Court Opinion

ID: 3016584
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:15:48.309137+00
Date Added: 2024-06-11T11:47:00.785518
License: Public Domain

___________

                                No. 95-2839
                                ___________

RELIANCE INSURANCE COMPANY,         *
a corporation,                      *
                                    *
     Plaintiff - Appellee,          *
                                    *   Appeal from the United States
     v.                             *   District Court for the Western
                                    *   District of Missouri
SHENANDOAH SOUTH, INC.,             *
GARY SNADON, RICHARD GALLAGHER, *
EUGENE BICKNELL and C. WAYNE    *
NEWTON,                             *
                                *
      Defendants - Appellants.      *

                                ___________

                   Submitted:   January 12, 1996

                       Filed:   April 19, 1996
                                ___________

Before BEAM and MORRIS SHEPPARD ARNOLD, Circuit Judges, and JONES,* Senior
      District Judge.

JONES, Senior District Judge.

     Shenandoah South, Inc. and its officers and directors (hereinafter
collectively referred to as Shenandoah South), appeal a declaratory
judgment finding that the commercial general     liability policy issued to
it by Reliance Insurance Company (Reliance) does not provide coverage for
an action brought against it by Wayne Newton.       For the reasons stated
below, we affirm the district court.1

         *
      The HONORABLE JOHN B. JONES, Senior District Judge, United
States District Court for the District of South Dakota, sitting by
designation.
     1
     The Honorable Russell G. Clark, United States District Judge
for the Western District of Missouri, Southern Division.
                                     I.

     In the underlying action, entertainer Wayne Newton brought suit
against Shenandoah South and its officers and directors relating to
Shenandoah South's operation of the "Wayne Newton Theater" in Branson,
Missouri.    Newton alleges breach of contract, breach of implied covenant
of good faith and fair dealing, negligent mismanagement, and negligent
misrepresentation.   In essence, Newton claimed that he had been cheated by
Shenandoah South, both through deliberate acts intended to deprive Newton
of compensation he was due, and through Shenandoah South's incompetence in
running the theater.   Newton also claimed that his reputation was damaged
as a result of Shenandoah South's actions.
     The policy in question covers liability of the insureds2 for bodily
injury, property damage, personal injury, and advertising injury as those
terms are defined in the policy.   The parties agree that coverage does not
exist under the bodily injury or property damage portions of the policy.

     Shenandoah South asserts that Count III (negligent mismanagement) of
Newton's Second Amended Complaint is within the scope of coverage under the
personal and advertising injury provisions.3      Newton's Second Amended
Complaint alleges that:

           In promoting and operating a theater named after Newton,
     defendants necessarily have relied on his reputation and good
     will with the theater-going public.

             Defendants owed Newton a duty to operate and manage

     2
     Apparently there is no dispute that all persons and entities
named in the underlying action, and all defendants named in the
present declaratory action (save Newton) are insureds under the
policy.
         3
      The remaining counts pray only for compensation due Newton
under   the   contract   with   Shenandoah    South, allegations
unquestionably outside the scope of coverage.

                                    -2-
     the Theater in a manner consistent with good and reasonable
     management practices designed to and capable of producing a
     profit, upon which much of Newton's compensation depends.
     Defendants further owed Newton a duty to exercise reasonable
     care in the operation of the Theater so as to avoid injury to
     Newton's reputation. It was foreseeable that breach of these
     duties would result in injury to Newton.

                                        ***

           As a direct and proximate result of defendants' breaches,
     Newton has been injured in the form of lost compensation under
     the Agreement and damage to his reputation and good will in the
     community ... .

Newton's Second Amended Complaint ¶¶ 44, 45, and 47.

     It is Shenandoah South's position that these allegations of damage
to reputation, contained within the claim for negligent mismanagement, are
sufficient to trigger coverage, or at least a duty to defend, under the
policy issued by Reliance.      They further insist coverage exists based on
allegations in Newton's complaint that Shenandoah South "turned away
inquiries    from   tour   operators   anxious   to   purchase   tickets   for   1994
[performances] by falsely claiming they had not yet received Newton's 1994
schedule."    Newton's Second Amended Complaint ¶ 12.

     After Shenandoah South advised Reliance of this litigation, the
current declaratory action was commenced by Reliance.        The issue facing the
district court and this court on appeal is whether coverage under the
Reliance policy extends to the claims made in the Newton lawsuit.          On cross
motions for summary judgment, the district court found that it did not.

                                        II.

     We review the district court's grant of summary judgment de novo,
applying the same standards and affirming only when the

                                        -3-
record shows that there is no genuine issue of material fact and the moving
party is entitled to judgment as a matter of law.                Fed. R. Civ. P. 56(c);
Johnson v. Group Health Plan, Inc., 994 F.2d 543, 545 (8th Cir. 1993).                  The
interpretation and construction of insurance policies is a matter of law,
and therefore, issues involving the duty to defend are particularly
amenable to summary judgment.        First Southern Ins. Co. v. Jim Lynch Ent.,
Inc., 932 F.2d 717, 719 (8th Cir. 1991).

