No Coverage for Contract Breach and Defamation Claims
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No Coverage for Contract Breach and Defamation Claims

A vendor sued a municipality for breach of contract, defamation and other negligence acts related to the council member’s responses after the vendor’s termination. A coverage dispute ensued with the directors and officers insurer arguing the policy excluded coverage for breach of contract, defamation, and mental anguish under its contractual liability exclusion. The insured countered that the plaintiff’s claims for negligence and non-contractual liability fell within a carve-out to the exclusion, restoring coverage when “such Insured would have been liable in the absence of such contract or agreement.” On appeal the Louisiana court sided with the insurer reasoning the tort claims stem from the contract [between the vendor and insured and would not have occurred “but for” the breach of contract.

Perniciaro v McInnis