The issue in this case was whether a general liability insurer had a defense duty under "Coverage B" personal injury coverage for a wrongful termination lawsuit brought against its insured by a discharged employee. The insured's umbrella liability insurer, which had settled the case, sought reimbursement from the primary insurer for the settlement and legal fees. The general liability insurer had denied coverage and defense.

The parties agreed that there was no coverage under "Coverage A" (bodily injury and property damage) of the general liability policy. The federal court focused on the five specified offenses that are within the scope of "Coverage B," and concluded that none covered a wrongful termination claim.

The umbrella insurer argued that the employee's complaint alleging wrongful termination stated that the discharge caused injury to his "person, personal relations, and reputation," and that this could bring the claim within libel and slander provisions of personal injury coverage. The court, however, made clear that claim was made only for wrongful termination, which was not within the scope of the general liability insurance.

The court concluded that the primary (general liability) insurer did not have defense or settlement obligations. Its motion for summary judgment was granted.

(CRUM & FORSTER INSURANCE COMPANY, Plaintiff v. PACIFIC EMPLOYERS INSURANCE COMPANY, Defendant. United States District Court for the District of South Dakota. No. 94-4245. December 12, 1995. CCH 1996 Fire and Casualty Cases, Paragraph 5630.)