Truth Trumps Insurance Agent’s Defamation Claim

(CN) - An insurance salesman who submitted a document with a forged signature can't sue Allstate for defamation for reporting the forgery, the 10th Circuit ruled.

The court upheld dismissal of a lawsuit filed by R. Greg Cory, an independent insurance agent.

Allstate had dropped him as an insurance agent after security investigators identified two documents with possible forgeries. A forensic document examiner concluded that Cory had, in fact, forged a signature on one of the documents.

Allstate explained the situation to the National Association of Securities Dealers by filling out a Form U5. The form listed his reason for termination as "failure to follow firms [sic] policy and procedures due to non genuine customer signatures on account documents."

Cory admitted that he had signed as a witness to the signature without actually witnessing it, but insisted that the phony signature was due to "sloppy supervision," not intentional forgery.

Although the association found no violation of federal securities law, Cory is required to report the investigation to prospective employers.

He sued Allstate in New Mexico state court, claiming breach of implied contract and defamation.

The district court dismissed his case based on the truth defense: Allstate's Form U5 statements weren't defamatory, because they were essentially true.

But Cory argued that the "substance, gist or sting" of the statements was false.

The Denver-based appeals court wasn't convinced.

Cory violated the insurer's policy by submitting documents with a fake signature that he didn't witness, the court ruled. "Mr. Cory has therefore acknowledged that Allstate's statement ... is substantially true and that 'the substance, the gist, the sting of the [defamatory] charge can be justified," Judge Tacha wrote.

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