MEDFORD v. LAVERGNE (W.D. La., Mar. 31, 2010)

The plaintiff, Medford, is the CEO and Chairman of PIVoD Technologies, LLC (PIVoD). He filed suit against defendant Lavergne, a former manager of PIVoD, contending that Lavergne "commenced a campaign designed to undermine the integrity and credibility. . .of Medford in the eyes of PIVoD text membership and management." Specifically, Medford asserted that Lavergne disseminated certain e-mails containing false and unflattering information to various third persons and also made verbal comments intended to defame and embarrass Medford.

Lavergne answered the complaint and filed a third-party complaint against Twin City Fire Insurance Company alleging that Twin City issued a Directors & Officers liability policy to PIVoD under which Lavergne was entitled to indemnity and defense. Twin City contended that coverage did not exist by virtue of the Insured versus Insured exclusion.

The court stated that it was apparent that Medford and Lavergne both qualified as insureds under the policy. Accordingly, the insured versus insured provision was triggered, and there was no coverage for the defamation claims. While the court acknowledged the duty to defend is broader than the duty to indemnify, an insurer is certainly not obligated to furnish a defense if the complaint unambiguously excludes coverage as it did in the instant case.

Impact: This case is a perfect example of the exact type of spat the insured versus insured provision is intended to exclude. Here, it is apparent that the exclusion applied and the court properly determined that coverage did not exist for the purported defamation claims.

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