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# United States Court of Appeals For the Seventh Circuit

No. 18-1945

M ARTI N SVI L L E C ORR AL, I N C ., doing business as M ARTI N SVI L L E T E XAS C OR R AL, et al ., Plaintiffs-Appellants ,

v.

S O CI E T Y I N SUR

AN C E, Defendant-Appellee.

Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. N o. 1:16-cv-02487-TWP-MPB — Tanya Walton Pratt , Judge.

A RGUE D N OVE M

B E R 5, 2018

— D E C ID E D D E C E MB E R 1 3, 2018

Before B AUE R

, R OVN E R

, and S T

. E VE, Circuit Judges

. B AUE R , C irc uit Judge. Ma r tinsville Corral, Inc. d/b/a Martinsville T

exas Corral, Victor A. Spina, and William Spina (collectiv ely

, “MCI”), held a business owners insurance policy with an “Employment-Related Practices Liability Endorse-2 No. 18-1945

m e nt” (“Endorsement”) from Society Insurance (“Society”). When DirecTV sued MCI for publicly displaying its p rogramming in M CI’s tw o restaurants without p aying the commercial subscription rate, Society denied MCI’s claim. MCI sued Society for c ov erage, and the district court granted summary j u dgment for Society

. MCI appeals the summary judgment order , limiting its appeal to the denial of cov erage under the Endorsement only

. For the following reasons, w e affirm. I. BACKGROUND Martinsville Corral, Inc. o wns tw o T exas Corral r estaurants in Indiana. Victor A. Spina and William Spina are both Indiana residents, and each own 50% of Martinsville Corral. S ociety is
an insurance company w ith its principal p lace of business in Wisconsin. With the parties div erse and the amount in controv ersy exceeding $75,000, the district court exercised div e r s ity jurisdiction pursuant to 28 U.S.C. § 1332(a). On December 6, 2013, Society issued an insurance policy t o MCI that pr ov i ded general business liability cov erage. MCI also purchased additional c ov erage under an “Employment-Related Practices Liability Endorsement.” The Endorsement requires S ocie ty to cov er MCI for “damages resulting fr om a ‘ wrongful act’ to which [the P olicy] applies.” The Endorsement defi nes “wrongful act” to include, in r elev ant part, “[l]ibel, slander

, inv asion of priv acy

, defamation or humiliation.” On January 26, 2015, DirecTV , L L C filed tw o l awsuits against MCI pursuant to the Cable Communications Policy Act of 1984, 47 U.S.C. § 521, et seq
. The complaints alleged that MCI display ed DirecTV’s satellite television programming inNo. 18-1945 3
its restaurants, but paid only for a residential subscription and not the higher commercial subscription r ate. DirecTV claimed it w as damage d b y MCI’s actions because “(a) DIRECTV has b e e n denied subscription fees for commercial use of its Satellite Programming; (b) DIRECTV's sales re v e nues hav e been reduced through Defendants’ unfa ir competition; (c) DIR E CTV’s propriety rights in the Satellite Programming hav e been impaired.” DirecTV further asserted tha t its “goodwill and reputation hav e been usurped” as a result of MCI’s violations o f the CCP A, while M CI gained unjust profits and goodwill by displaying DirecTV’s programming without paying the commercial rate. T aking the pos ition that DirecTV’s claims for i mpairment of its goodwill and reputation constituted the “wrongful a cts” of libel, slander or defamation under the E n dor sement, MCI requested Society to defend the suit and p rovide indemnification. Society de nied cov erage and refused t o indemnify MCI. DirecTV ultimately dismissed its suit, but not before MCI incurred ov er $75,000 in expenses defending against it. MCI filed a complaint against Society fo r br e a ch o f contract. Socie ty c ounter-claimed seeking a declaratory judgment that there w as no cov erage. MCI and S ociety filed cross-motions for summary j u dgment. The district court granted summary judgm e nt to Society

. MCI’s a ppeal is limited to whether Society properly denied coverage under the Endorsement for what MCI asserts is a defamation claim.4 No. 18-1945
II. ANAL

YSIS W e review the district court’s grant of summary judgment de novo , drawing all reasonable inferences in fav or of the party opposing the motion. Simmons v
. Chicago Bd. of Educ. , 289 F .3d 488, 491–92 (7th Cir

. 2002). S ummary judgm e nt should be granted “if the mov ant shows that there is no genuine dispute
as to a ny material fact and the mov ant is entitled to judgment
as a matter of law

