10:49am PT by Eriq Gardner
Gawker's Insurer Looks to Avoid Responsibility for Hulk Hogan Lawsuit
Who is responsible for defending Gawker Media from Hulk Hogan's ongoing legal assault?
St. Paul Fire & Marine Insurance Company doesn't want to pay the legal defense. On Friday, the insurer asked a judge for permission to skirt a bankruptcy shield and file a complaint in New York Supreme Court against Gawker. The insurer is ultimately looking for a declaration that would deem one of its subsidiaries as having no duty to defend Gawker.
Gawker is in Chapter 11 bankruptcy, thanks to a $140 million judgment in Hogan's invasion-of-privacy lawsuit. After Hogan first filed a complaint against Gawker over a 2012 post about his sex tape, the media company went to court with Nautilus Insurance Company over who was paying under a policy that provided coverage damages related to "bodily injury." But then, rather craftily, Hogan dropped a claim of negligent infliction of emotional distress, and the insurance policy didn't apply. The move to remove the insurance company from the dispute became one of the reasons why Nick Denton became suspicious that Hogan had a secret financial backer, which turned out to be Silicon Valley billionaire Peter Thiel.
Now, Gawker's $135 million deal to sell most of its assets to Univision is on the verge of closing. But lest anyone forget, Gawker is facing a second lawsuit from Hogan over a leak of the wrestler's racist comments in a transcript of one of his sex tapes. There, Hogan is asserting tortious interference and intentional infliction of emotional distress. (Gawker denies having anything to do with the leak.)
As such, there looks to be a reprise of the earlier insurance dispute as to whether Gawker can get its insurer to pick up its legal defense. According to a draft copy of the complaint, Gawker submitted the Hogan dispute on May 4 for coverage. A few weeks later, the coverage was denied. St. Paul Fire & Marine Insurance Company points to exclusions related to publishing, deliberately breaking the law and conduct that preceded the insurance agreement.
St. Paul's move could be of interest to Hogan as distribution of the proceeds from the $135 million Univision deal figures to be a contentious subject. Some of the money may have to go to defending Gawker from the insurance company's lawsuit. But before anything proceeds, it goes to U.S. Bankruptcy Judge Stuart Bernstein for review.