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.