Implicit allegations of defamation doesn't invoke a duty to defend
In Novell, Inc. v. Vigilant Insurance Company, the 10th Circuit affirmed defendant-appellee’s motion for summary judgment. Plaintiff-Appellant (Novell) was sued by another company (SCO) in Utah state court for slander of title. Novell requested Defendant-Appellee’s (Vigilant) defense in the slander action pursuant to a general liability insurance contract which required Vigilant to pay for any personal injury that Novell was obligated to pay. The Policy defined personal injury to include electronic, oral, written or other publication of material that libels or slanders a person or organization. Vigilant refused to defend because SCO’s asserted allegations would not constitute personal injury. Novell sought declaratory relief in state court. After both parties filed Motions for Summary Judgment, the Court granted summary judgment in favor of Vigilant. Novell appealed. The Court’s standard was whether the allegations, if proved, could result in liability under the policy. Novell asserted that SCO’s alleged facts in the slander of title cause of action implicitly asserted a claim for defamation and was thus subject to coverage under the insurance contract. Specifically, Novell argued the alleged statements concerning proper copyright ownership could give rise to a potential cause of action for defamation because it called into question SCO’s honesty and significantly harmed SCO’s business reputation. The 10th Circuit wasn’t persuaded and held that since SCO did not allege that Novell’s statements impeached SCO’s honesty, integrity , virtue, etc., then Novell’s contention that the allegations implicitly calls SCO dishonest is just” too great a stretch.” Although SCO’s complaint focused on a copyright ownership dispute and the complaint alleges injury to SCO’s business reputation, the absence of allegations of defamatory comments persuaded the court to affirm the trial court’s decision.
