MARTINSVILLE CORRAL, INC., doing business as MARTINSVILLE TEXAS CORRAL, et al. v. SOCIETY INSURANCE
No. 18-1945
United States Court of Appeals For the Seventh Circuit
ARGUED NOVEMBER 5, 2018 — DECIDED DECEMBER 13, 2018
Before BAUER, ROVNER, and ST. EVE, Circuit Judges.
Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:16-cv-02487-TWP-MPB — Tanya Walton Pratt, Judge.
I. BACKGROUND
Martinsville Corral, Inc. owns two Texas Corral restaurants in Indiana. Victor A. Spina and William Spina are both Indiana residents, and each own 50% of Martinsville Corral. Society is an insurance company with its principal place of business in Wisconsin. With the parties diverse and the amount in controversy exceeding $75,000, the district court exercised diversity jurisdiction pursuant to
On December 6, 2013, Society issued an insurance policy to MCI that provided general business liability coverage. MCI also purchased additional coverage under an “Employment-Related Practices Liability Endorsement.” The Endorsement requires Society to cover MCI for “damages resulting from a ‘wrongful act’ to which [the Policy] applies.” The Endorsement defines “wrongful act” to include, in relevant part, “[l]ibel, slander, invasion of privacy, defamation or humiliation.”
On January 26, 2015, DirecTV, LLC filed two lawsuits against MCI pursuant to the
Taking the position that DirecTV‘s claims for impairment of its goodwill and reputation constituted the “wrongful acts” of libel, slander or defamation under the Endorsement, MCI requested Society to defend the suit and provide indemnification. Society denied coverage and refused to indemnify MCI. DirecTV ultimately dismissed its suit, but not before MCI incurred over $75,000 in expenses defending against it.
MCI filed a complaint against Society for breach of contract. Society counter-claimed seeking a declaratory judgment that there was no coverage. MCI and Society filed cross-motions for summary judgment. The district court granted summary judgment to Society. MCI‘s appeal is limited to whether Society properly denied coverage under the Endorsement for what MCI asserts is a defamation claim.
II. ANALYSIS
We review the district court‘s grant of summary judgment de novo, drawing all reasonable inferences in favor of the party opposing the motion. Simmons v. Chicago Bd. of Educ., 289 F.3d 488, 491-92 (7th Cir. 2002). Summary judgment should be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Society asks this court to apply the doctrine of issue preclusion against MCI based on Indiana state court judgments entered against William Spina and Victor Spina in lawsuits against their respective homeowner insurance providers. William and Victor Spina each sought coverage on the same basis that coverage is sought here—that DirecTV was seeking damages for libel, slander, or defamation. In general, “issue preclusion bars subsequent litigation of the same fact or issue that was necessarily adjudicated in a former suit.” Miller Brewing Co. v. Ind. Dep‘t of State Revenue, 903 N.E.2d 64, 68 (Ind. 2009). Both Spina appellants sought coverage by their homeowner insurance providers and sued their homeowner insurance providers when coverage was denied. A final order in favor of the insurance providers was entered in each case. However, issue preclusion is an affirmative defense
Turning to the district court‘s opinion, an insurance policy is subject to the same rules of interpretation as other contracts. Eli Lilly & Co. v. Home Ins. Co., 482 N.E.2d 467, 470 (Ind. 1985). If a policy‘s language is clear and unambiguous, it must be given its plain and ordinary meaning. Tate v. Secura Ins., 587 N.E. 2d 665, 668 (Ind. 1992). Additionally, an insurer must defend a claim if the alleged facts “arguably fall 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).
MCI argues that Society is required to cover its costs and expenses for the DirecTV action because DirecTV claimed damages that fall within the scope of the Endorsement‘s coverage for libel, slander or defamation claims. To maintain an action for defamation under Indiana law, a “plaintiff must demonstrate (1) a communication with defamatory imputation; (2) malice; (3) publication; and (4) damages.” Kelley v. Tanoos, 865 N.E.2d 593, 596-97 (Ind. 2007). Furthermore, “[a]ny statement actionable for defamation must not only be defamatory in nature, but false.” Trail v. Boys and Girls Clubs of Nw. Ind., 845 N.E.2d 130, 136 (Ind. 2006).
The opinion in Vermillion, relied upon heavily by MCI, is instructive. There, Earl Storms sued the school which employed him for terminating him in violation of his constitutional rights, and for several state law tort claims. Vermillion, 665 N.E.2d 630, 631-32. The school‘s insurance policy included, in relevant part, coverage for lawsuits based on “the publication or utterance of a libel or slander or of other defamatory or disparaging material.” Id. At 633. While Storms did not use the terms libel, slander or defamation in his complaint, he did state that the school “conspired to deprive [Storms] of his employment and sought to further damage him by impugning his good reputation in the community” and that the school “continued to deliberately and willfully cause him harm by harrassing [sic] him and embarrassing him and subjecting him to ridicule and humiliation by others.” Id. at 634. The Court concluded that Storms’ allegations “fit within the broadly written confines of ‘other defamatory or disparaging material‘, if not libel or slander.” Id. at 635.
Unlike in Vermillion, there is no reasonable interpretation of the DirecTV complaint where it could arguably fall within the category of libel, slander or defamation. DirecTV‘s complaint alleged that MCI damaged DirecTV‘s goodwill by showing its programming without paying the correct subscription fee. In DirecTV‘s complaints, there are no allegations that MCI made any false, defamatory statement about DirecTV. DirecTV‘s actions did not include allegations that MCI made any kind of statement at all.
III. CONCLUSION
The district court correctly determined that the Endorsement did not provide coverage for the DirecTV action. The district court‘s order granting summary judgment to Society is AFFIRMED.