                                         III.

     When faced with issues of insurance coverage, courts under Missouri
law compare the allegations of the underlying complaint to the language of
the insurance policy.         Benningfield v. Avemco Ins. Co., 561 S.W.2d 736
(Mo.App. 1978).        "The insurer owes no duty of defense where ... the
allegations    of     the   claimant's   petition    and     the    insurance    contract
demonstrate that coverage does not apply."                 Id.     If the petition or
complaint against the insured alleges facts not within the coverage of the
insurance policy, no duty devolves upon the insurer.               Steve Spicer Motors,
Inc. v. Federated Mutual Ins. Co., 758 S.W.2d 191, 193 (Mo. Ct. App. 1988).
The duty to defend is triggered if there exists facts, known or which
should   be   known    by   the   insurer,   which   could    potentially       bring   the
underlying claim within coverage.        Farm Bureau Town & Country Ins. Co. v.
Turnbo, 740 S.W.2d 232 (Mo. Ct. App. 1987).                Any uncertainty as to the
policy's coverage should be decided in favor of the insured.                    Howard v.
Russell Stover Candies, Inc., 649 F.2d 620, 621 (8th Cir. 1981).

     With this background, we must examine the allegations in the Newton
complaint to determine if they allege a claim within the personal injury
or advertising injury coverages in the liability policy.              Both the personal
injury and advertising injury coverages in the liability policy define the
covered injuries, inter alia, as injury arising out of "Oral or written
publication of material that

                                         -4-
slanders or libels a person ... or disparages a person's ... goods,
products, or services."     Shenandoah South is essentially arguing that
Newton's complaint sounds, at least in part, in some type of defamation.

     Under Missouri law, defamation or disparagement actions brought by
public figures4 require a showing of the following elements:
     (1) that the defendant (Shenandoah South) published5 a statement
which plaintiff alleges to be defamatory;
     (2) that the statement was false;
     (3) that the defendant published the statement either with knowledge
of its falsity or with reckless disregard for whether it was true or false
at a time when defendant had serious doubts as to whether it was true;
     (4) the statement tended to deprive the plaintiff of the benefit of
public confidence and social associations;
     (5) that the statement was heard by others; and
     (6) plaintiff was thereby damaged.

Klein v. Victor, 903 F. Supp. 1327, 1330 (E.D. Mo. 1995), citing Missouri
Approved Instructions, § 23.06(2).

     As the elements suggest, any defamation action requires a defamatory
publication,   an   allegation   wholly    absent   from   Newton's   negligent
mismanagement claim.   A person's reputation can be damaged in many ways,
only one of which is by slander or disparagement.          The policy provides
coverage for damages resulting from the "oral or written publication of
material that slanders or

         4
       There is no question Wayne Newton is a public figure for
purposes of defamation law. 50 Am Jur 2d., Libel and Slander § 87.

     5
      In defamation actions a "publication" is the communication of
defamatory matter to a third person. Dvorak v. O'Flynn, 808 S.W.2d
912, 916 (Mo.App. 1991).

                                     -5-
libels a person ... or disparages a person's goods, products or services."
Negligent mismanagement of the "Wayne Newton Theater" by Shenandoah South
may damage Wayne Newton's reputation and good will, but it clearly does not
libel or slander Newton or disparage his services, and therefore is not
covered by Reliance's liability policy.

      Regarding     the    alleged   statement    attributed      to   Shenandoah    South
personnel    that   they    had   not   yet   received   Newton's      1994    performance
schedule, this similarly cannot form the basis for coverage under the
policy.   When allegedly defamatory publications are claimed to have damaged
a person in his or her business, trade, or profession,                   "the words used
must impute a lack of knowledge, skill, capacity, or fitness to perform
one's duties; or fraud, want of integrity, or misconduct in the line of
one's calling.      More specifically, to be actionable the allegation must
strike at a person's professional competence."             Nazeri v. Missouri Valley
College, 860 S.W.2d 303, 311 (Mo. 1993) (en banc) (citations omitted).                 The
statement, taken in context and given its plain and ordinarily understood
meaning, Id., simply does not rise to the level of culpability required in
a   defamation    action.      Far   from     implying   fraud,   want    of    integrity,
misconduct, or lack of fitness to perform the duties as an entertainer, the
statement merely suggested that Newton's performance schedule was not yet
available.    Even if falsely given, the statement does not as a matter of
law libel or slander Newton or disparage his services, and therefore is not
covered by Reliance's policy.            Klein v. Victor, 903 F. Supp. at 1330
(whether allegedly libelous words are defamatory is a question of law).

      Based on a review of the entire record, we conclude that Newton's
Second Amended Complaint does not allege facts which would bring the
conduct of Shenandoah South within the coverage of Reliance's comprehensive
general liability policy or create a duty to defend.

                                            -6-
                                   IV.

     The decision of the district court, granting Reliance's motion for
summary judgment and declaring that no coverage exists under Reliance's
liability policy for the claims made in Newton's Second Amended Complaint,
is affirmed.

     A true copy.

           Attest:

           CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

                                   -7-