Opinion
No. 72846
FILED: May 26, 1998 Corrected Opinion: August 18, 1998
APPEAL FROM THE CIRCUIT COURT OF ST. LOUIS CITY, HONORABLE JULIAN L. BUSH.
Merle L. Silverstein, Mark E. Goodman, 7733 Forsyth, 4th Floor, Clayton, MO 63105, for appellant.
Karen L. Kendall, Suite 600, Bank One Building, 124 S.W. Adams St.; Peoria, IL 61602; Robert D. Rowland, Suite 100, 103 N. Main St., Edwardsville, IL 62025; Steven J. Hughes-One Boatmen's Plaza; 800 Market St., Ste. 2300, St. Louis, MO 63101, for respondent.
Kathianne Knaup Crane, P.J., concurring.
Mary Rhodes Russell, J., (author), James R. Dowd, J. (separate opinion), dissenting.
McCormack Baron Management Services, Inc. ("insured") appeals the entry of summary judgment in favor of American Guarantee Liability Insurance Company ("insurer") in a declaratory judgment action seeking interpretation of the personal and advertising liability coverage of a comprehensive commercial insurance policy. The trial court found that insurer had no duty under the insurance policy to provide a defense to insured in a lawsuit brought against it by a former employee, security guard. We affirm in that security guard's complaint for tortious interference with contractual relations did not constitute claim for injurious falsehood or disparagement, and therefore, the complaint did not constitute a claim for "personal injury" within meaning of the insurance policy.
Insured was engaged in the management of real estate development throughout the United States. It managed a housing project known as Lexington Village in Cleveland, Ohio. Insured purchased a comprehensive commercial insurance policy from insurer which provided liability coverage. The provisions of the insurance policy pertinent to the issues before us are:
COVERAGE B. PERSONAL AND ADVERTISING INJURY LIABILITY
1. Insuring Agreement.
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "personal injury" or "advertising injury" to which this coverage part applies. We will have the right and duty to defend any "suit" seeking those damages.
* * * * * * *
b. This insurance applies to:
(1) "Personal injury" caused by an offense arising out of your business, excluding advertising, publishing, broadcasting or telecasting done by or for you:
* * * * * * *
2. Exclusions.
This insurance does not apply to:
a. "Personal injury" or "advertising injury":
(1) Arising out of oral or written publication of material, if done at the direction of the insured with knowledge of its falsity;
* * * * * * *
SECTION V-DEFINITIONS
* * * * * * *
10. "Personal injury" means injury, other than "bodily injury" arising out of one or more of the following offenses:
* * * * * * *
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 . . . .
In February 1994, insured reported to the security guard service it employed at a housing project in Cleveland that a letter written by security guard constituted insubordination. As a result of the report, security guard was allegedly discharged from his job.
Security guard filed suit against his employer, the security guard service, and insured in Ohio. His complaint consisted of four counts, of which, only one was against insured. The count against insured was entitled "Tortious Interference with a Contractual Relationship." In this count, security guard alleged that he was an employee of a security guard service which insured retained to provide security at a housing project it managed. In early February 1994, security guard wrote a letter to his supervisor complaining about the conduct of another security guard. The supervisor showed the letter to the insured's property manager at the complex. The insured's property manager informed the supervisor that the letter constituted insubordination and asked that the security guard be removed from his post. Security guard alleged that the property manager's statement that his letter constituted insubordination, and her request that he be removed from his post constituted tortious interference with contract. Security guard further alleged that the insured, through the property manager, acted willfully, maliciously, and without justification. He stated that as a result of insured's report to his employer, he lost his employment, back pay, and fringe benefits.
Shortly after receiving security guard's petition, insured forwarded a copy to insurer, requesting that it defend the action and indemnify it against any judgment resulting from the suit. Insurer replied stating that inasmuch as the allegations of security guard's complaint did not meet the definitions of bodily injury, property damage, occurrence, or personal injury as defined by the insurance policy, his suit was not covered.
On July 1, 1996, insured filed its Petition in Equity for Declaratory Judgment, seeking a declaration that the insurance policy obligated insurer to provide a defense for the security guard's lawsuit, as well as obligated insurer to indemnify it against any loss, damage, or liability arising from the lawsuit. In its petition, insured alleged that under the terms of the insurance policy a "personal injury" included an injury arising out of an oral or written publication of material that slanders or libels or disparages a person's services. Insured's complaint further alleged that security guard's lawsuit, predicated upon a report that the security guard was guilty of insubordination, was a "personal injury."
