Friday, April 8, 2005
In the matter of Westport Insurance Corporation v. Tuskegee Newspapers, Inc., Tuskegee Newspapers negligently failed to publish an announcement of a foreclosure notice requested by a local bank. The bank filed a complaint and the newspaper asked its insurer, Westport Insurance to defend it against the complaint pursuant to its policy. Westpost did so "under reservation of rights" and in 2003 filed an action for a declaratory judgment claiming that that "it owed Tuskegee neither a defense nor indemnification."
At the center of Westport's argument was the Errors and Omissions Endorsement, which read "[t]he coverage afforded by the Communications Liability portion of Section I, COVERAGE, is extended to include any negligent error, omission, misstatement or misleading statement by or with the permission of the NAMED INSURED or its subsidiary in matter which is uttered or disseminated..." Westport argued that coverage applied to materials actually printed in the paper and not to materials omitted. The trial court agreed and granted summary judgment to the insurance company. The newspaper, however, argued that "the word `matter', which is not defined in the Policy, should be read to refer to the newspaper in its entirety, thereby affording coverage to the wholesale omission of the legal notice, which is an `omission...in matter which is uttered or disseminated.'"
The appeals court went on to consider the appropriate manner of interpretation of such language under Alabama contract law. "When the contract at issue is an insurance policy, any ambiguity is `to be resolved in favor of coverage.'...Westport says that the language of the Errors and Omissions Endorsement is susceptible of only one reasonable interpretation, and under that interpretation, the Tuskegee Newspapers' omission of the foreclosure notice is not covered. This argument is based on the ideas that (1) the word `matter' must take identical meaning in both the communications liability provision and the errors and omissions provision; and that (2) `matter' means content actually printed in the Tuskegee News. We are persuaded by neither. As to the first, Westport's argument that simply because a contract must be read as a whole means that a particular word must be read identically wherever it is used in the contract is unsupported by Alabama law. Alabama law requires simply that an agreement `must be construed in its entirety...'[E]ven if we accepted Westport's argument that we must construe `matter' identically in each section... we would remain unpersuaded...For one thing, the word `matter' is an inherently flexible and imprecise term...Significantly, the word is nowhere defined in the Policy. Without definitions, we must give the words of the Policy `their customary and normal meaning.'...Because Westport's definition of `matter' is not the only meaning that term can reasonably be read to take, and because the Policy is still susceptible of more than one reasonable reading even if we give `matter' Westport's preferred meaning, we are constrained to conclude that th Policy is susceptible to the interpretations of both parties and therefore ambiguous. Under Alabama law, any ambiguity in an insurance policy is `to be resolved in favor of coverage.'..."
After further consideration of Westport's arguments the 11th Circuit "REVERSE[D] and REMAND[ED] with instructions to enter summary judgment for Tuskegee Newspapers." Read the entire opinion here.