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Defamation Case Analysis

By: dmc-admin//July 27, 2005//

Defamation Case Analysis

By: dmc-admin//July 27, 2005//

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The decision is a good candidate for review in the Supreme Court, and attorneys whose clients are adversely affected by it should preserve the issue for further review, because there is substantial authority from other jurisdictions to the contrary.

The Seventh Circuit held in Hurst-Rosche Engineers, Inc., v. Commercial Union Ins. Co., 51 F.3d 1336, 1345-1346 (7th Cir.1995), that it is inherently ambiguous to include defamation in the definition of personal injury, and then exclude intentional torts from the definition of "occurrence." The court there applied Illinois law, and a definition of "occurrence" identical to the one in the case at bar.

Admittedly, the issue is different — whether the policy is ambiguous, as opposed to illusory. But that could be grounds for getting around the decision in the case at bar. It is a lot easier to convince a court that an insurance policy is ambiguous, than that it is illusory.

In another Seventh Circuit case, also applying Illinois law, Cincinnati Ins. Co. v. Eastern Atlantic Ins. Co., 260 F.3d 742 (7th Cir.2001), the court held that defamation was an "occurrence." The policy there defined "occurrence" similar to the one in the case at bar: something that "unexpectedly or unintentionally" results in personal injury, as opposed to "accident[ally]," in this case.

The complaint in that case was, as in the case at bar, "replete with allegations of deliberate misconduct." Id., at 746. The court found this irrelevant, however, concluding the allegations of deliberate misconduct were "much more likely to have been intended as a pitch for punitive damages than as a limitation of the claim." Id.

The court also noted that intent to injure is not an element of defamation.

Another case that reached the same result is Fuisz v. Selective Ins. Co. of America, 61 F.3d 238 (4th Cir. 1995)(applying Virginia law).

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Similar to the case at bar, the complaint was "permeated" with allegations of malice. Nevertheless, the court held there was coverage, because the plaintiff could recover even if the jury found no intent to harm, but only reckless disregard for the truth or falsity of the statements. Id., at 244-245.

The policy in Fuisz defined "occurrence" as "an offence," rather than "an accident," resulting in personal injury, but nothing in the court’s opinion suggests the result would be different if the language were the same as in the case at bar.

Given the persuasive authority from other jurisdictions, it would be wise to argue for coverage in similar cases, notwithstanding the decision, preserving the issue for potential Supreme Court review. Even wiser, given Seventh Circuit precedent, would be to remove the case to federal court, if possible.

– David Ziemer

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David Ziemer can be reached by email.

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