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Privilege Underwriters Reciprocal Exchange v. The Hanover Insurance Group

United States District Court, S.D. Florida

January 19, 2018

THE HANOVER INSURANCE GROUP, d/b/a Massachusetts Bay Insurance Company, Defendant.



         THIS CAUSE is before the Court following a bench trial held over the course of one day on October 16, 2017. See ECF No. [43]. Prior to trial, the parties filed their Proposed Findings of Fact and Conclusions of Law. See ECF Nos. [25] and [26]. The Court has carefully considered the evidence presented at trial, the applicable law, and the parties' submission, and sets forth its relevant findings of fact and conclusions of law below.


         This case arises from a lawsuit filed in the Seventeenth Judicial Circuit in and for Broward County styled as Bradley J. Edwards, et. al. v. Alan M. Dershowitz (the “underlying lawsuit). See ECF No. [44-8]. In the underlying lawsuit, attorneys Bradley J. Edwards (“Edwards”) and Paul G. Cassell (“Cassell”) alleged defamation claims against Alan Dershowitz (“Dershowitz”). Id. It was alleged that, after Edwards and Cassell filed legal pleadings that referenced Dershowitz in an unrelated federal lawsuit, Dershowitz then “initiated a massive public media assault on the reputation and character” of Bradley and Cassell. Id. The parties in this case each insured Dershowitz under different policies during the time the allegedly defamatory statements were made. Privilege Underwriters Reciprocal Exchange (“PURE”) issued a homeowner's insurance policy to Dershowitz whereas The Hanover Insurance Group (“Hanover”) issued a business owner's insurance policy to Dershowitz. Eventually, the parties in the underlying lawsuit entered into a confidential settlement. Both PURE and Hanover contributed to the settlement. In this case, PURE filed a claim for equitable subrogation, seeking to recover the amount it contributed toward the settlement from Hanover.


         a. Stipulated Facts[1]

         In the underlying lawsuit, it was alleged that Dershowitz made defamatory statements from his home during an interview broadcast on international media outlets, including CNN. See ECF No. [24] at ¶ F. PURE issued a homeowners' policy to Dershowitz, which provides as follows: “if a claim is made or a suit is brought against an insured for damages because of personal injury . . . caused by an occurrence anywhere in the world to which this coverage applies, we will [p]ay up to the liability coverage limits shown on your Declarations for which an insured is legally liable.” Id. at ¶¶ A and D. The PURE policy defined “personal injury” to include injury arising out of defamation, libel or slander. Id. at ¶ D.

         Hanover issued a business owner's policy to Dershowitz. Id. at ¶ B. The Hanover policy provides that it “will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury, ' ‘property damage' or ‘personal and advertising injury' to which this insurance applies.” Id. at ¶ E. The Hanover policy further states that it applies to “‘personal and advertising injury' caused by an offense arising out of your business.”

         Both PURE and Hanover provided a defense and contributed to the eventual settlement of the underlying lawsuit under separate reservations of rights. Id. at ¶ C. Significantly, both the PURE and Hanover policies contained an “other insurance” provision. The PURE policy states:

         N. Other Insurance and Service Agreement

2. Any coverage under SECTION III - LIABILITY COVERAGE will be excess over other valid and collectible insurance except insurance written specifically to cover as excess over the limits of liability that apply in this policy.

Id. at ¶ G. The Hanover policy contains the following provision:

H. Other Insurance
If other valid and collectible insurance is available to the insured for a loss we cover under SECTION II- LIABILITY, our obligations are limited as follows:
a. Primary Insurance
This insurance is primary except when Paragraph b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in Paragraph c. below.
b. Excess Insurance
This insurance is excess over:
1) Any of the other insurance, whether primary, excess, contingent or on any ...

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