Pace Integrated Systems, Inc. v. RLI Insurance

MEMORANDUM *

We affirm the district court’s grant of summary judgment to RLI Insurance Company (“RLI”) and denial of summary judgment to Pace Intergrated Systems, Inc. and Orlando Perez (together, “Pace”).

RLI had no duty to defend Pace from the defamation claims of ex-employees William Stairs and Kurt Gokbudak. These claims fell under the policy exclusion for personal injuries, including defamation, “arising out of’ an employee’s termination or employment-related practices. We reject Pace’s argument that this case *516 is analogous to HS Services, which held that “to ‘arise out of a termination of employment, the defamatory remark at issue must have been a part of or directly and proximately resulted from the termination.” HS Serv., Inc. v. Nationwide Mut. Ins. Co., 109 F.3d 642, 647 (9th Cir.1997). In that case, defamatory remarks made by an employer about ex-employees were held to be outside the scope of the policy exclusion, triggering the duty to defend, because “their proximate cause was [the ex-employee’s] own remark in the marketplace, made as a competitor, concerning [the employer’s] financial condition. Thus, the chain of causation between the termination and the…