Both parties appealed from the order of the Superior Court of Los Angeles County, California, granting summary judgment in a declaratory action to determine defendant insurer’s duty to defend.
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Plaintiffs were the two sole shareholders of defendant corporation. When their business relationship soured, plaintiff majority shareholder wrested control of the store and ousted plaintiff minority shareholder both as an employee and as president. Plaintiff minority shareholder filed suit against plaintiff majority shareholder, claiming defamation among other things. Plaintiff majority shareholder sued defendant insurer for failing to provide a defense. The trial court granted summary judgment, finding that defendant’s insurance policy covered defamation. The trial court entered summary judgment for defendant on all remaining claims. The appellate court affirmed in part and reversed in part. There were no facts to support plaintiff majority shareholder’s claim that he was acting in his capacity as a director of defendant corporation when he made the defamatory statements. Therefore, defendant insurer had no duty to defend, and was entitled to judgment, as a matter of law, on the entire action.
The judgment was reversed in part and dismissed in part. Defendant insurer was entitled to summary judgment dismissing the entire action.