Insured filed a motion for summary judgment contending that the insurance policy covered security guard's lawsuit. Insured claimed coverage under subparagraph (d) of the policy which defined a "personal injury" as an "[o]ral 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."
Insurer filed a response and its own motion for summary judgment, stating that it had no duty to indemnify or defend insured because security guard's complaint against insured was not a "personal injury" under the insurance policy. In order for paragraph (d) of the personal injury coverage to be triggered, insurer argued that the underlying suit filed by security guard would have to allege a cause of action for defamation. Insurer argued that because security guard's complaint alleged tortious interference with contract, rather than defamation, the allegations of the complaint did not fall within the definition of "personal injury" as defined by the policy.
Insured's motion for summary judgment was called, heard, and submitted to the trial court. The trial court issued its order and judgment denying insured's motion for summary judgment and granted summary judgment in favor of insurer. The trial court found that, under the policy, insurer owed no duty to defend insured in security guard's lawsuit, nor did insurer have any duty to indemnify insured for any liability arising from the lawsuit. This appeal followed.
Insurer's motion for summary judgment was not heard in that insured had not had thirty days within which to respond.
In its sole point on appeal, insured contends the trial court erred in denying its motion for summary judgment and in granting summary judgment in favor of insurer by finding that the insurance policy's provision "disparages a person's services" refers to the tort of disparagement of property or injurious falsehood. Insured states that the tort of disparagement or injurious falsehood requires that the tortfeasor make the statement with knowledge of its falsity. The policy issued to it, however, expressly excludes personal injuries "done by or at the direction of the insured with knowledge of its falsity." Insured essentially argues that the trial court could not have found "disparages a person's services" to refer to the tort of injurious falsehood because that tort requires the tortfeasor to make the statement with knowledge of its falsity, and the policy specifically excluded this type of statement. Insured contends that the parties could not have intended for the definition of personal injury to encompass the tort of disparagement or injurious falsehood because it would render the exclusionary clause meaningless.
We first note that part of insured's point on appeal alleges that the trial court erred in denying its motion for summary judgment. Ordinarily, the denial of a summary judgment is not a final judgment and, therefore, is not an issue for appeal.Gilmore v. Erb, 900 S.W.2d 669, 671 (Mo.App. 1995). This is true even if summary judgment is granted in favor of the other party at the same time. Clooney v. Pre-Paid Legal Services, Inc., 830 S.W.2d 566, 568 (Mo.App. 1992). In this case, however, insured's point may be construed as a challenge to the trial court's granting of summary judgment in favor of insurer. See, First National Bank of Annapolis, N.A. v. Jefferson Insurance Co. Of New York, 891 S.W.2d 140, 141 (Mo.App. 1995). We will review this case on that basis.
When considering appeals from summary judgment, we review the record in the light most favorable to the party against whom judgment was entered. ITT Commercial Finance Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). Our review is essentially de novo. The criteria on appeal for testing the propriety of summary judgment are no different from those which should be used by the trial court to determine the propriety of sustaining the motion initially. Id. The propriety of summary judgment is purely an issue of law. Because the trial court's judgment is founded on the record submitted and the law, we need not defer to the trial court's order granting summary judgment.Id.
Under Missouri law, an insurer's duty to defend is determined by comparing the policy language and the allegations of the petition in the action brought by the person injured. Bonner v. Automobile Club Inter-Insurance Exchange, 899 S.W.2d 925, 929 (Mo.App. 1995). If the complaint alleges facts which state a claim potentially or arguably within the policy coverage, there is a duty to defend. Id. Conversely, where the pleadings in a complaint fail to allege any basis for recovery within coverage of the policy, the insurer has no obligation to defend. McDonough v. Liberty Mutual Insurance Co., 921 S.W.2d 90, 93 (Mo.App. 1996).
The interpretation of the meaning of an insurance policy is a question of law. Killian v. Tharp, 919 S.W.2d 19, 21 (Mo.App. 1996). In construing an insurance policy, the words must be given their plain meaning, consistent with the reasonable expectations, objectives, and intent of the parties. Krombach v. Mayflower Insurance Co., Ltd., 785 S.W.2d 728, 731 (Mo.App. 1990). An insurance policy is designed to furnish protection; therefore, it will be interpreted to grant coverage rather than defeat it.Centermark Properties, Inc. v. Home Indemnity Co., 897 S.W.2d 98, 100-101 (Mo.App. 1995). Insofar as an insurance policy may be open to different constructions, the interpretation most favorable to the insured will be adopted. Moore, 912 S.W.2d at 533. This rule, however, does not authorize a perversion of language or the exercise of inventive powers for the purpose of creating an ambiguity when none exists. Id. Parties seeking to establish coverage under an insurance policy have the burden of proving the claim is within the coverage provided by the policy. State Farm Casualty Co. v. D.T.S., 867 S.W.2d 642, 644 (Mo.App. 1993).
