Professional Documents
Culture Documents
IN RE:
Case No. 09-34791-RBR
ROTHSTEIN ROSENFELDT ADLER, P.A.
Involuntary Chapter 11 Proceeding
Debtor.
________________________________________/
vs.
Defendant.
________________________________________/
through its undersigned counsel, hereby files its Complaint for Rescission against
Defendant, Rothstein Rosenfeldt Adler, P.A. (“RRA”), and in support thereof, respectfully
states as follows:
PREFATORY NOTE
Carolina Casualty brings this action to rescind two policies of professional liability
PARTIES
Bankruptcy Code was filed against RRA by the petitioning creditors, Roger Wittenberns,
Bonnie Barnett, Aran Development, Inc. and Universal Legal. An order was entered on
November 20, 2009 appointing Herbert Stettin as Chapter 11 trustee and an order for
4. This Court has jurisdiction over this complaint pursuant to 28 U.S.C. §1334(b),
5. The creditors at issue in this Bankruptcy action seek all assets of RRA. RRA
has attempted to put Carolina Casualty on notice of a laundry list of matters to which it
seeks coverage for which the outcome has an effect on the rights, liabilities, and options of
the debtor and/or can have an effect on the handling or administration of the firm’s assets.
Because this case has a conceivable effect of reducing RRA’s assets available to the
policies will serve the purposes of the Bankruptcy Code and §1334(b).
BACKGROUND
8. Carolina Casualty issued two claims made and reported Lawyers Professional
Liability Policies to RRA as named insured: (1) Policy No. 9871870 for the policy period
February 22, 2009 to February 22, 2010, with limits of liability of $ 10,000,000 each claim
and in the aggregate, subject to a $25,000 deductible; and, (2) Policy No. 9818271 for the
policy period February 22, 2008 to February 22, 2009, with limits of liability of $5,000,000
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each claim and in the aggregate, subject to a $25,000 deductible. (Attached hereto and
1. Insuring Agreement
This Policy shall pay on behalf of the Insureds all Damages and Claims
Expense that the Insureds shall become legally obligated to pay, arising from
any Claim first made against an Insured during the Policy Period and
reported to the Insurer in writing during the Policy Period or within 60 days
thereafter for any Wrongful Act, provided that prior to the inception date of
the first Lawyers’ Professional Liability Insurance Policy issued by the Insurer
to the Named Insured, which has been continuously renewed and
maintained in effect to the inception of this Policy Period, the Insured did not
know or could not reasonably foresee that such Wrongful Act might
reasonably be expected to be the basis of a Claim.
3. any matter deemed uninsurable under the law pursuant to which this
Policy shall be construed; or
4. legal fees, costs and expenses paid, incurred or charged by the Insured,
whether claimed as forfeiture, restitution of specific funds, financial loss,
set-off or otherwise, and injuries that are a consequence of any of the
foregoing; or
limited to Rule 11, Federal Rule of Civil Procedure, any successor thereto
or state rule counterpart.
“Professional Services” also means a title insurance agent, provided such services
are connected with and incidental to the Insured’s practice of law and are pursuant
to a written agency agreement with a licensed title insurance company; provided,
however, the Insurer shall not be liable to make any payment for Damages or Claims
Expense in connection with any Claim made against an Insured based upon, arising
out of, directly or indirectly resulting from or in consequence of, or in any way
involving:
a. defects in title of which any Insured had knowledge at the date of issuance of
such title insurance whether or not a matter of public record;
“Wrongful Act” means any actual or alleged act, omission or Personal Injury arising
out of Professional Services rendered by an Insured or by any person for whose act
or omission the Insured is legally responsible.
11. Scott W. Rothstein (“Rothstein”), RRA’s managing partner and chief executive
officer, completed a Lawyers’ Professional Liability Insurance Proposal Form LPL 29505
(rev. 05-04) on February 14, 2008 for the Carolina Casualty Policy effective February 22,
2008 to February 22, 2009. See Exhibit C attached hererto and incorporated herein.
