In Hardenbergh v. Patrons Oxford Ins. Co., --- A.3d ---, 2013 WL 3752665, (Me. July 16, 2013), the Supreme Judicial Court of Maine applied Maine law and held that the “business pursuits” exclusion in a homeowners policy excluded a defense obligation for a lawsuit alleging that the insured made defamatory statements in a trade publication that he edited, published, and owned.
The case arose out of a defamation complaint filed against the insured. Id. at *1. The complaint alleged that the insured was the editor, publisher, owner, and principal of Atlantic Northeast Rails & Ports, a trade publication. The complaint also alleged the he published defamatory statements in the publication’s newsletter and e-bulletin, as well as on its website. Id. Specifically, the complaint alleged that the insured “published false and defamatory statements about [the plaintiffs] including, but not limited to, those described in paragraph 12” of the complaint. Id. (emphasis added).
After receiving the complaint, the insured sought a defense under his homeowners policy. Id. at *1. The homeowners policy applied to “personal injury” including “injury arising out of . . . libel, slander or defamation of character.” Id. The policy, however, excluded coverage for “injury arising out of the business pursuits of any insured.” Id. (internal quotations omitted). Although the policy did not define “business pursuits,” it defined “business” to “include trade, profession or occupation.” Id. at *3. Determining that the “business pursuits” exclusion precluded coverage for the complaint’s allegations, the homeowners insurer declined to defend. Id. at *1.
Disagreeing with the insurer, the insured filed a declaratory judgment action seeking a defense and indemnity for the defamation complaint. Id. at *2. The trial court granted summary judgment on the duty to defend for the insured, concluding a duty to defend existed because the “including, but not limited to” language in the complaint, “could include statements [the insured] made in his individual capacity and outside the policy’s ‘business pursuits’ exclusion.” Id. at *2.
On appeal, the Supreme Judicial Court of Maine vacated the trial court’s ruling. Id. at *4. The court found that, even though the complaint alleged defamation arising from statements “including but not limited to” those specifically described in paragraph 12 of the complaint, it also alleged that all of the defamatory statements appeared in the insured’s trade publication, “which has a place of business and for which [the insured] is the ‘editor, publisher, owner and principal.’” Id. The court reasoned that “[s]tatements published in a trade publication by that publication’s ‘editor, publisher, owner and princip[al] arise out of that person’s ‘business pursuits.’” Id. Accordingly, no duty to defend existed because the allegations in the complaint fell within the “business pursuits” exclusion. Id.
The Hardenbergh decision addresses the “business pursuits” exclusion -- an exclusion found in most homeowners policies. It confirms that a court will not strain to find a defense obligation when a complaint’s allegations clearly fall within the scope of an exclusion that precludes coverage for an insured’s business pursuits or operations.