The facts of this case are undisputed. Therefore, we are presented solely with the legal issue of the proper interpretation to be given the personal injury provision in the insurance policy, and whether the scope of the personal injury provision encompasses security guard's claim against insured.
The first step in our analysis is to determine what the provision "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" means. More precisely, we need to determine the meaning of "disparages a person's or organization's goods, products or services."
We have discovered no Missouri decision construing the disputed provision in a comprehensive commercial insurance policy. The majority of courts from other jurisdictions, however, have construed the identical phrase, or a similar one, in similar circumstances as referring to the tort of disparagement or injurious falsehood.
In Select Designs, Ltd. v. Union Mutual Fire Insurance Co., 674 A.2d 798 (Vt. 1996), the court held that an insurance policy providing personal injury coverage for "[o]ral 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" did not require the insurer to defend claims of breach of contract, tortious interference with contractual relations, breach of fiduciary duty by the former employee, unlawful destruction of commercial opportunity, and fraud. The court held that the term "disparagement," in the context of the insurance policy provision providing personal injury liability coverage for the offense of disparaging a person's goods, products or services, required a claim of "injurious falsehood" to be actionable. Id. at 804.
In Foxon Packaging Corp. v. Aetna Casualty and Surety Co., 905 F. Supp. 1139, 1145 (D.R.I. 1995), the court held that a liability insurance policy providing personal injury coverage for "a publication or utterance . . . of a libel or slander or other defamatory or disparaging material" did not require the insurer to defend a claim of intentional racial discrimination. The court found that the employer was not entitled to coverage under the personal injury provision of the policy because the underlying injury resulted from intentional discrimination, as opposed to the tort of disparagement. Id. at 1145. The court noted that disparagement was a legal cause of action similar to defamation and injurious falsehood, and that coverage did not extend to claims which merely made reference to allegedly libelous or disparaging statements as factual background. Id. at 1144-45.
In Lindsey v. Admiral Insurance Co., 804 F. Supp. 47 (N.D. Cal. 1992), the court held that a liability insurance policy providing personal injury coverage for "a publication or utterance of a libel or slander or other defamatory or disparaging material" did not require the insurer to defend a claim of sexual harassment. The court noted that the underlying complaint for sexual harassment did not seek damages for "disparagement" under California law because the term disparagement referred to the twin torts of trade libel and slander of title. Id. at 52. Because the underlying complaint did not implicate a cause of action for trade libel or slander of title, the complaint for sexual harassment did not constitute a claim for "personal injury" under the insurance policy. Id.
Missouri recognizes a tort of disparagement. In Cuba's United Ready Mix, Inc. v. Bock Concrete Foundations, Inc., 785 S.W.2d 649, 651 (Mo.App. 1990), the court stated that this tort is called by various names such as disparagement of property, slander of goods, commercial disparagement, and trade libel. The tort is now generally referred to as "injurious falsehood." Id. (citing Prosser and Keeton, The Laws of Torts, sec. 128, pp. 963-64 (5th ed. 1984)). The tort consists of the publication of false statements concerning the plaintiff, his property or business, which cause him pecuniary loss. Zippay v. Kelleher, 638 S.W.2d 292, 294 (Mo.App. 1981). The tort is applied chiefly in cases of disparagement of property, land, chattels or intangible things.Id.
The Restatement of Torts, Second, sec. 623A, p. 334 states as follows:
One who publishes a false statement harmful to the interests of another is subject to liability for pecuniary loss resulting to the other if
(a) he intends for publication of the statement to result in harm to interests of the other having a pecuniary value, or either recognizes or should recognize that it is likely to do so, and
(b) he knows that the statement is false or acts in reckless disregard of its truth or falsity.
We recognize that an action for injurious falsehood is similar in many respects to an action for defamation. Both involve the imposition of liability for injury sustained through the publication to a third party of a false statement affecting the plaintiff. The two torts, however, protect different interests. The action for defamation is to protect the personal reputation of the plaintiff, whereas the action for injurious falsehood is to protect the economic interests of the plaintiff against pecuniary loss. See, Restatement (Second) of Torts, sec. 623A, comment g (1977).
We find the phrase "disparages a person's or organization's goods, products or services" refers to the tort of disparagement or injurious falsehood. We reach this conclusion based upon the context in which the term is used, and because the policy specifically states that the injury must arise out of an offense of a oral or written publication of material which disparages a person's services. Further, the court in Select Design Ltd., construing identical policy language as here, held that the term disparagement required a claim for injurious falsehood. 674 A.2d at 804.
