When a business gets sued it looks to its various insurance policies for coverage and a defense.  But sometimes the insurance policy purchased does not fit the coverage sought.  That was the case in the Seventh Circuit where a restaurant company sought coverage for a claim brought by a television provider for damages when the restaurant used a non-commercial subscription to show programming on screens in the restaurant.

In Martinsville Corral, Inc. v. Society Insurance, No. 18-1945 (7th Cir. December 13, 2018), the policyholder restaurant group purchased a business liability policy, which included an Employment-Related Practices Liability Endorsement.  The endorsement covered wrongful acts, including libel, slander, invasion of privacy, defamation or humiliation.

The policyholder was sued by a television provider for violation of the Cable Communications Policy Act of 1984 for paying a residential subscription fee and not the higher commercial subscription rate causing it damages.  The allegations included that the provider’s goodwill and reputation had been usurped by the violation of the statute.  The policyholder asked the insurer to defend under the endorsement arguing that the claim for impairment of the provider’s goodwill and reputation came within the endorsement’s coverage for defamation and the like.  The insurance company denied coverage and this suit commenced.  The district court granted the insurance company’s motion for summary judgment that there was no coverage and this appeal ensued.

In affirming the grant of summary judgment in favor of the insurance company, the circuit court rejected the policyholder’s claim that the allegations in the complaint amounted to defamation under the endorsement. The court rebuffed the policyholder’s reliance on a case that required an insurer to defend a claim if the alleged acts arguably fell within the described offenses for which coverage is provided. Ind. Ins. Co. v. N. Vermillion Cmty. Sch. Corp., 665 N.E.2d 630, 635 (Ind. Ct. App. 1996).  While finding the case instructive, the circuit court stated that unlike that case, “there is no reasonable interpretation of the [provider] complaint where it could arguable fall within the category of libel, slander or defamation.”  The court noted that there were no allegations that the policyholder made any false, defamatory statement about the provider and, in fact, there were no allegations of any kind of statement at all.   Accordingly, the finding of no coverage was affirmed.