Opinion ID: 1985685
Heading Depth: 1
Heading Rank: 2

Heading: Property Damage and Personal Injury

Text: Plaintiffs next argue that its complaint presented a genuine issue of material fact as to whether the RMH complaint alleged property damage within the meaning of the policy. The policy provides coverage for property damage where it is caused by an occurrence. It defines occurrence to mean an accident, including continuous or repeated exposure to substantially the same general harmful conditions. It defines property damage to include either [p]hysical injury to tangible property or [l]oss of use of tangible property. Plaintiffs argue that they were alleged to have taken tangible property, that is, the customer list and customer artwork. They further argue that there is an issue of fact as to whether any injury to RMH was expected or intended and thus an accident. We hold that the RMH complaint does not allege an accident and therefore does not allege an occurrence as required for coverage. Accordingly, we do not reach whether the RMH complaint alleges a loss of use of tangible property. This case is controlled by our decision in City of Burlington v. National Union Fire Ins. Co ., In that case, the city was sued by wood chip suppliers for its electric generating plant. The suit alleged that the city failed to purchase the volume of wood chips called for in its contract with the suppliers and this failure had devastating economic impact on the suppliers. It sought damages on theories of breach of contract, economic duress, deceit, and the tort of insult and oppression. The city sought insurance coverage for the suit, arguing the complaint alleged an accident because the city did not expect or intend the resulting harm. 163 Vt. at 128, 655 A.2d at 721. Based on policy language virtually identical to that in the present case, the city had to show that the suppliers alleged an accident. We held that the city failed to make that showing: Here, it cannot be said that Burlington intended no injury to the plaintiffs.... Burlington intended or expected economic injury to the wood chip suppliers when it reduced its purchases from them. The distinction Burlington draws is unworkable and would result in a duty to defend in virtually any commercial contractual dispute. No doubt Burlington took the actions it did because of its economic interests in the electricity generation business. There is no reason that it, or more properly its managers, would have precise knowledge of the amount or nature of the damage it might inflict on others as a consequence of its business actions. To determine whether there is a duty to defend based on such knowledge is arbitrary, far afield from any common-sense definition of accident. Id. at 129, 655 A.2d at 722. The case for coverage is the same here as in National Union. The underlying complaint alleges that SDL and its officers induced Cousins to leave RMH, bringing with him as much proprietary information as possible. It alleges Cousins left and used the proprietary information to induce RMH's customers to break their contracts with RMH and enter into contracts with SDL. It alleges that SDL and its officers knew this was a sensitive time for RMH because of a private stock offering, and SDL hoped to use the Cousins information to put RMH out of business. Finally, it alleges Cousins fraudulently executed contracts for RMH for the purpose of switching them to SDL contracts. None of the alleged conduct constitutes an accident. The whole purpose of the alleged conduct is economic benefit to SDL at the expense of RMH. The fact that SDL and its officers may not know the extent of the harm that would result is irrelevant. Defendant had no duty to defend or indemnify based on a property damage theory, and summary judgment was appropriate. Plaintiffs' final contention is that coverage exists for personal injury. Specifically, plaintiffs argue that the complaint against them necessarily alleges that they disparaged RMH's products to take its customers away. Thus, they argue the complaint allegations fit within one of the offenses the policy considers part of personal injury: [o]ral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services. The policy covers personal injury only if it is caused by an occurrence, however, and the definition of occurrence is the same for personal injury and property damage. As a result, this contention again fails for want of an occurrence. Moreover, the RMH complaint does not allege that plaintiffs disparaged RMH's products or services. For plaintiffs to argue that Cousins necessarily disparaged the goods and services of RMH in soliciting business from RMH customers is to contend that all comparison-based advertising is actionable and that Cousins necessarily went over the line of protected commercial speech. Disparagement in this context does not simply mean comparing a competitor's product or service unfavorably with one's own, but must constitute an injurious falsehood to be actionable. W. Keeton, et al., Prosser and Keeton on the Law of Torts § 128, at 964 (5th ed. 1984). There were no such allegations in the RMH complaint. Affirmed.