Petty v. General Accident Fire & Life Assurance Corp., 15699.
| Decision Date | 22 July 1966 |
| Docket Number | No. 15699.,15699. |
| Citation | 365 F.2d 419 |
| Parties | Henry W. PETTY, Appellant, v. GENERAL ACCIDENT FIRE & LIFE ASSURANCE CORPORATION, Ltd., and Potomac Insurance Company. |
| Court | U.S. Court of Appeals — Third Circuit |
James M. Davis, Jr., Mount Holly, N. J., for appellant.
John J. Gaffey, Newark, N. J. (Gaffey, Webb & McDermott, Newark, N. J., on the brief), for appellees.
Before McLAUGHLIN, HASTIE and FREEDMAN, Circuit Judges.
The complaint in this diversity action undertook to assert a claim for libel under New Jersey law. It appears that the plaintiff Petty is an architect. He and his partner Croft, together with various other persons who participated in the construction of a building, had been sued in the Superior Court of New Jersey by a workman who alleged that the negligence of the defendants in planning and constructing the building had caused him serious physical injury. The present defendants are two insurance companies which jointly had insured Petty and Croft against the risks of suit and liability for negligence in their professional work. In the policy the insurers contracted to defend any such suit and reserved the right to make whatever settlement they might deem expedient.
The insurers retained counsel to defend Petty and Croft against the injured workman's negligence claim, and counsel thus retained duly appeared for and represented Petty and Croft in that litigation. There came a time when counsel, instructed by the insurers but without the knowledge of Petty, agreed to a settlement of the case as against all defendants for an aggregate of $123,000, to which the insurers would contribute $12,583.33 for and in the names of Petty and Croft. The settlement to which the insurers thus committed the insured was agreed to in open court and formulated as an entry by the clerk in the records of the court reciting that the case "shall be resolved by entry of Judgment in the amount of $123,000.00 against all named defendants * * *" and that Petty and Croft "have agreed to contribute" $12,583.00 as their share of the total payment.
In the present action Petty alleges that the quoted terms of this settlement falsely "imputed * * * to the plaintiff negligence and malpractice by him in his profession as an architect". His stated theory of libel as it appears in his complaint is that, in authorizing the formulation and entry of the allegedly derogatory terms of settlement in the court's records, the insurers "caused false and libelous writings of perpetual endurance to be made and published in the form of a statement of a verdict by the County Clerk of Burlington County".
After the defendants had answered the complaint, the court, acting upon a motion by the defendants, ordered that summary judgment be entered for the defendants. The plaintiff has appealed.
Even if the recorded terms of settlement can be construed as an assertion that Petty had been negligent and incompetent, we are satisfied that the conduct of the insurance companies in causing a court officer to formulate and enter those terms of settlement is protected against any action for defamation by the absolute immunity which the law affords to relevant assertions in the course of judicial proceedings. The Supreme Court of New Jersey has observed that the "most noteworthy illustration of the absolute privilege or immunity is that afforded in judicial proceedings where judges, attorneys, witnesses, parties and jurors are fully protected against defamation actions based on utterances made in the course of the judicial proceedings and having some relation thereto." Rainier's Dairies v. Raritan Valley Farms, 1955, 19 N.J. 552, 558, 117 A.2d 889, 891-892. Cf. Prosser, Torts, 3d ed. 1964, § 109. This rule reflects the prevailing common law view that the public interest in freedom of expression by participants in judicial proceedings, uninhibited by any risk of resultant suits for defamation, outweighs the interest of the individual in the protection of his reputation from defamatory impairment in the judicial forum. Moreover, the...
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