Erie Insurance loses battle over defamation coverage claims
Law360.com has reported that Maryland’s Court of Appeals set aside Erie Insurance Exchange’s win over policyholder David Springer in a coverage battle over defamation claims. Maryland’s highest court established a two-part test for determining whether insurance companies can apply exclusions in homeowner’s policies for business practices.
David Springer and Sovereign Funding Group were involved in a defamation lawsuit brought by J.G. Wentworth. The company claimed that Springer and Sovereign made defamatory statements on the websites jgw-sucks.com and jgwentworth-scam.com. According to the suit, Springer and Sovereign also wrote factually inaccurate stories in an attempt to lure business from J.G. Wentworth.
While Springer’s homeowners policy with Erie provided coverage for libel, slander and defamation; it also excluded personal injuries stemming from business activities.
“The allegations on the face of the J.G. Wentworth complaint were not sufficient to trigger the business pursuits exclusion and thereafter, to support the entry of summary and declaratory judgments on Erie’s behalf,” the high court stated.
Adopting similar two-part tests established by high courts in Kansas, Arizona and Montana; the Maryland Courts applied a test of continuity and profit motive. The court determined that J.G. Wentworth made conflicting statements in regards to Springer–claiming he was CEO of Sovereign. However state records determined that Sovereign was no longer a business entity.
Eventually Springer and J.G. Wentworth signed a joint stipulation agreeing to have the case dismissed with prejudice.
Sources:
http://www.law360.com/articles/552182/md-high-court-sets-2-part-test-for-biz-pursuits-exclusion
