The media and public were captivated in the summer of 2022 when Johnny Depp sued his ex-wife, Amber Heard, for defamation based on an article she wrote, which was published in The Washington Post, about her experience with sexual violence.
Amber Heard’s insurance case study
According to Reuters, the case was decided in June of 2022. The jury ruled in Depp’s favor, and Heard was ordered to pay $8.3 million. Heard then looked to her insurance company to pay the judgment. This is because Heard’s liability insurance covered defamation.
Many homeowners insurance policies include liability coverage for what is sometimes called a “personal injury.” “Personal injury” coverage can cover an insured against a variety of different torts and offenses.
Of the protections provided by “personal injury” coverage, “libel, slander or defamation of character” is often included.
However, just because an insurance policy covers more than bodily injury and property damage, and extends to defamation, that does not mean that coverage is always available when an insured is sued for defamation.
Whether defamation is covered will depend on the specific nature of the defamation, the specific language of the policy, and how a court interprets that language under applicable law.
For example, some homeowners policies only cover defamation that is caused by an “accident.” But defamatory statements are typically made very intentionally.
A defamation plaintiff usually has to prove:
- a false statement purporting to be fact
- published or communicated to a third person
- with legally sufficient fault
- resulting damage or harm to reputation.
Defamation is intentional, and courts have had to closely scrutinize the insurance policy
Because defamation is, by definition, most likely intentional, courts in various states have had to closely scrutinize both the policy language and the circumstances surrounding the alleged defamatory statements to evaluate coverage.
In 2007, a California appellate court in Stellar v. State Farm General Ins. Co. looked at a policy that covered defamation arising from an “accident.”
In the underlying defamation lawsuit, the plaintiff alleged that his brother had falsely informed Child Protective Services that the plaintiff had sexually molested his 8-year-old son, sent emails to people stating that the plaintiff was on drugs and had a gambling problem, and published posts on the internet referring to the plaintiff as a pedophile.
The court held that because the complaint alleged that this conduct was “willful and intentional, and arose from an evil improper motive,” no coverage was available.
However, this does not mean that coverage cannot be available for defamation. California courts have also acknowledged that it is possible for defamation to be negligent. As the California appellate court put it in 2003 in Uhrich v. State Farm Fire & Casualty Co., “an insured could be liable for defamation for negligently publishing a false defamatory statement.”
Other states follow similar approaches to California. For example, in 2002, in Iafallo v. Nationwide Mut. Fire Ins. Co., a New York appellate division court noted that “defamation does not occur by accident and thus does not fall within the coverage of the policy” that only covered liability arising out of an “accident.”
Similarly, Texas and Florida courts have found that “personal injury” coverage for defamation is not available if the allegedly defamatory statements were made voluntarily and deliberately, not inadvertently or by accident.
How can you “accidentally” defame someone?
One of the few examples of “accidental” defamation was discussed by a California District Court in 2015, in Grange Ins. Ass’n v. Lintott. Specifically, the Court used the factual background of the 1952 California Appellate case, Hellar v. Bianco, to provide an example of “accidental publication.”
In Hellar, a woman sued tavern owners, claiming that she was defamed by libelous statements a patron wrote about her on a wall in the men’s restroom. After the woman alerted the Tavern owners to the libelous statements, the owners failed to remove them. The woman asserted that the owners of the tavern should be held liable based on their inadvertent failure to remove the libelous statements.
The Court determined that a jury would need to evaluate whether the tavern owners were negligent.
However, given that the tavern owners’ responsibility for the defamatory statements was based only on their alleged negligence, the Grange Ins. Ass’n court reasoned that “Hellar demonstrates that defamation can be an accident where the publication of the statement, not its falsity, is accidental or unintended.”
Put another way, the court determined that negligently failing to remove defamatory words from a bathroom stall may be accidental.
While many courts have focused on whether defamation is an accident to determine whether coverage is available, coverage could still be available for defamation if the policy does not require an accident to trigger coverage for defamation.
What does a commercial liability policy cover?
Commercial general liability policies, for example, typically cover the “offense” of defamation, without requiring an accident. Making a publication with knowledge of its falsity is, however, excluded.
Coverage for defamation could also be limited by the application of state laws. For example, in California, California Insurance Code section 533 says that an insurance company cannot indemnify damages caused by an insured’s willful conduct.
It appears that Amber Heard’s insurance company feels that coverage is not available for the judgment entered against her in part because of this Insurance Code section. Heard’s insurance company has filed a declaratory relief lawsuit alleging that it has no duty to indemnify Heard because her defamatory conduct was allegedly willful, which cannot be indemnified under the California Insurance Code.
The insurance company’s argument seems to be premised on the heightened standard for defamation, which applies when the person who was allegedly defamed is a celebrity or politician.
Generally, a statement made about a public figure requires proof of “actual malice,” meaning the statement must have been made with knowledge that it was false or with reckless disregard of whether the statement was false or not.
According to the declaratory relief complaint against Heard, in the Depp v. Heard case, this heightened standard was applied. The jury determined that Heard’s statements were with actual malice and awarded punitive damages.
It remains to be seen how the coverage fight between Heard and her insurance company will resolve.
Coverage for defamation is highly dependent on the facts of the situation, the policy language at issue, and applicable laws. Before hitting “send” on an angry “reply all” email or posting that clever but derogatory social media post, maybe think about taking a minute to look at your liability insurance.
Amber Heard files million-dollar countersuit against insurer
Actress Amber Heard has filed a countersuit against her insurer, claiming that the company breached its contract when it refused to honor her $1 million liability policy for defamation claims, in relation to the infamous trial of her ex-husband Johnny Depp.
The Depp v. Heard trial ruled on allegations of defamation between the formerly married actors. Depp had filed a $50 million complaint of defamation against Amber, who in turn filed counterclaims worth $100 million.
The case was decided in June, when the jury ruled in Depp’s favor and Heard was ordered to pay $8.3 million.
At that time, Heard had taken a $1 million liability policy with New York Marine and General. The actress also had another insurance policy with Travelers Commercial Insurance Company, which covered libel claims of up to $500,000.
As reported by vt.co, Travelers initially sued New York Marine in 2021 for half of what it had spent defending Heard, believing the actress was able to choose her own attorneys, and accusing New York Marine of wanting to use cheaper attorneys.
Travelers also alleged that its lawyers were kept in the dark about certain legal proceedings.
It was due to Travelers’ suit that New York Marine filed its own lawsuit against Heard on July 08, 2022. According to New York Marine, it should not have to pay Heard because she was guilty of willful misconduct.
It added that California law says that insurers do not need to pay in the event of “willful acts.”
But Heard is striking back with her own lawsuit. According to court documents obtained by TMZ, Heard claimed that she had an “unconditional deal” with New York Marine and General for the insurer to pay her defense costs and judgments against her. The actress called her insurer’s refusal to pay a breach of contract.
AUTHORS: Erin Mindoro Ezra, Jamie L. Rice and Tyler J. Angelini – Reuters
Fact checked by Oleg Parashchak