The Illinois Appellate Court overturned a trial court’s decision that allowed for Farmers Insurance to get out of its contractual obligation to pay for our client’s successful defense of a meritless libel suit. When a business or homeowner is sued for libel, they may not realize it but their CGL business insurance policy or homeowners insurance policy often plainly provides for coverage of libel, defamation and slander suits. Most insurance carriers stand behind their insureds and honor the obligation to pay for the defense, even when the allegations are ugly. That is what happened for Bill Cosby who used his homeowners’ insurance policy to defend against libel suits brought by women when he denied drugging and raping them. If a carrier is willing to defend Cosby it should defend its insureds when they are wrongfully sued for libel simply for exercising their First Amendment free speech rights by posting a negative review on Yelp or stating a strongly held position at work that they don’t like how their supervisor treats them. After all, we pay for insurance policies to protect us even when we make a mistake.
Farmers spends millions of dollars on television advertising claiming that it will stand behind its insureds when they make every conceivable mistake; it never advertises that it will attack its own insureds, place all the blame on them and refuse to honor the express provisions of its form homeowners insurance policy which contains a standard provision to defend homeowners sued for libel.
Given Farmers’ advertisements, our client never imagined that Farmers would betray and attack him as opposed to paying for his defense of meritless libel suit.
However, much to our client’s chagrin and surprise, Farmers refused to stand behind him when he made the “mistake” of allegedly criticizing his former supervisor by photoshopping her photograph onto a course flyer dealing with how to handle problem employees. Farmers wouldn’t honor its obligation to defend him in the libel suit even though it was obvious, as the federal court later found, that he hadn’t committed the tort of libel.
Our client’s former supervisor sued him for libel in federal court, even though he hadn’t made a single false statement about her. We outlined our plan to Farmers on how we intended to obtain immediate dismissal of the case. Farmers told us to go ahead with the defense but didn’t start paying our client’s fees and costs. After our client fronted the tens of thousands of dollars in fees and costs, we obtained dismissal of the case in a few months.
But Farmers didn’t celebrate that result. Farmers turned around and sued our client. It attacked him for engaging in “alleged misconduct” — which simply amounted to the conduct alleged in the meritless libel claims. Farmers claimed that this purported alleged misconduct allowed it to escape its obligation to pay for his successful defense. Farmers sued it’s own insured, even though the insurance policies which our client paid dutifully for years provided for libel coverage. Farmers exploited self-serving and contradictory language it had drafted into its policies along with “Catch 22” policy exclusions, such as the intentional acts exclusion and business activity exclusion (which plainly did not apply ) to claim that it had a right to refuse to pay for our client’s defense. The lawsuit against our client contained allegations of negligence and reckless conduct so the intentional acts exclusion didn’ apply. Our client clearly had allegedly posted the flyer with his former supervisor’s photograph photoshopped onto it for personal non-business reasons and thus the business activity exclusion did not apply.
We counter-sued claiming that Farmers owed a duty to pay for the defense under the clear-cut language of the policy and that it had engaged in bad faith denial of coverage. When the trial court flouted clear-cut Illinois law and construed the policy in favor of Farmers as opposed to in favor of the insured and found that Farmers didn’t have to pay for the defense buying into Farmers’ misinterpretation of the policy language and exclusions we appealed. Although the Appellate Court did not agree with us that Farmers engaged in bad faith conduct, it did agree that Farmers breached its duty to defend our client and with our reading of the policy. Ironically, Farmers forced our client to spend many more years to require it to honor its duty to defend him than the few months it took us to obtain dismissal of the meritless libel suit.
You can review the full Appellate Court decision finding that Farmers breached its duty to pay for our client’s successful libel defense here.
You can also review the federal court decision finding that our client did not defame his supervisor here.
We are committed to standing up for our consumer and business clients in the trial and appellate courts and at the negotiating table. We will take our clients cases to the Appellate Court or Supreme Court when needed. We have argued cases before the federal appeals courts and obtained en banc rehearings and have handled cases that have gone to the Illinois and United States Supreme Courts. We have handled many insurance policy coverage disputes to ensure that the carriers pay for a wide variety of suits faced by our clients, including defamation cases, class actions and many types of statutory and tort claims including consumer fraud, and malicious prosecution suits.
Conveniently located in Chicago, Wilmette and Elmhurst, Illinois, we have obtained wins for consumer and business clients in prosecuting or defending defamation, internet defamation, and cyber smear cases for clients from all over the country in courtrooms throughout Illinois and the Chicago area. To schedule a consultation with one of our Oak Brook and Naperville defamation, libel or slander lawyers, you can contact us online or give us a call on our toll-free number at 630-333-0333 or locally at (630) 333-0333.