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St. Paul Fire and Marine Insurance Co. v. United States Fire Insurance Co.

decided: July 30, 1981.

ST. PAUL FIRE AND MARINE INSURANCE COMPANY, APPELLANT
v.
UNITED STATES FIRE INSURANCE COMPANY, APPELLEE



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 79-03020)

Before Aldisert, Weis and Sloviter, Circuit Judges.

Author: Weis

Opinion OF THE COURT

The issue in this appeal is whether a claim against the insured for slander comes within an insurance policy endorsement that provides coverage for professional malpractice. The district court determined that language in the policy that extends protection only for bodily injury or property damage was applicable and, therefore, slander was not covered. We conclude that the definition of injury and damages contained in the malpractice endorsement, which is more favorable to the insured, controls and, accordingly, remand for the entry of a declaratory judgment establishing coverage.

St. Paul Insurance Company filed a complaint in the United States District Court for the Eastern District of Pennsylvania to obtain a declaratory judgment that the defendant, U. S. Fire Insurance Company, owes primary coverage for a claim of slander against their mutual insured, Dr. Robert A. Weisberg. After a bench trial, the district court entered judgment for the defendant.

The facts are largely undisputed. Dr. Weisberg was sued in state court by a professional associate, who alleged he had been slandered by the doctor during the course of a hospital board meeting. The St. Paul Insurance Company had issued an excess "umbrella" policy to Weisberg, and U. S. Fire had written the doctor's primary malpractice policy. St. Paul undertook defense of the case, but later tendered it to U. S. Fire, contending the latter was the primary carrier. St. Paul concedes that it owes coverage, but asserts it is excess only. U. S. Fire denies that its policy protects against slander, but admits that if coverage is due, it is primary. The construction of the U. S. Fire policy, therefore, is the narrow issue in this case.

An independent insurance agent sold the policy to Dr. Weisberg. It provides, by two endorsements attached to a general automobile liability policy, owners', landlords', and tenants' (OL&T) liability insurance and physicians' professional liability coverage. The premiums for each type of insurance are stated separately.

The OL&T liability insurance has "bodily injury liability" limits of $250,000-$500,000. This is shown on the face sheet of "Part Two," which recites, "This Declarations page and Coverage Part(s) with "Policy Provisions-Part One' completes the below numbered POLICY...." In the coverage part, the company agrees to

"pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of

Coverage A. bodily injury or

Coverage B. property damage

to which this insurance applies...."

In the general automobile liability policy, "Part One," under the heading "definitions," the policy provides, " "Damages' includes damages for death and for care and loss of services resulting from bodily injury and damages for loss of use of property...."

The malpractice section of the policy, like the OL&T insurance, is also contained in a separate endorsement. Under its terms, the insured is described as an osteopathic physician, ...


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