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Proposal Form LPL 29505 (rev. 05-04) on February 25, 2009 for the Carolina Casualty
Policy effective February 22, 2009 to February 22, 2010. See, Exhibit D attached hererto
13. Both Proposal Forms contained the following question and the following
response:
17. Is the Applicant Firm or any lawyer in the Applicant Firm aware of
any facts, circumstance or situation that might result in any professional
liability claim or suit against the Applicant Firm or any predecessor in
business or any past or present lawyers in the applicant firm?
Response: No.
Does any lawyer in the Applicant Firm serve as a director, officer, trustee
or partner of, or exercise any fiduciary controls over, any organization
other than the Applicant Firm?
15. In response to Question 5 on the Proposal Form dated February 14, 2008,
Rothstein listed three organizations – Jewel River Cruises; Q Task; and Edify. See,
Exhibit C.
16. In response to Question 5 on the Proposal Form dated February 25, 2009,
Rothstein responded “See Attached” and attached the list attached hereto and
states:
Indicate the percentage of gross income for the past fiscal year derived
from the following areas of practice.
18. On both Proposal Forms, Rothstein responded that 100% of the firm’s
gross income was derived from the areas of practice disclosed on the form.
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19. Rothstein did not indicate that any of the firm’s gross income was derived
20. At no time following the completion of the February 14, 2008 Proposal
Form and the inception of the 2008-2009 Carolina Casualty Policy did any insured
21. At no time following the completion of the February 25, 2009 Proposal
Form and the inception of the 2009-2010 Carolina Casualty Policy did any insured
The undersigned acting on behalf of the Applicant Firm and all persons
proposed for this insurance declares that the statements set forth herein
are true and correct and that thorough efforts have been made to obtain
sufficient information to facilitate the proper and accurate completion of
this Proposal Form.
This Proposal Form has been completed as respects the entire Applicant
Firm;
And the signing of this Proposal Form does not bind the undersigned to
purchase the insurance.
23. The 2008-2009 Carolina Casualty Policy and the 2009-2010 Carolina
***
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B. Proposal
***
24. In the past few weeks numerous claims have been alleged against
25. These claims have been part of a criminal investigation conducted by the
See, Civil Amended Forfeiture Complaint, Case No. 09-CV-61780, filed in the United
States District Court for the Southern District of Florida, attached hereto and
incorporated herein as Exhibit F (the “Amended Forfeiture Complaint”).
26. In the course of evaluating this matter, Carolina Casualty has identified
several facts, circumstances or situations that might result in a suit against Rothstein
and/or RRA before the Carolina Casualty 2008-2009 Policy incepted but which were not
situations that might result in a suit against Rothstein and/or RRA before the Carolina
Casualty 2009-2010 Policy incepted but which were not disclosed during the 2008-2009
which Rothstein served and, on information and belief continues to serve as a director,
officer, trustee or partner of, and/or over which Rothstein exercised fiduciary control
which were not disclosed on either the Proposal Form dated February 25, 2008 or the
29. On information and belief, a substantial portion of the firm’s gross income
was derived in the firm’s 2008 and 2009 fiscal years from the sale of structured
settlements which was not disclosed on either the 2008 or 2009 Proposed Forms.
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30. The failure of RRA to disclose the facts, circumstances or situations that
might result in a suit and/or all of the numerous companies Rothstein served on were
misrepresentations material to the risk assumed by Carolina Casualty under the Carolina
Casualty Policies.
Policies and prevented the underwriters from being able to properly evaluate the
underwriting risks.
Casualty Policies.
33. Carolina Casualty would have altered its underwriting had it known the
facts and information misrepresented by RRA’s failure to disclose the alleged fraudulent
34. Had the omitted information been reported to Carolina Casualty before the
effective dates of the Carolina Casualty Policies, Carolina Casualty would not have
36. Carolina Casualty stands ready to return to RRA the premiums previously
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Casualty Policies unenforceable, and preclude coverage for all claims and suits reported
C. Declaring such other and further relief this Court deems just, including the
AND
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