Having determined that the disputed policy language refers to the tort of injurious falsehood, the next issue to determine is whether the allegations contained in security guard's complaint are covered by the insurance policy. The insurance policy in question provides coverage for the "[o]ral 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." In his complaint, security guard alleged that the property manager's statement to his supervisor that his letter constituted insubordination comprised a claim for tortious interference with contract. We find insured's statement that security guard's letter constituted insubordination to be an opinion, rather than a statement of fact. Statements of opinion without more are not actionable. Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974). While statements in the form of opinions do not enjoy absolute protection as such, to be actionable such statements must be "reasonably read as anassertion of a false fact." Beverly Hills Foodland, Inc. v. United Food and Commercial Worker's Union, Local 655, 39 F.3d 191, 195-196 (8th Cir. (Mo.) 1994) (quoting Chapin v. Knight-Ridder, Inc., 993 F.2d 1087 (4th Cir. 1993) (emphasis in original)). Statements of fact can be true or false, but opinions are never "true" or "false" in the same sense as a statement of fact. 2 Harper, James and Gray, The Law of Torts, sec. 5.8, p. 66 (2d ed. 1986). An opinion can never be objectively proven true or false.Anton v. St. Louis Suburban Newspapers, Inc., 598 S.W.2d 493, 498 (Mo.App. 1980). According to the Restatement (Second) of Torts, sec. 566, a defamatory communication in the form of an opinion is not actionable unless it implies the allegation of undisclosed facts as the basis of the opinion. This principle also applies to the tort of injurious falsehood. Restatement (Second) of Torts, sec. 626, comment c. Because insured's statement was not a false statement of fact, nor could it be reasonably read as such, no valid claim for injurious falsehood has been stated.
See, e.g., Hoffman Co. v. E.I. DuPont de Nemours and Co., 202 Cal.App.3d 390, 248 Cal.Rptr. 384, 387 (Cal.App. 1 Dist. 1988) (If defendant's statements concerning plaintiff are opinions, cause of action for trade libel must fail).
Further, the complaint does not allege a cause of action for injurious falsehood as security guard made no allegation that insured's statement was false. In an action for injurious falsehood, the plaintiff must plead and prove that the statement is false. Restatement (Second) of Torts, sec. 623A, comment g (1977); Annbar Associates v. American Express Co., 565 S.W.2d 707, 707 (Mo.App. 1978).
See, Liberty Bank of Montana v. Travelers Indemnity Co. of America, 870 F.2d 1504, 1508 (9th Cir. (Mont.) 1989) (court held that insurer had no duty to defend under personal injury provision of insurance policy where pleadings did not contain allegation of falsehood); Aetna Casualty and Surety Co. v. First Security Bank of Bozeman, 662 F. Supp. 1126, 1132 (D. Mont. 1987) (holding that insurer was not required to defend claims for breach of implied covenant of good faith and fair dealing and for wrongful termination in that underlying complaint did not allege that the defendant made a false statement to a third party).
Coverage under the policy must be determined based upon the claim brought by security guard against insured. Security guard's claim is for tortious interference with contract and does not allege any cause of action for injurious falsehood or the tort of disparagement. Since the security guard's complaint did not allege disparagement, for purposes of the policy's personal injury coverage, insurer has no duty to defend. The trial court's grant of summary judgment in favor of insurer was proper.
The judgment of the trial court is affirmed.
Kathianne Knaup Crane, P.J., concurs.
James R. Dowd, J., dissents in separate opinion.
DISSENT
I respectfully dissent.
I disagree with the majority's reading of the insurance contract that provides coverage for a publication that "disparages a person's . . . services." The clear intent of the provision is to insure against a broad range of commercial speech that may cause damage to another. Yet the majority holds that in addition to stating a claim within the coverage provisions, the claim must sound in injurious falsehood, a tort not named in the contract. While I agree the provision encompasses the tort of injurious falsehood, the inclusive nature of the language makes it clear that the contract covers a broad range of conduct which could manifest itself in a number of distinct causes of action, including tortious interference with a contract.
The fact that security guard chose to plead tortious interference with a contract as opposed to the tort of "injurious falsehood" should not defeat coverage at this early juncture. That the disparagement may not even be a tort is a contractual recognition that the duty to defend is broader than the duty to indemnify. Bonner v. Automobile Club Inter-Insurance Exchange, 899 S.W.2d 925, 929 (Mo.App.E.D. 1995). In recognition of this principle, insurance companies in a variety of contexts routinely provide a defense even when a petition wholly fails to state a cause of action.
