Fifth Circuit holds liability coverage for claimed violations of “person’s right of privacy” does not extend to lawsuit brought by business

Jon T. Neumann and Benjamin B. Watson of Steptoe & Johnson LLP write:

In Nationwide Mutual Insurance Company v. Gum Tree Property Management, L.L.C., ___ F. App’x ___, 2015 WL 170244 (5th Cir. Jan. 14, 2015), the United States Court of Appeals for the Fifth Circuit, applying Mississippi law, affirmed the district court’s summary judgment order holding that a general commercial liability insurer had no duty to defend or indemnify its policyholder in a lawsuit seeking damages associated with the policyholder’s alleged solicitation of confidential information and customers from a business competitor.

The Gum Tree Property litigation arose out of a dispute between Lexington Relocation Services, LLC (Lexington), a corporate housing company, and a group of parties associated with Gum Tree Property Management, LLC (collectively, Gum Tree).  Gum Tree is a property-management company that manages real estate in the Tupelo, Mississippi area.  In a lawsuit filed in Kentucky state court, Lexington alleged that its former employee left her position and went to work for Gum Tree.  Lexington contended that the employee violated her employment agreement with Lexington by disclosing Lexington’s confidential company information which Gum Tree then used to solicit current and prospective customers.  Lexington brought claims for, among other things, tortious interference with contractual relations, tortious interference with business relations, and misappropriation of trade secrets.

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