporated in New York State with a New York principal place of business. (Compl. 2 [DE 1]). Steven Schanker, Esq. and R. Mark Hochberg, Esq. are New York citizens practicing law at Schanker & Hochberg, P.C. (Id.
3-4). Berkley is an insurance corporation incorporated in Iowa with an Arizona principal place of business. (Id. 5). Berkley issued a lawyers professional liability insurance policy to S&H for the policy period June 29, 2019 to June 29, 2020. (Id. 12; see Policy No. VUMA0177701 (the “Policy”), Ex. A [DE 14-3] to Declaration of Gabriel Darwick (“Darwick Decl.”) [DE 14-2]). Under the Policy, Berkley provides coverage for those sums [S&H] becomes legally obligated to pay as ‘damages’ because of an act, error or omission arising out of [S&H's] ‘legal services’ rendered or that should have been rendered. [Berkley] will have the right and duty to defend [S&H] against a ‘claim’ seeking those damages. However, [Berkley] will have no duty to defend [S&H] against any ‘claim’ seeking ‘damages’ for ‘legal services’ to which this insurance does not apply. (Policy §I.1.a). “Damages” are “judgments, awards and settlements an insured is legally obligated to pay as a result of a ‘claim.’” (Id. §VII.3). A “claim” includes civil proceedings demanding “monetary ‘damages’ arising out of ” S&H’s “ legal service[s]” — but not “ demand[s] for equitable or non-pecuniary relief ” — as well as any “ related claims.” (Id. §VII.2, .11). “Legal services” are the “usual and customary services of a licensed lawyer in good standing.” (Id. §VII.5). The Policy also has exclusions. In particular, the Policy does not apply to any claim j. Based on or directly or indirectly arising out of or resulting from: (1) Any act committed with knowledge of its wrongful nature or with intent to cause damage; …; or (3) Any criminal, fraudulent, or dishonest act. However, [Berkley] shall defend such allegations against any insured if it involves a ‘claim’ otherwise covered under this Policy until final adjudication. l. For payment of any fine, sanction or penalty of any nature against any insured[.] (Policy §I.2.j, .l). On September 23, 2019, a second amended complaint in a New York State Supreme Court, New York County action named S&H as defendants, bringing four causes of action against S&H for violations of the New York False Claims Act (“NYFCA”). (Compl. 30; Second Amended Complaint (“Merns Complaint” or “Merns Compl.”)
