First Circuit Orders AIG to Cover Cosby Defense

BOSTON (CN) – AIG Insurance must defend disgraced comedian Bill Cosby against defamation claims from nine of his accusers, the First Circuit ruled Thursday.

Actor and comedian Bill Cosby reacts while being notified a verdict was in in his sexual assault retrial, Thursday, April, 26, 2018, at the Montgomery County Courthouse in Norristown, Pa. A jury convicted the “Cosby Show” star of three counts of aggravated indecent assault on Thursday. The guilty verdict came less than a year after another jury deadlocked on the charges. (Mark Makela/Pool Photo via AP)

In the wake of dozens of women coming forward with sexual-assault allegations against the elderly comedian, AIG, which holds an umbrella insurance policy on Cosby, sought a declaratory judgment absolving the company of any obligation to mount Cosby’s defense.

Though the insurance giant pointed to an exemption in the policy for legal action “arising out of” sexual misconduct, a federal judge dismissed the case and the First Circuit affirmed Thursday.

Written for the three-judge panel by retired Supreme Court Justice David Souter, the 10-page decision says that Cosby’s policy may not cover sexual misconduct but the case at hand concerns defamation, which is covered under its personal-injury clause.

The defamation cases are related to Cosby’s criminal prosecution in Pennsylvania. Though claims by most of Cosby’s accusers are barred by the statute of limitations, Montgomery County District Attorney Kevin Steele came in just under the wire with charges against Cosby related to his 2005 sexual encounter with Andrea Constand.

On April 26, a jury found the comedian guilty on all charges.

Cosby faced a tide of defamation cases before his conviction for calling his accusers liars through a statement from his lawyer.

In Massachusetts, a suit by nine of those accusers has been on hold since October 2017, pending the outcome of his sexual assault trial in Pennsylvania.

AIG was attempting to avoid defending defamation charges, which the First Circuit found was different from defending against sexual-misconduct allegations, especially due to the vagueness of the sexual-misconduct clause in comparison with other parts of the policy that were more specific about sexual misconduct but did not apply to Cosby’s situation.

“As the district court observed, the presence of another, more broadly worded sexual-misconduct exclusion in the umbrella policy tips the scales in favor of finding ambiguity,” Souter wrote.

The decision also specifies that AIG is obligated to cover the cost of Cosby’s legal defense, but not any awards that the court may render if it rules against the disgraced comedian.

Representatives for AIG Insurance did not respond to an email seeking comment.

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