District Judge William H. Pauley III


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The parties cross-moved for summary judgment in breach of contract and declaratory judgment action, seeking damages for defendant’s alleged breach of its commercial insurance policies and a declaration that defendant was obligated to defendant plaintiff in an underlying lawsuit. Defendant issued plaintiff primary and excess policies for losses from personal and advertising injury. The underlying suit alleged that plaintiff engaged in defamation and false advertising when it claimed that the underlying plaintiff’s company had terminated him as chairman and CEO for misconduct. The court granted plaintiff’s motion. The court first concluded that the offending statement was not an “advertising injury” because it was not made to promote plaintiff or its services but rather to state its position on the underlying events. However, the court held that the underlying statement constituted a “personal injury” covered by defendant’s policies, which was not excluded by the policies’ employment-related practices exclusion as there was no employment relationship between plaintiff and the underlying plaintiff, construing the exclusion to require the existence of an employment relationship between plaintiff and the injured party.