A recent Law 360 story by Jennifer Mandato, “Insurer Must Pay Defense Costs In Newspaper Shooting Row”, reports that an insurer owed coverage to the parent companies of a Maryland newspaper for the legal fees resulting from two underlying lawsuits brought by the victims and their families after a 2018 mass shooting, an Illinois federal judge ruled. 

In his order, U.S. District Judge Matthew F. Kennelly ruled that ACE American Insurance Co. breached its duty to defend Tribune Publishing Co. and The Baltimore Sun Co. by refusing to pay for or reimburse any portion of the defense expenses incurred from the underlying litigation.  How much coverage is afforded is still undetermined.

Judge Kennelly determined that Tribune and the Sun were entitled to retain independent counsel, and therefore ACE can't "viably argue" that the publishers' $4 million in defense fees and expenses were considered voluntary, relieving it of the duty to reimburse them.

Tribune and the Sun filed suit in December 2022, accusing the Chubb unit of impermissibly trying to "allocate" some of the company's defense costs to its commercial general liability policy, which has a $1 million deductible that effectively cancels out a corresponding $1 million coverage limit.  Allocating defense costs to the CGL policy would improperly reduce the amount of defense costs covered under the Tribune's worker's compensation policy, which also has a $1 million deductible and $1 million policy limit, but the deductible doesn't erode the policy limit, filings show.

The coverage dispute stems from a June 2018 shooting at the Capital Gazette's offices in Annapolis, Maryland.  The gunman, Jarrod Ramos, broke into the office space and opened fire, killing five employees and injuring others, according to Tribune's complaint.  Ramos was sentenced to multiple life sentences in September 2021.  Tribune was later named in a pair of lawsuits filed by 10 plaintiffs seeking damages for the shooting, the publishing company said.  The underlying suits asserted claims for wrongful death, survival and negligence based on premises liability.

According to court records, it's undisputed that Tribune paid over $900,000 in workers' compensation claims filed on behalf of the victims and their families and that ACE was aware that the publisher did so.  In September, Tribune sought a determination that ACE breached its duty to defend and had no valid reason to deny coverage of the underlying suits under their employers' liability policy.

Judge Kennelly granted the publisher's request, finding that because ACE agreed to defend Tribune and the Sun — even under a reservation of rights — it was obligated to continue to defend the insureds until it subsequently sought and obtained a judgment relieving it of any obligation.  While ACE argued that Tribune wrongfully appointed independent counsel, Judge Kennelly disagreed.

Instead, he found that the insurer knew Tribune and the Sun were represented by outside counsel in the underlying suits, but failed to put forth any evidence showing that it expressed disapproval of the publishers' choice.  Judge Kennelly also supported Tribune's notion that a conflict of interest entitled it to retain independent counsel.

According to the order, Tribune and the Sun had a "strong interest" in proving that they were excluded from the underlying suits because of workers' compensation exclusivity laws, and thus would be entitled to coverage under the workers' compensation policy rather than the CGL policy, to the detriment of ACE.

Although the court concluded that ACE owed the publishers' reimbursement for any portion of their defense expenses, Judge Kennelly held that the finding didn't necessarily entitle them to coverage of the entirety of their claimed defense expenses.   An insurer may only be required to cover reasonable defense expenses, an amount which remains unsolved at present, according to the order.