Financial Management Advisors, LLC v. American International Specialty Lines Insurance

Financial Management Advisors, LLC and Financial Management Advisors, Inc. (collectively, “FMA”) and Kenneth D. Ma-lamed appeal from the district court’s grant of summary judgment in favor of American International Specialty Lines Insurance Company (“AISLIC”). For the reasons that follow, we reverse that summary judgment and remand for proceedings consistent with this opinion.

Background

FMA is a firm that provides investment advice and portfolio management services. Malamed is FMA’s President and Chief Investment Officer, and acts as the financial advisor to many of FMA’s clients.

In May of 2002, FMA purchased from AISLIC an Investment Management Insurance Policy to cover claims made against the FMA Parties for “Wrongful Acts” in the rendering of, or failure to render, investment advisory services. A “Wrongful Act” is defined as “any breach of duty, neglect, error, misstatement, misleading statement, omission or other act wrongfully done or attempted by the Insured.” The initial policy issued to FMA (“Policy I”) covered the period from May 2, 2002 to May 2, 2003. In May of 2008, AISLIC issued a “renewal” policy (“Policy II”) covering the period from May 2, 2003 to May 2, 2004.…