Berkley Insurance Company v. Caraway & Broombaugh, P.C.

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IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
BERKLEY INSURANCE COMPANY,
Plaintiff,
vs.
CARAWAY & BROOMBAUGH, PC f/k/a
CARAWAY, FISHER &
BROOMBAUGH, PC, JASON
CARAWAY, AUTUMN CARAWAY,
HEIDI DAVIS, and THOMAS DENNIS, et
al. DOES 1–25,
Defendants.
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Case No. 23-cv-1661-SMY
MEMORANDUM AND ORDER
YANDLE, District Judge:
Berkley Insurance Company (“Berkley”) filed this declaratory judgment action against
Defendant Caraway & Broombaugh (“Caraway”) and its attorneys, seeking a declaration that it
has no duty to defend or indemnify them with respect to claims arising from an attorney’s alleged
misappropriation of client trust funds (Doc. 116). 	Now pending before the Court is Berkley’s
Motion for Summary Judgment (Doc. 148). 	Defendants did not respond 1 . 	For the following
reasons, the Motion is GRANTED.
Facts
The following facts are undisputed unless otherwise indicated: Plaintiff Berkley Insurance
Company issued Lawyers Professional Liability Policy No. PLP-1499184-P7 to Caraway &
1 On December 3, 2025, Berkley and Defendant Thomas Dennis filed a stipulation for dismissal with prejudice
(Doc. 150). As such, Defendant Thomas Dennis is dismissed with prejudice from this action. Additionally,
Defendants Sheryl Fisher and Daniel Broombaugh stipulated and agreed to be bound by and subject to any and all
judgments in this lawsuit regarding insurance coverage (Docs. 149-2, 149-3).
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Broombaugh, P.C. as the named insured for the policy period of June 1, 2022, through May 1,
2023 (Doc. 149-2). Subject to its terms, conditions, and exclusions, the policy provides coverage
only for claims arising “by reason of an act or omission in the performance of Legal Services by
the Insured.” 	(Doc. 116-1, p. 17). 	The policy defines “Legal Services” as “those services . . .
performed by an Insured for others as a lawyer.” (Id.). The policy further provides that it does
not apply to any Claim based on, or arising out of, or in any way involving:
x 	“the actual or alleged conversion, misappropriation or improper commingling
of client funds”;
x 	“any Insured having gained any personal profit or advantage to which he or
she was not legally entitled”; or
x 	“any dishonest, fraudulent, criminal, malicious act or omission or intentional
wrongdoing by an Insured.”
(Id., pp. 17–18)
Between 	September 	2023 	and 	February 	2024, 	multiple 	lawsuits 	and 	disciplinary
proceedings were filed against Defendant Jason Caraway. The Illinois actions included Melissa
Gordon v. Jason Caraway, Caraway, Fisher & Broombaugh, P.C., and Autumn Caraway, Case
No. 24LA0207 (Doc. 116-2), Thomas Dennis v. Jason Caraway and Caraway, Fisher &
Broombaugh, P.C., Case No. 23LA0572 (Doc. 116-3), Heidi Davis v. Caraway, Fisher &
Broombaugh, P.C., Jason Caraway, Cheryl Fisher, and Daniel Broombaugh, Case No. 2023-LA-
1112 (Doc. 116-4), all filed in the Twentieth Judicial Circuit Court, St. Clair County. 	The
Complaints in those cases allege that Caraway intentionally retained or diverted client funds and,
in some instances, made false statements to conceal the misuse of those funds for personal use
rather than distributing them to clients, lienholders, or creditors (Doc. 116).
On May 13, 2022, and again on August 14, 2023, the Illinois Attorney Registration and
Disciplinary Commission (“ARDC”) initiated disciplinary proceedings against Caraway based on
the misappropriation of client funds and dishonest conduct (Doc. 116-6). 	As a result of those
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proceedings, the ARDC paid or agreed to pay 16 claimants through its Client Protection Program
(Doc. 149 ¶ 28).
