Condo Media - January 2011 - 42

INSURANCE

by Brendon Kilcoyne

Think Before You Speak (or Write)
Libel and Slander in Associations
s is the case with most court actions, libel and slander suits have increased over the years. These cases are generally very complex and can be drawn out over months, and sometimes years. As defined by Webster’s Dictionary, libel is any written or printed matter tending to injure a person’s reputation unjustly and slander is the utterance of a falsehood that damages another’s reputation. The global impact the Internet has made cannot be overstated. It has changed the landscape of how we do business, get information and communicate with people around the world. It also provides the opportunity for anyone with a computer and Internet connection to be a commentator on any topic they choose, which has increased the chance for anyone to communicate libelous statements on a much broader level. The same can be true for condominium associations.

The Spoken and Written Word
Many associations have websites and they use these sites to post information about the association, and to communicate with owners. These posts often include minutes from meetings of the board. But what happens when the information may be considered libelous in nature? For example, what if the website is used to show unit owners late in paying their dues and announces that Mr. Jones is three months late in dues and owes $675 to the association, which will be sent to collections if he doesn’t pay in the next 30 days. If this information is incorrect, does this hurt Mr. Jones? Maybe he is a carpenter, and someone decides they no longer will

use him because they only hire people who are punctual with their bills. Is there a blog where complaints can be listed? Are owner disagreements discussed at board meetings and are the details of those discussions included in the written minutes and distributed (i.e., Ms. Smith has been harassing her neighbors for months, she is constantly yelling about parking spaces and noise problems, she is mentally unstable.)? Both of these situations could create a major exposure to a libel suit. The same can be said for slander, and open board meetings are a breeding ground for slanderous speech. In the case of Russell A. Siegfried v. The Grand Krewe of Sphinx in Jackson Tenn., Siegfried sued the association and the board members individually for both what was said in a board meeting accusing him of being in violation of the bylaws, as well as similar libelous charges written in a letter to voting board members. No matter what the outcome in cases such as these, by the time the verdict is delivered, an individual may have spent a fortune on legal fees, time out of work and other court expenses.

Insurance Coverage
How are these claims covered? The simple answer is the personal injury section of your association’s liability policy would originally cover the association in a libel or slander case, up to the policy limits, including umbrella. However, the coverage itself, as well as the nature of the lawsuit, can be more complex than that. What if you, as a board member, are named individually in a libel or slander suit? Would you fall under the

association’s liability portion? Are you individually covered under your directors’ & officers’ (D&O) policy? As a board member, the company could classify you as a volunteer, and grant you the policy limits afforded by the personal injury. However, the company may defer coverage to the D&O policy, which opens a new set of coverage questions. All D&O policies are not created equal. Though most include coverage for settlements and court fees, some also include breach of contract and cost of defense outside of policy limits; most, however, do not cover libel and slander. It is important to speak with your agent to fully understand what is covered in your particular policy; not having one is not an option. Will the personal injury section cover you as a board member? Generally speaking, no, however some companies may consider you as a “named insured.” But if the person bringing the suit also is a unit owner, will they also not be a “named insured”? If so, the insurance company may deny the claim, because a “named insured” cannot sue another “named insured” under policy rules. This may be different if an outside party is suing the association, or an individual board member for something said or written on behalf of the association. Board meetings may include a discussion about problems the association is having with outside parties. For example, “Mr. Johnson, who owns the home next door to the association, has been stealing lawn furniture from members in the association and the police have been notified about the situation”; or “Dirt Lovers Landscaping, who is currently contracted to landscape the

CONDO MEDIA • JANUARY 2011

Condo Media - January 2011

Table of Contents for the Digital Edition of Condo Media - January 2011