On February 20, 2015, the Illinois Supreme Court held that the common law innocent insured doctrine did not preserve coverage for an innocent insured where the insurer rescinded a lawyer’s professional liability (LPL) policy based on misrepresentations by another insured in the renewal application. Illinois State Bar Association Mutual InsuranceCompany v. Law Office of Tuzzolino and Terpinas, 2015 IL 117096. The court stated “that doctrine is relevant to issues of policy exclusions and insurance coverage, but it is unsuited to the case at bar, which deals with rescission and contract formation.”
In the underlying matter, the insured law firm, Law Office of Tuzzolino & Terpinas, represented client Anthony Coletta. Tuzzolino allegedly committed malpractice while representing Coletta and offered to pay $670,000 to settle any potential claim for legal malpractice. Coletta never received the $670,000.