In the

United States Court of Appeals

For the Seventh Circuit

No. 18-1945

MARTINSVILLE CORRAL, INC., doing

business as MARTINSVILLE TEXAS

CORRAL, et al.,

Plaintiffs-Appellants,

v.

SOCIETY INSURANCE,

Defendant-Appellee.

Appeal from the United States District Court for the 

Southern District of Indiana, Indianapolis Division.

No. 1:16-cv-02487-TWP-MPB — Tanya Walton Pratt, Judge.

ARGUED NOVEMBER 5, 2018 — DECIDED DECEMBER 13, 2018

Before BAUER, ROVNER, and ST. EVE, Circuit Judges.

BAUER, Circuit Judge. Martinsville Corral, Inc. d/b/a

Martinsville Texas Corral, Victor A. Spina, and William Spina

(collectively, “MCI”), held a business owners insurance policy

with an “Employment-Related Practices Liability Endorse-
2 No. 18-1945

ment” (“Endorsement”) from Society Insurance (“Society”).

When DirecTV sued MCI for publicly displaying its programming in MCI’s two restaurants without paying the commercial

subscription rate, Society denied MCI’s claim. MCI sued

Society for coverage, and the district court granted summary

judgment for Society. MCI appeals the summary judgment

order, limiting its appeal to the denial of coverage under the

Endorsement only. For the following reasons, we affirm. 

I. BACKGROUND

Martinsville Corral, Inc. owns two Texas Corral restaurants

in Indiana. Victor A. Spina and William Spina are both Indiana

residents, and each own 50% of Martinsville Corral. Society is

an insurance company with its principal place of business in

Wisconsin. With the parties diverse and the amount in controversy exceeding $75,000, the district court exercised diversity

jurisdiction pursuant to 28 U.S.C. § 1332(a).

On December 6, 2013, Society issued an insurance policy to

MCI that provided general business liability coverage. MCI

also purchased additional coverage under an “Employment-Related Practices Liability Endorsement.” The Endorsement requires Society to cover MCI for “damages resulting

from a ‘wrongful act’ to which [the Policy] applies.” The

Endorsement defines “wrongful act” to include, in relevant

part, “[l]ibel, slander, invasion of privacy, defamation or

humiliation.”

On January 26, 2015, DirecTV, LLC filed two lawsuits

against MCI pursuant to the Cable Communications Policy

Act of 1984, 47 U.S.C. § 521, et seq. The complaints alleged that

MCI displayed DirecTV’s satellite television programming in
No. 18-1945 3

its restaurants, but paid only for a residential subscription and

not the higher commercial subscription rate. DirecTV claimed

it was damaged by MCI’s actions because “(a) DIRECTV has

been denied subscription fees for commercial use of its

Satellite Programming; (b) DIRECTV's sales revenues have

been reduced through Defendants’ unfair competition;

(c) DIRECTV’s propriety rights in the Satellite Programming

have been impaired.” DirecTV further asserted that its

“goodwill and reputation have been usurped” as a result of

MCI’s violations of the CCPA, while MCI gained unjust profits

and goodwill by displaying DirecTV’s programming without

paying the commercial rate.

Taking the position that DirecTV’s claims for impairment

of its goodwill and reputation constituted the “wrongful acts”

of libel, slander or defamation under the Endorsement, MCI

requested Society to defend the suit and provide indemnification. Society denied coverage and refused to indemnify MCI.

DirecTV ultimately dismissed its suit, but not before MCI

incurred over $75,000 in expenses defending against it. 

MCI filed a complaint against Society for breachof contract.

Society counter-claimed seeking a declaratory judgment that

there was no coverage. MCI and Society filed cross-motions for

summary judgment. The district court granted summary

judgment to Society. MCI’s appeal is limited to whether

Society properly denied coverage under the Endorsement for

what MCI asserts is a defamation claim.
4 No. 18-1945

II. ANALYSIS

We review the district court’s grant of summary judgment

de novo, drawing all reasonable inferences in favor of the party

opposing the motion. Simmons v. Chicago Bd. of Educ., 289 F.3d

488, 491–92 (7th Cir. 2002). Summary judgment should be

granted “if the movant shows that there is no genuine dispute

as to any material fact and the movant is entitled to judgment

as a matter of law.” Fed. R. Civ. P. 56(a). Rule 56 “mandates

the entry of summary judgment, after adequate time for

discovery and upon motion, against a party who fails to make

a showing sufficient to establish the existence of an element

essential to that party’s case, and on which that party will bear

the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S.