. ” Fe d. R. Civ

. P

. 56(a). Rule 56 “mandates the entry of summary judgment, after adequ a te time for discov ery a nd upon motion, against a party who fails to make

a showing sufficient to establis h the existence of an element essential to that party’s case, and on which that party will bear the burden o f proof at trial.” Celotex Co rp
. v
. Catrett, 477 U.S. 317, 3 22 (1986). “Summary judgment is appropriate when no material fact is d isputed and the moving parties are entitled t o judgment as a matter of law , meaning that no reasonable jury could find for the othe r party based on the evidence in the record.” Carman v. T

inkes , 762 F .3d 565, 566 (7th Cir

. 2014). Society a sks this court to apply the doctrine of issue p r eclusi o n a g a i n s t M CI based on In diana st a t e co u r t jud g ment s entered against William S pina and Victor Spina in l awsuits against their respectiv e homeowner insurance providers. William and Victor Spina each sought cov erage on the sam e basis that cov erage is sought h ere—that DirecTV w as seeking damages for libel, slander , or defamation. In g eneral, “issue preclusion bars subsequent litigation of the same fact or issue tha t w as 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 cov erage by their homeowner insurance providers and sued their h omeownerNo. 18-1945 5
insurance providers when cov erage w as denied. A final order in fav or of the ins ur a nce providers w as entered in each case. How ev er

, i ssue preclusion is an affirmativ e defense that must be raised in a responsiv e pleading a nd Society failed to raise it in the district court. See Fed. R. Civ

. P

. 8(c)(1). “W

e will n o t affirm a judgment based o n an affirmativ e de fe nse r aised for the first time on a ppe a l.” McDonald v
. Adamson , 840 F .3d 343, 347 (7th Cir

. 2 016). Ergo, Society’s i ssue preclusion argument must fail. T urning to the district court’s o pinion, 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 giv en i ts plain and or d inary meaning. T ate v
. Secura Ins. , 587 N.E. 2d 6 6 5, 668 (Ind. 1992). Additionally , an insurer must defend a claim if the allege d f a c ts “arguably fall within the described offenses for which cov erage is provided.” Ind. Ins. Co. v
. N. V

ermillion Cmty

. Sch. Corp. , 6 6 5 N.E.2d 630, 635 (Ind. Ct. App. 1996). MCI a rgues that Society is required to cov er its c os ts and expenses for the DirecTV a c tion because DirecTV claimed damages that fall w ithin the scope of the Endorsement’s
cov erage for l ibel, slander or defamation claims. T o m a intain
an action for defamation under Indiana law , a “plaintiff must d emo n st r a t e (1 ) a c o m mu ni c a ti o n w i t h d e f a m a t o ry i m p ut a ti o n; (2) malice; (3) publication; and (4) dama ges.” Kelley v
. T anoos , 865 N.E.2d 593, 596–97 (Ind. 2007). F ur thermore, “[a]ny statement a ctionable for defamation must not only be defamatory in natur e, but false.” T rail v
. Boys and Girls Clubs of Nw

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

e r m i l lion , relied upon heavily by MCI, is instructiv e. There, Earl Storms sued the s c hool which employ ed him for te r m ina ting him in violation o f his constitutional rights, and for sev eral state l aw tort claims. V ermil lion , 665 N .E.2d 6 3 0 , 6 3 1

–3 2

. Th e sch o o l ’s in sur a nce policy included, in rele v ant part, cov erage 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 depriv e [Storms] of his employment and sought to further damage him by im pu gning his good reputation in the community” a nd that the school “continued to d eliberately and willfully cause him harm by harrassing [sic] him and embarrassing him and subjecting him to ridicule and humiliation b y o thers.” Id

. a t 634. The Court concluded that Storms’ allegations “ fit within the broadly written confi n es of ‘other defamatory or disparaging material’, if not libel or slander.” Id . at 635. Unlike in V

ermillion , there i s no reasonable interpretation of the DirecTV complaint where i t could arguably fall within the category of libel, slander or defamation. DirecTV’s complaint alleged that MCI d amaged DirecTV’s goodwill by showing its programming without paying the correct subscription fee. In DirecTV’s complaints, there are no a llegations that MCI made any false, defama tory 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 tha t the Endorsement did not provide cov erage for the DirecTV action. The district court’s order granting summary judgment t o Society is AFFIRMED.