On November 8, 2016, the District Court in the District of Massachusetts held that AIG has a duty to defend Bill Cosby against pending defamation claims under both Massachusetts and California law. The court rejected AIG’s contention that the defamation claims fall within the exclusion for sexual misconduct since they were “arising out of” claimants’ original allegations of sexual misconduct.  Instead, the court found the exclusion was at least ambiguous in the context of these defamation claims and, therefore, a duty defend is owed.

It is generally well known that William H. Cosby, Jr., (known familiarly in his comedy and acting career as Bill Cosby), has been accused on a number of occasions of sexual misconduct many years ago. Cosby has denied the allegations in public statements issued personally and through representatives.

Based upon these denials, three defamation cases were filed against Cosby and others in the District Court of Massachusetts.  Green v. Cosby, Case No. 14-cv-30211, Ruehli v. Cosby, Case No. 15-cv-13796, and McKee v. Cosby, Case No. 15-cv-30221.  Cosby sought coverage for the defamation claims under a Massachusetts homeowners policy (“Homeowner’s Policy”) and a personal excess liability policy (“Excess Policy”), both purchased from AIG.  The policies cover claims alleging personal injury, which is defined to include “[d]efamation, libel or slander” emotional distress.  While the Homeowner’s Policy includes a duty to pay defense costs, the Excess Policy includes a duty to defend.  Both policies exclude actions “arising out of” sexual misconduct, harassment or abuse.
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