Media liability insurers beware: policy covers loss to publisher for reprinting outside of policy
November, 2006
In Westport Insurance Co. v. Harvest House Publishers, Inc., 2006 WL 696295 (D. Or.), the U.S. District Court of Oregon recently held that a Media Liability Insurance Policy for Print and Electronic Publishers covers loss from reprinting outside the policy period of publications first printed during the policy period.
Westport sought a declaration that it had no duty to defend or indemnify Harvest House for an underlying libel action filed against Harvest House by a religious organization known as the Local Church. The District Court denied summary judgment to Westport and granted, in part, summary judgment to Harvest House, finding that Westport had a duty to defend and pay all defense costs.
A. Alleged Defamatory Statements
The underlying Complaint alleged that Harvest House made the purported defamatory statements about the Local Church in the Encyclopedia of Cults & New Religions, which described the beliefs and teachings of this religious organization. The Encyclopedia was first published in December 1999, and then reprinted in June 2000, March 2001 and March 2002. The underlying action was filed December 31, 2001, alleging that "within one year of the date of this Complaint, defendants published the encyclopedia" and the defendants made defamatory statements about the underlying plaintiffs in the publication. Harvest House tendered the defense to both Westport and National Casualty Company (Harvest House's subsequent media liability insurer), and both defended the libel case under a reservation of rights.
While the underlying case (presumably) was proceeding, Westport filed this action seeking a declaration of no coverage. The Westport policy at issue was in effect from October 29, 1999 to October 29, 2000, and Westport took the position that the actionable publication was outside its policy period. Harvest House counterclaimed that Westport had a duty to fully defend it, that the insurer's liability for defense costs was in addition to and not out of the policy limit of liability, and that Harvest House was entitled to be held harmless by Westport for any reduction in coverage claimed by National Casualty.
On cross-motions for summary judgment, Westport argued that the policy did not cover liability arising out of libel committed outside of the policy period and that the underlying Complaint sought recovery for acts committed after the expiration of the policy period – the parties did not "contemplate[] Media Liability Coverage in perpetuity." Harvest House contended that the media liability provisions cover liability arising out of libel committed through the publication of works first published during the policy period and that the underlying Complaint stated a claim for libel based on publication of the encyclopedia, which was indisputably first published during the policy period.
B. Covered Loss
Westport did not dispute, and the Court found, that the Complaint stated a claim for libel based on reprinting of the encyclopedia in June 2000, after the expiration of the Westport policy period. But the Court found that the policy plainly covered loss from reprinting outside of the policy for books first printed during the policy period. Citing to the policy, the Court held that "the policy covers the insured's loss sustained by reason of liability for damages for injury arising out of libel, ‘committed in the utterance or dissemination of matter' in books first published or printed during the policy period."
It was undisputed that Harvest House first published the encyclopedia during the policy period. The Court, therefore, rejected Westport's argument that a non-renewal provision indicated the parties' intent that the media liability provisions did not provide coverage for works not published, printed or distributed during the policy period. And the Judge concluded that Harvest House was entitled to a declaration that Westport is obligated to pay all defense costs enumerated in the Westport policy, subject to retention, and in addition to the policy limits of liability.
C. Hold Harmless
The Judge did not express any opinion on whether Harvest House was entitled to be held harmless by Westport for any reduction in coverage claimed by National Casualty on account of defense costs paid by National Casualty in the libel case. The Court concluded that National Casualty was not a party to this case and it was participating in the defense of Harvest House in the libel case under a reservation of rights. The Court held that because National Casualty was not a party, coverage was not established under its policy and Harvest House was, in essence, seeking an improper "advisory opinion" on that issue. The Court expressed no opinion as to whether or to what extent National Casualty may be liable to Harvest House or liable for contribution to Westport.
D. Conclusion
The Court found that Westport's Media Liability Policy covered the libel claim against Harvest House because the book containing the alleged libelous statement was first published during Westport's time on the risk, regardless of the fact that the actionable occurrence was outside the policy period. The interesting question left unresolved is the potential allocation, if any, between Westport and National Casualty, as the insurer on the risk when the reprinted version of the allegedly libelous publication was actually published. Presumably because National Casualty's policy was not directly at issue in these proceedings, the issue of allocation between the two insurers was not addressed. Whether the Court should apply a "time on the risk" versus an "injury in fact" type allocation method under a Media Liability Policy such as the one in question, appears to be an issue of first impression in Oregon.