Friday, June 8, 2018

First Circuit affirms coverage for defamation claims against Bill Cosby

I've posted here, here, and here about the declaratory judgment lawsuit brought by AIG Property Casualty Company asserting that it has no duty to defend Bill Cosby in the defamation lawsuits brought against him.  Those suits allege that Cosby lied when he denied allegations of rape, thereby defaming his accusers.
In AIG Property Casualty Co. v. Cosby, __ F.3d __, 2018 WL 2730762 (1st Cir.), the United States Court of Appeals for the First Circuit has affirmed the decision of the United States District Court for the District of Massachusetts holding that AIG must defend Cosby. 
The AIG homeowner's and umbrella policies provide coverage for defamation claims.  The issue in dispute is whether  exclusions for claims "arising out of" sexual misconduct apply.  The District Court had held that the meaning of arising out of is ambiguous and therefore AIG must defend. 
The court noted that in a different coverage of the umbrella policy there is an exclusion for damages "arising out of, or in any way involving, directly or indirectly, any sexual misconduct."  The exclusion applicable to the defamation claim did not include that specific language.  Since every word in an insurance contract must be presumed to have meaning, the less specific language in the applicable exclusions must be interpreted as requiring a closer connection between the alleged defamation and the alleged sexual assaults. 
The court added that the phrase arising out of is not inherently ambiguous, and that its holding is limited to this case, where the ambiguity question is close to begin with and where a similar exclusion in the same policy was more broadly worded. 

Thursday, June 7, 2018

U.S. District Court weighs in on innocent coinsured doctrine

Massachusetts Lawyers Weekly quoted me in an article about Shepperson v. Metropolitan Prop. & Cas. Ins. Co., 2018 WL 2324089 (D. Mass.), in which the United States District Court for the District of Massachusetts addressed the innocent coinsured doctrine.  That doctrine applies to property policies that insure more than one person.  If one of them commits an intentional act that causes damage to the insured property, that insured is not covered because damages from intentional acts are excluded.  Under the innocent coinsured doctrine, the other, innocent, insured person also cannot recover under the policy. 
In Shepperson, the court held that an insured homeowner cannot be denied coverage for a fire loss even if the fire was set by another household member who is an insured on the homeowner’s policy, as long as two conditions are met.  First, the homeowner did not participate in the arson.  Second, the household member was made an insured by the operation of the policy language, such as a definition of insureds that includes any relatives who are household members, rather than by a conscious decision to make them an insured listed by name on the policy.   
The case started in Massachusetts state court and was removed by the insurer to federal court.  The federal judge predicted that even though a 1951 decision of the Massachusetts Supreme Judicial Court held that there was no coverage for the innocent coinsured under similar facts, if the case were before the SJC today it would hold that there is coverage.  He based that prediction on changes to the statute regulating fire insurance policies and on Massachusetts Superior Court decisions.