Implicit Defamation/Disparagement Evidenced by Allegations of Substitution of Sub-Standard Goods


Miranda v. California Capital Ins. Co., No. A126778, 2011 WL 1168064, *6 (Cal. App. (1st Dist.) March 29, 2011)


Cow breeders transferred inferior cows to the claimant misrepresenting to him and the insured that the cows were from the insured’s herd, so as to disrupt their relationship.  These statements allegedly misrepresented “that the cows were the property of” [the insured] and from [the insured’s] herd. . . .”  The claims were not only for palming off inferior cows but for creating the false impression that the insured’s cows of better quality than they were thereby impairing future sales when the truth of their inferior character came to light.  “One accused of libel is responsible “for what is insinuated, as well as for what is stated explicitly.” (Bates v. Campbell (1931) 213 Cal. 438, 442.)”  Id. at *6.  Such statements were both defamatory of the insured and disparaging of its goods, i.e., the cows sold to the claimant by the insured.


California Capital limited its coverage inquiry to allegations of an untrue statement that would lead others not to deal with the insured and cause special damages.  But the Court of Appeals found potentially covered claims could exist regardless of the technical legal cause of action pled.


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