On appeal from the Superior Court of New Jersey, Law Division, Cape May County.
King, Deighan and Havey. The opinion of the court was delivered by King, P.J.A.D.
[216 NJSuper Page 698] This case calls upon us to construe a "Libel, Slander, Defamation or Violation of Right of Privacy" insuring agreement in a comprehensive general liability policy issued to a municipality. This is a declaratory judgment action by the City of Cape May and its City Managers Fred Coldren and Robert Cabana, brought in 1984 to establish insurance coverage and a duty to defend, against St. Paul Fire and Marine Insurance Company (St. Paul) arising from a law suit captioned in pertinent part, Robert B. Spiegle v. City of Cape May, Robert Cabana and
Fred Coldren, "City Officials ",*fn* Docket No. L-74717-80, in the Superior Court, Law Division.
On February 1, 1978 St. Paul issued policy number 629 NA 7462 to the City of Cape May which included comprehensive general liability insurance coverage. The basic insuring agreement provided these coverages pertinent to this case
Group B. -- the publication or utterance of a libel or slander or of other defamatory or disparaging material, or a publication or utterance in violation of an individual's right of privacy; except publications or utterances in the course of or related to advertising, broadcasting or telecasting activities conducted by or on behalf of the Named Insured; [Emphasis added].
The first count of the complaint filed by Spiegel was captioned: "Malicious Interference." The substance of the first count was that the officials of the City maliciously interfered with Spiegle's business interests by statements to the print media and others. The statements generally were allegations that Spiegle's activities were designed to drive up the value of beach front property so that later condemnation awards to owners would be higher. Paragraph 11, for instance, alludes to "the serious and injurious effects of such false statements upon, of and concerning the plaintiff, that the same will be repeated by persons who heard and read thereof, that gossip, reports and rumors will naturally . . . result therefrom . . . to . . . the permanent injury to plaintiff's reputation."
The second count was captioned: "Slander and Libel." It incorporated by reference all of the allegations of Count One. It substantially alleged conventional common-law libel and slander, a defamation claim.
This is the factual background. On October 20, 1978 Robert D. Spiegle purchased a parcel of real estate on the beach in the
City of Cape May for the price of $55,650. The parcel is a strip of the City of Cape May's beach with about a 54-foot frontage which extends approximately 1000 feet towards and into the ocean. The property lies south of Beach Avenue and consists solely of sandy beach. The zoning ordinance allowed only recreational use of the beach parcel with all building prohibited.
The beach had been used for years for recreational purposes including sun-bathing and swimming. Although some commercial income resulted from rental of beach equipment, any form of commercial use of the beach which involved building permits, structures or sales of items was prohibited by Ordinance "S-1". The assessment on Spiegle's parcel at the time of purchase was $4,200, a sum comparable to the assessment of other similarly-situated beaches parcels. These assessments were based upon the limited permitted uses of the property. The City of Cape May's policy of maintaining its beaches for public and recreational use has continued, manifested by a policy condemning remaining privately-owned beach parcels for acquisition by the City at fair market value.
After Spiegle purchased the property, the Atlantic City Press, a local newspaper of general circulation, published articles quoting statements that the City Manager Robert Cabana had made questioning the sale. The articles reported that Cabana had stated he could not understand why anyone would spend so much money on land that could not be developed because of the existing restrictive zoning ordinances. The article reported that Cabana stated that the property transfer involved what appeared to be a fictitious sale, and that the sale price was generated in an attempt to drive up the price of the property in the event of a condemnation action. Spiegle claimed he was going to build on the beach, despite the protective ordinances. Spiegle filed his law ...