Davidson v. Cincinnati Insurance Co.

SULLIVAN, Judge,

dissenting.

The duty to defend is governed not only by the allegations of the complaint but by what the insurer might ascertain after reasonable investigation. Transamerica Insurance Services v. Kopko (1990) 3rd Dist., Ind.App., 559 N.E.2d 322; Cincinnati Insurance Co. v. Mallon (1980) 2nd Dist.Ind. App., 409 N.E.2d 1100. Underlying facts may result in a determination that there is no duty to defend. Barmet of Indiana, Inc. v. Security Insurance Group (1981) 1st Dist., Ind. App., 425 N.E.2d 201. Thus, where the investigation would disclose that a claim is unmistakably not within the coverage, no defense will be required. Heshelman v. Nationwide Mutual Fire Insurance Co. (1980) ist Dist.Ind.App., 412 N.E.2d 301.

If an insurer has the duty to defend any aspect of a suit it seems practical and appropriate for the defense to be made against all claims. It has been held, however, that where one cause of action is within coverage, but others may not be, the insurer has the duty to defend those causes alleged which are within the coverage. All-Star Insurance Corp. v. Steel Bar, Inc. (1971) N.D.Ind., 324 F.Supp. 160 (duty to defend based upon allegations of complaint); 14 Couch on Insurance, 2d Ed. § 51.47.

In any event, notwithstanding failure to investigate or inaccurate investigation, it may be said that an insurer refuses to defend at his own risk and may be liable for the costs of the defense. Utica Mutual Insurance Co. v. Ueding (1977) list *509Dist., 175 Ind.App. 60, 370 N.E.2d 373. Such liability does not necessarily extend to the cost of defending any and all allegations which may be made against an insured. The consequences for a wrongful failure to defend will extend only to those claims upon which there was a duty to defend. Budd v. Travelers Indemnity Co. (1987) C.A.6th, 820 F.2d 787.

As to that part of Hardin's complaint which alleges malicious prosecution without regard to the alleged bribery in the form of campaign contributions, investigation would have clearly revealed that the original lawsuit did not terminate in Hardin's favor. Such is an essential element in a malicious prosecution action. It was ascertainable and it is a fact that the case of Davidson v. Hordin, Memorandum Decision, Cause No. 52A02-8902-CV-44 terminated in favor of Davidson. That decision was certified and became final on June 28, 1990.

Admittedly, on October 13, 1988, at the time Hardin filed the suit which is the subject of the claimed duty to defend, that final appellate action had not taken place. Nevertheless, the action was still in Aeri at the time. As a matter of fact, it was still pending in the trial court. The hearing on Hardin's summary judgment motion did not even take place until October 14, 1988 and the judgment was not entered in Hardin's favor until November 18, 1988. Thereafter, Davidson's Motion to Correct Errors was overruled and the praecipe filed on January 80, 1989. In short, as of the date of Hardin's complaint which is the focus of the duty to defend, the matter had not terminated at all at the trial level let alone in Hardin's favor. For this reason, insofar as Hardin's complaint alleges malicious prosecution, an essential allegation was demonstrably false. The procedural facts are established by the record and Hardin may not successfully advance a contrary position. See Pepple v. Parkview Memorial Hospital, Inc. (1987) 3rd Dist., Ind.App., 511 N.E.2d 467, 470 (Sullivan, J. dissenting) off"d on trans. 586 N.E.2d 274; Hudson v. Hudson (1984) 2nd Dist.Ind. App., 484 N.E.2d 579; Cunningham v. Hiles (1982) 2nd Dist., Ind.App., 435 N.E.2d 49.

Perhaps it could be that Cincinnati had a technical duty to "defend" in order to bring the procedural facts to light, but at this point it is not necessary to retreat in time and require Cincinnati to file an appearance and defend Davidson as to all allegations in Hardin's complaint. It is adequate, legally as well as equitably, to remedy the situation by requiring Cincinnati to pay the cost of presenting that defense.

As to all the other allegations of the complaint, with the possible exception of the free-standing and wholly unsupported assertion that Davidson's conduct "slandered" Hardin (Record at 188), they are clearly tied to the allegations of making campaign contributions for the purpose of getting a favorable result in the litigation. Such conduct could not be reasonably construed to arise out of the conduct of Davidson's business whether we consider his business to be the practice of dentistry, the leasing of real estate, or any other possible business. Even the conduct which Hardin alleges as causing the slander is the giving of campaign contributions.

To the extent that Hardin alleges slander, the complaint is clearly specious. The assertion as noted, is necessarily premised either upon the contributions given to Smith, or Smith's judgment against Hardin, or a combination of both.

The campaign contributions, notwithstanding any arguable illicit purpose or goal, do not, without some communication defaming - Hardin, - constitute - slander. There is no hint of any such publication. The judgment entered by Smith may have been published in the sense that it became a matter of public record, but no slander may be inferred from that fact, even though it stated that Hardin was liable in damages to Davidson. Certainly no slander by Davidson, as opposed to Smith, is inferrable.

If slander were committed each time a law suit is filed and each time a judgment is entered, every litigation defendant and every judgment debtor would become an automatic slander plaintiff.

Furthermore, any coverage arguably giving rise to a duty to defend a slander claim *510under the Broad Form Liability Endorsement is restricted to "Advertising Injury" arising out of Davidson's "advertising activities". Record at 29. There is no hint that any of Hardin's alleged injuries resulted from advertising activities by Davidson. It requires unacceptably tortured reasoning to equate campaign contributions from Davidson with some advertising effort on his part. That Smith may have used campaign funds in part for advertising himself and his candidacy, is speculative. But in any event such activity could not be said to be the activity of Davidson. Quite to the contrary, it would seem that Davidson would have greatly preferred that those contributions not have become known to Hardin or to any other persons except those directly involved in the campaign itself.

I would reverse the summary judgment in Cincinnati's favor only to the extent that I would require it to pay Davidson's costs of pleading and presenting the "no favorable termination" defense to the malicious prosecution claim. See State Security Insurance Co. v. Globe Auto Recycling Corp. (1986) 141 Ill.App.3d 133, 95 IIl.Dec. 539, 490 N.E.2d 12; 15 Ind.L.Rev. 247 at 250. Because the other allegations are clearly not within the coverage, I would affirm the judgment in all other respects.