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Insurance company asserts it has no duty defend Chicago attorney in RICO suit over alleged bank fraud scheme

By Jonathan Bilyk | Feb 12, 2014

An insurance company has asked a federal judge to declare it has no obligation to defend a Chicago attorney being sued because of her position within a law firm formerly led by her father, who pleaded guilty for his role in a scheme that defrauded two suburban banks.

On Jan. 31, Cleveland-based Wesco Insurance Co. filed suit in Chicago's federal court against attorney Suzanne Regas, as well as Diane Goldring-Nesbitt of Evanston and Constitutional Casualty Co.

In its complaint for declaratory judgment, Wesco asserts that, while Regas holds an insurance policy through it, the terms of that policy do not require the company to defend her in the legal action Goldring-Nesbitt brought last fall or pay damages that may be awarded against her.

Wesco’s action centers on the suit Goldring-Nesbitt filed Nov. 15 against a number of defendants, including her husband, Christian Nesbitt, former attorney James Regas and the Chicago law firm of Regas, Frezados and Dallas LLP, where Suzanne Regas previously worked as an associate and her father was a partner.

Goldring-Nesbitt's suit alleges fraud, fraudulent inducement, aiding and abetting fraud and violations of the Racketeer Influenced Corrupt Organizations (RICO) and Illinois Deceptive Business Practices acts.

Goldring-Nesbitt, who was being sued herself, claims in her suit that she was unwittingly “left holding the bag” after James Regas went to prison and the scheme he concocted with  her husband to defraud Western Springs Bank and Mutual Bank of Harvey was uncovered.

Essentially, James Regas and some of his family members were accused of using their positions as officers and legal counsel at the banks to improperly issue millions of dollars in loans and credit extensions to various corporate entities he and Christian Nesbitt created, siphoning off some of the money for their own use.

Goldring-Nesbitt alleges she was duped into signing her name to legal and financial documents that were used to support the scheme.

In October, about a month before Goldring-Nesbitt filed her suit, Suzanne Regas purchased a professional liability policy from Wesco. Following the terms of the policy, Suzanne Regas notified Wesco of Goldring-Nesbitt's suit in December.

Wesco, however, contends in its recently-filed complaint that it should not be obligated to defend Suzanne Regas against Goldring-Nesbitt's suit because it is “temporally, logically or causally connected” to similar litigation brought against the Regas family and law firm in 2010 by Western Springs Bank President George M. Moser, and other bank directors, including John P. Moser and Douglas C. Altenberger.

Constitutional Casualty Co. covered the defense of Suzanne Regas in that action.

Wesco notes in its Jan. 31 complaint that the suit Moser filed against the Regas family is based on the same allegations and facts as Goldring-Nesbitt's suit.

In its complaint for declaratory judgment, Wesco asserts that in her letter notifying it of Goldring-Nesbitt’s action, Suzanne Regas “indicated that Diane Goldring-Nesbitt ‘basically copied a lawsuit filed against the same defendants in" in Moser's suit.

Since the allegations in both underlying complaints were first brought in 2010, three years before Suzanne Regas purchased her liability policy, Wesco contends it is not obligated to cover the attorney's defense.

Wesco also notes the terms of its liability policy dictate that it is only obligated to defend Suzanne Regas in the event she is sued for actions she performed as a lawyer “for a fee that inures to the benefit of the named insured.”

Because Suzanne Regas is being sued for actions related to the Regas firm as a whole, Wesco further asserts it has no obligation to defend her against Goldring-Nesbitt's action.

Wesco is being represented by attorneys Daniel L. Polsby and Rostyslaw J. Smyk of Ruberry, Stalmack & Garvey LLC in Chicago.

In its complaint, Wesco indicated it named Goldring-Nesbitt and Constitutional Casualty as defendants for the purpose of binding them to the court’s judgment.

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