317, 322 (1986). “Summary judgment is appropriate when no

material fact is disputed and the moving parties are entitled to

judgment as a matter of law, meaning that no reasonable jury

could find for the other party based on the evidence in the

record.” Carman v. Tinkes, 762 F.3d 565, 566 (7th Cir. 2014).

Society asks this court to apply the doctrine of issue

preclusionagainstMCI based on Indiana state courtjudgments

entered against William Spina and Victor Spina in lawsuits

against their respective homeowner insurance providers.

William and Victor Spina each sought coverage on the same

basis that coverage is sought here—that DirecTV was seeking

damages for libel, slander, or defamation. In general, “issue

preclusion bars subsequent litigation of the same fact or issue

that was necessarily adjudicated in a former suit.” Miller

Brewing Co. v. Ind. Dep’t of State Revenue, 903 N.E.2d 64, 68 (Ind.

2009). Both Spina appellants sought coverage by their homeowner insurance providers and sued their homeowner
No. 18-1945 5

insurance providers when coverage was denied. A final order

in favor of the insurance providers was entered in each case.

However, issue preclusion is an affirmative defense that must

be raised in a responsive pleading and Society failed to raise it

in the district court. See Fed. R. Civ. P. 8(c)(1). “We will not

affirm a judgment based on an affirmative defense raised for

the first time on appeal.” McDonald v. Adamson, 840 F.3d 343,

347 (7th Cir. 2016). Ergo, Society’s issue preclusion argument

must fail.

Turning to the district court’s opinion, an insurance policy

is subject to the same rules of interpretation as other contracts.

Eli Lilly & Co. v. Home Ins. Co., 482 N.E.2d 467, 470 (Ind. 1985).

If a policy’s language is clear and unambiguous, it must be

given its plain and ordinary meaning. Tate v. Secura Ins., 587

N.E. 2d 665, 668 (Ind. 1992). Additionally, an insurer must

defend a claim if the alleged facts “arguably fall within the

described offenses for which coverage is provided.” Ind. Ins.

Co. v. N. Vermillion Cmty. Sch. Corp., 665 N.E.2d 630, 635

(Ind. Ct. App. 1996).

MCI argues that Society is required to cover its costs and

expenses for the DirecTV action because DirecTV claimed

damages that fall within the scope of the Endorsement’s

coverage for libel, slander or defamation claims. To maintain

an action for defamation under Indiana law, a “plaintiff must

demonstrate (1) a communicationwithdefamatoryimputation;

(2) malice; (3) publication; and (4) damages.” Kelley v. Tanoos,

865 N.E.2d 593, 596–97 (Ind. 2007). Furthermore, “[a]ny

statement actionable for defamation must not only be defamatory in nature, but false.” Trail v. Boys and Girls Clubs of Nw.

Ind., 845 N.E.2d 130, 136 (Ind. 2006). 
6 No. 18-1945

The opinion in Vermillion, relied upon heavily by MCI, is

instructive. There, Earl Storms sued the school which employed him for terminating him in violation of his constitutional rights, and for several state law tort claims. Vermillion,

665 N.E.2d630, 631–32.The school’s insurance policy included,

in relevant part, coverage for lawsuits based on “the publication or utterance of a libel or slander or of other defamatory or

disparaging material.” Id. At 633. While Storms did not use the

terms libel, slander or defamation in his complaint, he did state

that the school “conspired to deprive [Storms] of his employment and sought to further damage him by impugning his

good reputation in the community” and that the school

“continued to deliberately and willfully cause him harm by

harrassing [sic] him and embarrassing him and subjecting him

to ridicule and humiliation by others.” Id. at 634. The Court

concluded that Storms’ allegations “fit within the broadly

written confines of ‘other defamatory or disparaging material’,

if not libel or slander.” Id. at 635. 

Unlike in Vermillion, there is no reasonable interpretation of

the DirecTV complaint where it could arguably fall within the

category of libel, slander or defamation. DirecTV’s complaint

alleged that MCI damaged DirecTV’s goodwill by showing its

programming without paying the correct subscription fee. In

DirecTV’s complaints, there are no allegations that MCI made

any false, defamatory statement about DirecTV. DirecTV’s

actions did not include allegations that MCI made any kind of

statement at all.
No. 18-1945 7

III. CONCLUSION

The district court correctly determined that the Endorsement did not provide coverage for the DirecTV action. The

district court’s order granting summary judgment to Society is

AFFIRMED.