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Thompson v. Maryland Casualty Co.2/9/2004
JUDGMENT AFFIRMED AND CASE REMANDED WITH DIRECTIONS
EN BANC
Introduction
In this duty to defend insurance case, we review the court of appeals' decision in Thompson v. Maryland Casualty Co., No. 01CA1039, slip op. (Colo. App. June 27, 2002). That court held that under the facts alleged in the underlying complaint the insurers have no duty to defend the insureds under provisions of a commercial general liability insurance policy that provides the insureds coverage against claims of malicious prosecution and disparagement. Alternatively, the court of appeals held that the insurers had no duty to defend against the disparagement claim because allegations in the underlying complaint triggered a policy provision excluding coverage for material published with knowledge of its falsity. We affirm.
In this case, the insureds, John D. Thompson, Jr. and Hiwan Ridge Development Company, Inc. (collectively, "Thompson"), purchased insurance policies through Maryland Casualty Company and Northern Insurance Company of New York ("insurers") covering claims for malicious prosecution and disparagement. Thompson brought this suit against the insurers seeking the costs of defending against the malicious prosecution and disparagement claims.
We hold that claims covered in an insurance policy must be construed as legal claims rather than as lay terms. In analyzing the insurer's duty to defend, we look initially to the claims expressly covered by the policy, and next we determine the elements of those claims under Colorado case law. This approach furthers the reasonable expectations of the parties to the insurance contract.
Applying this standard here, we hold that an insurer is not required to defend its insured against a claim of malicious prosecution where the complaint fails to allege that the insured's wrongful filing of a lis pendens was resolved in favor of the plaintiff. Under Colorado law the tort of malicious prosecution requires that the element of favorable resolution of the prior action be alleged.
We disagree with the court of appeals' holding that the complaint failed to allege the elements of a claim for disparagement of services as covered in the insurance policy. The complaint alleged that the insureds disparaged the services of the plaintiff by interfering with the plaintiff's ability to develop and sell real property. However, the insurers had no duty to defend because the complaint alleged that the insureds knew that their disparaging statement was false, and, as a consequence, the knowledge-of-falsity exclusion provision precluded coverage.
We therefore affirm the court of appeals' holding affirming the trial court's grant of summary judgment for the insurers, and return this case to that court with directions to remand the case to the trial court to dismiss.
I. Facts and Proceedings Below
Petitioner Thompson purchased commercial general liability insurance policies through respondents Maryland Casualty Company and Northern Insurance Company of New York. Maryland was the primary carrier and Northern was the excess carrier.
Thompson's policy provides that the insurers will defend against claims for "personal injury," which include " alicious prosecution" and " 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 excludes coverage for disparagement claims where the insured publishes material "with knowledge of its falsity."
In 1992, Thompson and Ridge at Hiwan, Ltd. ("Ridge"), a landholding partnership that subsequently became involved
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