Surplus lines insurer Evanston is taking one of its policyholders to federal court - and it's about a date scribbled on an invoice.
In a complaint filed May 11, 2026 in the Southern District of New York, Evanston Insurance Company is asking a judge to declare it owes nothing to New York law firm Michelstein & Ashman, PLLC under a $4 million lawyers professional liability policy. No defense. No indemnity. Nothing.
The trouble started in a Queens courtroom on September 16, 2019. According to the complaint, that's the morning no one from Michelstein showed up for a pre-trial conference in a personal injury case the firm was running for a client named Jose Luis Brito. The Note of Issue was struck. The case eventually got marked "disposed."
How did the firm miss it? The underlying malpractice complaint alleges that a per diem attorney who covered an earlier hearing on April 29, 2019 wrote the next conference date on his invoice to the firm "without explanation." When the invoice reached the firm, the filing states, "the bookkeeper did not realize the significance of the date on the invoice or that it needed to be entered into Michelstein's calendar."
Michelstein filed a Motion to Restore on May 17, 2022. The court denied it on June 10, 2022, finding the firm had "abandoned" the case under New York's CPLR 3404. Michelstein appealed. On January 15, 2025, the Appellate Division's Second Department denied the appeal.
Brito sued the firm for malpractice on February 19, 2025, alleging he was permanently deprived of compensation for injuries he says he sustained on March 30, 2015.
The coverage fight is about what Michelstein knew, and when.
The firm renewed its Evanston policy on October 4, 2023. According to the complaint, managing partner Richard A. Ashman answered "No" on the renewal application to a question asking whether anyone proposed for insurance was "aware of any fact, error, omission circumstance or situation that might provide grounds for any claim under the proposed insurance." The application also carried a bolded notice stating that any claim arising from a known but undisclosed fact, circumstance, or situation "WILL BE EXCLUDED FROM COVERAGE UNDER THE PROPOSED INSURANCE."
The Evanston policy's insuring agreement carries a Prior Knowledge Condition. Translated: coverage only kicks in if, before the policy's effective date, no insured knew of any wrongful act "or any fact, circumstance, situation, or incident which would lead a reasonable person in the Insured's position to conclude that a Claim was likely."
Evanston says that's the problem. By the policy's October 8, 2023 inception, the complaint alleges, Michelstein already knew its missed conference had led to dismissal of Brito's case, knew the miss stemmed from an internal administrative error, knew the trial court had refused to reinstate, and knew a loss on appeal "would potentially result in Brito being permanently deprived of compensation for his alleged injuries."
There's also a wrinkle around the policy's Discovery Clause - the provision letting an insured report a potential claim mid-policy and have any later claim treated as filed on the notice date. On March 11, 2024, the firm sent Markel Claims a letter dated March 8, 2024 flagging the situation. Evanston initially accepted it as notice, subject to a reservation of rights.
The carrier now says the Discovery Clause doesn't apply. Its position: Michelstein didn't first become aware of the problem during the policy period - the complaint alleges the firm knew "no later than June 10, 2022," the day the trial court denied the Motion to Restore.
Evanston appointed Marshall Dennehey to defend the firm under a reservation of rights on or about July 28, 2025. By letter dated May 1, 2026, the carrier formally disclaimed indemnity while agreeing to keep funding the defense until a court rules. It has reserved the right to seek recoupment of defense costs.
The complaint pleads six counts of declaratory relief - no duty to defend and no duty to indemnify under the Prior Knowledge Condition, the Discovery Clause, and the application's "Notice to Applicant" provision in the alternative. The policy carries a $4,000,000 each-claim and aggregate limit, a $25,000 per-claim deductible and a $75,000 aggregate deductible.
The allegations have not been tested in court. Michelstein & Ashman has not yet filed a response, and no court has ruled.
