Montgomery v. Cal Accountants Mutual Insurance

Opinion

SPENCER, P. J. Introduction

Plaintiff Belfa Kay Montgomery appeals from a summary judgment in favor of defendant Cal Accountants Mutual Insurance Company. We affirm.

Statement of Facts

In September 1987, Brett Cleaver (Cleaver) and Michael Beck (Beck) asked plaintiff to become a partner in their accounting firm. Plaintiff was hesitant to do so: She had given up accounting some years before; she had allowed her license as a certified public accountant to lapse. She was nonetheless intrigued by the prospect of becoming a partner in the firm. They discussed buy-in amount and compensation, deciding all partners would share equally in the firm’s profits.

The firm added plaintiff’s name to its own, changing its name to Cleaver, Beck, Blank, Stein & Montgomery. It added plaintiff’s name to its letterhead, listing her as a partner.

On December 19, 1987, plaintiff signed a letter to Fred S. James & Company, insurance agents, written on Cleaver, Beck, Blank, Stein & [857]Montgomery letterhead; she was identified below her signature as a partner in the firm. On January 11, 1988, Cleaver wrote to Fred S. James & Company advising them that plaintiff had been made a partner in the firm so that she could be added to the firm’s insurance policy; plaintiff signed Cleaver’s name to this letter, followed by her own initials.

Effective January 1, 1988, plaintiff was added as an insured to an Accountants Professional Liability Insurance Policy issued by defendant to Cleaver, Beck, Blank, Stein & Montgomery. On the declarations page, the named insured is set forth as the firm of Cleaver, Beck, Blank, Stein & Montgomery and the individual partners, including plaintiff are listed. Under article 2, paragraph (b), of the policy, if the named insured is a partnership, the partners also are insured under the policy. The partners listed on the declarations page would “be conclusively presumed to constitute all such individuals ... at the effective date of this policy.”

Effective January 1, 1992, the firm renewed the policy. At that time, the firm was a corporation named Cleaver, Beck, Blank & Company; Cleaver, Beck and Merle Blank were listed as stockholders. Paragraph (d) of article 5, which covers exclusions, provides: “This policy does not apply ... to any Claim or Multiple Claim made in part or whole by any Insured or a present, former or prospective employer, proprietor, partner, officer, principal, director, owner, shareholder, employee or Related Individual of any Insured.” (Italics in the original.)