Florida Court Refuses To Enforce Employment Related Practices Exclusion Against Defamation Claim Under Coverage B
December 16, 2014
| Agents of America
In Khatib v. Old Dominion Insurance Co., 2014 Fla. App. LEXIS 19843 (Fla. DCA 1st Dist. Dec. 5, 2014), the Florida Court of Appeal held that Old Dominion Insurance Company (Old Dominion) did not have a duty to defend its insureds against a defamation claim. As background, the insureds, directors and officers First Coast Cardiovascular Institute (FCCI), filed suit against Dr. Majdi Aschi for fraud, negligently supplying false information, breach of contract, reformation, unjust enrichment, breach of fiduciary duty, and conspiracy. Dr. Aschi denied the allegations and brought a third-party defamation complaint, alleging that the insureds made baseless allegations against Dr. Aschi at an FCCI shareholders meeting, and each third-party defendant published defamatory statements to third parties.
The commercial general liability insurance policy provided that “personal injury” included “(d) Oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services.” However, the policy excluded “personal injury” arising out of “(c) Employment-related practices, policies, acts or omissions, such as … defamation ….”
The third-party defendant insureds argued that the exclusion was ambiguous as a matter of law because it totally negated the coverage afforded under the definition of “personal injury.” The court disagreed, recognizing that a defamatory statement could “arise out of a company’s business” while not being “employment related.” Nevertheless, the court recognized a theoretical possibility that the insureds’ statements could have been made to their staff members, referring physicians, and patients at a business-related conference or social event; these statements would arise out of the insureds’ business for insuring agreement purposes, while still not being “employment related.” Accordingly, the court concluded that the exclusion did not preclude a duty to defend.