Law firm denied coverage for search warrant compliance

Where the government executed a search warrant at a law firm, that wasn’t a “claim” under the firm’s insurance policy. The warrant authorized law enforcement to carry out the search and seizure without regard to any response by the target of the warrant.

Background

The law firm of Brown Goldstein Levy LLP, or BGL, and one of its partners, Joshua Treem, filed suit against their insurer, Federal Insurance Company, when it refused to provide coverage for costs appellants incurred after the government investigated Treem, executed a search warrant at BGL’s office and notified Treem that his representation of certain clients may present a conflict of interest. The district court held that there was no “Claim,” as that term is defined in the insurance policy, and alternatively that any costs appellants incurred were excluded from the policy’s definition of “loss.”

Analysis

All parties agree here that the only arguably applicable definition of a covered claim is “a written demand or written request for … nonmonetary relief … against an Insured for a Wrongful Act.” Appellants first argue that the “government’s application for and execution of the search and seizure warrant on the BGL offices was clearly” a written demand or request for nonmonetary relief as required by the policy. In appellants’ view, “an application for a search warrant expressly ‘request[s]’ relief against BGL, and the issued warrant demands compliance.”

The district court concluded, “[s]earch warrants are not forms of ‘relief,’ but rather constitute judicial authorization — based upon a finding of probable cause — to conduct searches of places and things.” The district court further held that because “[t]he Government did not seek to redress any diminution of its legal rights, nor did it seek remedy for any harm brought upon it by [appellants] in its pursuit of the Search Warrant,” the warrant application was not a demand or request for relief against the insured. This court agrees with the district court.

When the government asked the court for authorization to search and seize BGL’s files, it was not seeking redress or a benefit from BGL. Indeed, the warrant was issued and directed to law enforcement — not to BGL. And while the resulting warrant may have been adverse to BGL, it was not “against an Insured.” That is, the target of a warrant is “not asked to say or to do anything” in response to the warrant.

Similarly, the search warrant itself is not a “Claim” because it is not a written demand or request. Contrary to appellants’ assertion that a warrant “demands compliance,” the target of a warrant is “not asked to say or to do anything” in response to the warrant. Instead, the warrant authorizes law enforcement to carry out the search and seizure without regard to any response by the target of the warrant.

In support of their argument that the search warrant is a “Claim,” appellants cite several cases which hold that subpoenas are written demands or requests for relief. But a subpoena differs from a search and seizure warrant in that it does command the recipient to comply.

Appellants next argue that “[t]here could not be a clearer example of a written demand for nonmonetary relief” than the Ravenell conflict letter and the target conflict letter. Again this court disagrees. Each of the letters at issue was sent by the government to “advise” Treem of his status and inform him of potential conflicts of interest. Contrary to appellant’s assertions, the conflict letters neither “demanded” nor “requested” Treem’s withdrawal from representation. The conflict letters are not “Claims.” Despite appellants’ attempts to characterize them as “demands,” they are not.

Affirmed.

Brown Goldstein Levy LLP v. Federal Insurance Company, Case No. 22-1023, May 18, 2023. 4th Cir. (Thacker), from DMD at Baltimore (Johnston). John Thorpe Richards Jr. for Appellants. Katherine Booth Wellington for Appellee. VLW 023-2-133. 14 pp.