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Martinsville Corral, Inc. v. Society Insurance, 2018 WL 6566671 (7th Cir.)

An Indiana restaurant subscribed for satellite TV service under a residential subscription rate. The satellite provider sued the restaurant by contending that the restaurant’s display of the satellite TV services in a commercial establishment, but at a residential rate, violated various federal statutes. The restaurant sought insurance coverage from its general liability insurer pursuant to an endorsement that provided coverage for “damages resulting from a ‘wrongful act’ to which [the policy] applies.” The policy defined “wrongful act” to include “libel, slander, invasion of privacy, defamation or humiliation.” The restaurant contended that the claims in the lawsuit impaired the satellite provider’s goodwill and reputation and constituted a “wrongful act.”

The district court granted summary judgment to the insurer finding that the definition of “wrongful act” was not satisfied. On appeal, the Seventh Circuit affirmed. Specifically, the Seventh Circuit determined:

[T]here is no reasonable interpretation of the [satellite company’s] complaint where it could arguably fall within the category of libel, slander and defamation. [The satellite company’s] complaint alleged that [the restaurant] damaged [the satellite provider’s] goodwill by showing its programming without the correct subscription fee. [The satellite company’s] complaint make no allegations that [the restaurant] made any false, defamatory statement about [the satellite provider]. [The satellite provider’s] actions did not include allegations that [the restaurant] made any kind of statement at all.

This decision is helpful in further understanding when coverage may be available for alleged defamation cases.