Liebling v. Garden State Indemnity – Case Brief Summary (New Jersey)

In Liebling v. Garden State Indemnity (N.J.Super.A.D. 2001) 767 A.2d 515, the appellate court ruled that a question on an application, about whether the attorney-insured "was aware of any circumstances . . . , which may result in a claim being made" was subjective in nature. However, the court also concluded that "no reasonable fact-finder could conclude that his negative answer truly reflected his actual opinion." (Ibid.)

In Liebling, supra, 767 A.2d 515, the court relied on Shaheen, Capiello, Stein & Gordon v. Home Ins. Co. (N.H. 1998) 719 A.2d 562, 564, for the observation that when an insurer asks in its application a question such as, "is any lawyer aware of . . . any incident, act or omission which might reasonably be expected to be the basis of a claim . . . ," the insurer is requiring that "its insureds exercise professional judgment at several critical junctures." (Id. at p. 566.)

These include an exercise of judgment "before triggering the reporting requirement for potential claims" (ibid.), or in applying for renewal of a policy, such as being asked to disclose " 'any incident, act or omission which might reasonably be expected to be the basis of a claim or suit arising out of the performance of professional services for others.' " (Ibid.)

The result in Shaheen was that "the application question would not permit a denial of coverage so long as the insured had made a good-faith professional judgment." (Liebling, supra, 767 A.2d at p. 520.)