If it is established at trial that property manager made the statement in question with knowledge of its falsity, coverage could be denied pursuant to the contract's exclusion for personal injuries "arising out of oral or written publication of material . . . with knowledge of its falsity."
Unlike the other personal injuries designated in the contract, "publication of material that . . . disparages a person's . . . services" is directed towards conduct that could result in numerous different causes of action. Here, security guard has stated a cause of action based on a "publication" that has disparaged his services and caused him to lose his employment.
An insurance contract is designed to furnish protection; therefore it will be interpreted to grant rather than to defeat coverage. Centermark Properties, Inc. v. Home Indemnity Co., 897 S.W.2d 98, 100-01 (Mo.App.E.D. 1995). When a petition alleges facts which state a claim potentially or arguably within policy coverage, an insurer is under a duty to defend. Bonner, 899 S.W.2d at 929.
After lengthy analysis, the majority concludes that the provision in question only applies to the tort of injurious falsehood. However, only three Missouri cases in the last twenty-five years make more than a passing reference to the tort of injurious falsehood. See Cuba's United Ready Mix, Inc. v. Bock Concrete Foundations, Inc., 785 S.W.2d 649, 651 (Mo.App. S.D. 1990); Zippay v. Kelleher, 638 S.W.2d 292, 294 (Mo.App. E.D. 1981); Annbar Assocs. v. American Express Co., 565 S.W.2d 701 (Mo.App. 1978). Significantly, not one of these cases defines injurious falsehood in terms of disparagement of services or even implies that coverage for these claims might exist.
The majority apparently expects insured to realize the contract language is referring to the relatively unlitigated tort of injurious falsehood even though the contract fails to use this terminology. This is an unrealistic expectation. I would give the language its ordinary meaning. Cf. Boston Symphony Orchestra, Inc. v. Commercial Union Ins. Co., 545 N.E.2d 1156, 1157 (Mass. 1989). "Disparage" is defined as "to lower in esteem or reputation," "to diminish the respect for," or "to speak slightingly of." Webster's Third New Int'l Dictionary 653 (1965). Property manager's actions directly resulted in damage to security guard and would be commonly understood as disparaging security guard's services under any of these definitions. Had insurer intended to limit coverage to claims for injurious falsehood, it could have so stated in plain and unequivocal terms. An insurer is obligated to defend when a petition "alleges facts which state a claim potentially or arguably within policy coverage," Bonner, 899 S.W.2d at 929. I would hold that the contract potentially provides coverage for the injury alleged in security guard's complaint and that insurer was obligated to provide a defense.
I also disagree with the majority's conclusion that property manager's statement accusing security guard of insubordination is not actionable because it is an opinion as opposed to a statement of fact. Although the majority correctly notes that "a defamatory communication in the form of an opinion is not actionable unless it implies the allegation of undisclosed facts as the basis of the opinion," it erroneously applies this principle. Property manager's statement that security guard was insubordinate implies the allegation of undisclosed facts (e.g., security guard disobeyed the orders of his supervisor) as the basis of property manager's opinion. Had property manager expressed the facts on which she based her conclusion that security guard was insubordinate, her statement would be privileged. Property manager, however, has made no such disclosure. Accordingly, I would find that the statement was one of fact and therefore actionable.
According to security guard's complaint, property manager found him insubordinate on the basis of a letter he wrote to his supervisor. In the letter, security guard reported that another security guard, Carl Brathwaith, came to work intoxicated in violation of company policy on several occasions. Security guard, who was responsible for supervising Brathwaith, was forced to work shifts of up to 24 hours in a row when Brathwaith would come to work intoxicated. Brathwaith was never disciplined for violating company policy.
This result is supported by Illustration 3 of Restatement (Second) of Torts sec. 566, which provides: "A writes to B about his neighbor C: `I think he must be an alcoholic.' A jury might find that this was not just an expression of opinion but that it implied that A knew undisclosed facts that would justify this opinion."
Illustration 4 of Restatement (Second) of Torts sec. 566 provides an example of this situation:
A writes to B about his neighbor C: "He moved in six months ago. He works downtown, and I have seen him during that time only twice, in his backyard around 5:30 seated in a deck chair with a portable radio listening to a news broadcast, and with a drink in his hand. I think he must be an alcoholic." The statement indicates the facts on which the expression of opinion was based and does not imply others. These facts are not defamatory and A is not liable for defamation.
I would reverse the trial court's judgment.