Alleged Defamatory Statements do not Trigger Coverage if they only Provide Context, Says Kentucky District Court

National Fire Insurance Co. of Hartford v. Kosair Charities Committee, Inc. (W.D. Ky., May 5, 2016)

The underlying litigation involved a contract dispute between a hospital administrator and the policyholder, a charity. The policyholder initially sued the hospital administrator for breach of contract. In response, an affiliate of the hospital administrator filed a counterclaim against the charity containing claims for, in pertinent part, breach of contract, breach of fiduciary duty, unlawful businesspractice, intentional interference with gift, and unjust enrichment. Thereafter, liability and umbrella insurers sought a declaration that they did not have the duty to defend or indemnify the policyholder. The court first reasoned the defamatory statements alleged in the counterclaim did not provide grounds for coverage since they did not form the basis of the hospital administrator’s claims against the policyholder. With respect to the remaining claims, the district court held that they were all excluded due to certain exclusions.