In December 2023, Caraway was indicted in the U.S. District Court for the Southern
District of Illinois on multiple counts of wire fraud arising from the misappropriation of client
funds. United States v. Caraway, 3:23-cr-30148-NJR-1. He later entered a guilty plea admitting
that he knowingly devised and executed a scheme to defraud his law firm and clients by
embezzling, converting, and misapplying money held in trust. Id., Doc. 26.
Berkley filed this declaratory judgment action seeking a determination that it owes no duty
to defend or indemnify Defendants in connection with the underlying matters. 	Specifically,
Berkley asserts six counts seeking declarations, including three counts concerning the Illinois
lawsuits (Counts I–III), one count concerning a potential victim claim (Count IV), and two counts
arising from the ARDC proceedings (Counts V–VI) (Doc. 116).
Discussion
Summary judgment is proper only if the moving party can demonstrate that there is no
genuine issue as to any material fact. Fed. R. Civ. P. 56(a); Alabama v. North Carolina, 560 U.S.
330, 344 (2010). The moving party is entitled to summary judgment if the non-moving party “has
failed to make a sufficient showing on an essential element of [his] case with respect to which [he]
has the burden of proof.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the evidence is
merely colorable or not sufficiently probative, summary judgment may be granted. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249–50 (1986). 	Any doubt as to the existence of a genuine
issue of material fact must be resolved against the moving party. 	Lawrence v. Kenosha Cnty.,
391 F.3d 837, 841 (7th Cir. 2004).
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Under Illinois law, “the insurer’s duty to defend arises when ‘the facts alleged in the
underlying complaint fall within, or potentially within, the policy’s provisions.’” 	Mkt. St.
Bancshares, Inc. v. Fed. Ins. Co., 962 F.3d 947, 951–52 (7th Cir. 2020) (quoting Crum & Forster
Managers Corp. v. Resolution Tr. Corp., 620 N.E.2d 1073, 1079 (Ill. 1993)). The insured bears
the burden of proving that its claim falls within the policy’s coverage. Addison Ins. Co. v. Fay,
905 N.E.2d 747, 752 (Ill. 2009). Once the insured has established coverage, the burden shifts to
the insurer to prove that a limitation or exclusion applies. 	Id. 	An insurer’s duty to defend is
broader than its duty to indemnify. Pekin Ins. Co., 930 N.E.2d at 1017 (citing Outboard Marine
Corp., 607 N.E.2d 1204 (Ill. 1992)).
Here, the undisputed facts establish that the underlying matters do not arise “by reason of
an act or omission in the performance of Legal Services,” as required by the policy’s insuring
agreement. The underlying complaints seek recovery for the intentional conversion and misuse of
client funds, not for negligent legal representation. As such, no duty to defend arises. See Pekin
Ins. Co. v. Wilson, 930 N.E.2d 1011, 1016–17 (Ill. 2010) (“In a declaratory judgment action . . .
where the issue is whether the insurer has a duty to defend, a court ordinarily looks first to the
allegations in the underlying complaint and compares those allegations to the relevant provisions
of the insurance policy.”).
Even if the insuring agreement were implicated, which it is not, the facts establish that the
policy’s exclusions bar coverage. 	Each underlying matter arises out of alleged conversion,
misappropriation, or improper commingling of client funds, triggering the policy’s Funds
Exclusion. 	Thus, the policy’s exclusions independently preclude coverage for each of the
underlying matters. Because the underlying claims do not fall within the policy’s coverage and
are expressly excluded, Berkley owes no duty to defend or indemnify Defendants in connection
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with the underlying matters. Health Care Industry Liability Ins. Program v. Momence Meadows
Nursing Center, Inc., 566 F.3d 689, 693 (7th Cir. 2009) (Where no duty to defend exists, no duty
to indemnify can arise as a matter of law.).
Conclusion
For the foregoing reasons, Berkley Insurance Company’s Motion for Summary Judgment
(Doc. 116) is GRANTED. The Court DIRECTS the Clerk of Court to enter judgment in
Plaintiff’s favor on Counts I through VI of the Third Amended Complaint, declaring that
Plaintiff owes no duty to defend or indemnify Defendants in connection with the underlying
matters.
IT IS SO ORDERED.
DATED: February 3, 2026
STACI M. YANDLE
Chief U.S. District Judge
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