Insurance Policyholder Advocate & Attorney David Gauntlett : Gauntlett Law Firm : Insurance Recovery, Policy Interpretation : Irvine, Orange County, California

Affirming the trial court, at issue was a class action lawsuit for TCPA violations under an “advertising injury” coverage provision. The district court concluded that neither the “advertising injury” nor “property damage” provisions were implicated. While an invasion of privacy did include a right of seclusion, the advertising injury provision in the policy is limited to violations of the privacy right of secrecy, not implicated by a TCPA claim.

It also specifically found that “the consumption of a fax recipient’s toner and paper is the intended consequence of the insured’s intentional act when sending a fax, and is therefore not ‘accidental’ within the meaning of the Policy.” Id. at *2.

The latter determination appears inconsistent with the published court of appeals

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Reversing the district court and finding that the known loss doctrine did not bar potential coverage in a libel case, the court reiterates the notion that fortuitous risk is required for coverage even under offense-based “personal and advertising injury” coverage. The first circuit thus reached a result that is inconsistent with a recent Illinois appellate court assertion by Federal, who standing in the policyholder’s shoes, sued Cincinnati Ins. Co.

Cincinnati Ins. Co. v. American Hardware Mfrs. Assoc., Inc., 898 N.E.2d 216, 237-38 (Ill. App. Ct. 2008) (“Federal contends that, if

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The court affirmed summary judgment for the insurer, finding the first publication exclusion barred a defense for otherwise potentially covered trademark and trade dress claims. Spectrum advertised and distributed for its client, Sunset Health Products, the “Hollywood 48-Hour Miracle Diet” drink. Spectrum terminated its marketing agreement with Sunset and reformulated it with Tremain and Schwartz, who formed Celebrity Products to promote “The Original Hollywood Celebrity Diet” drink.

Slight variations in the physical appearance of the advertisements by Spectrum for Celebrity Diet remained after initial complaints. Judge Manella granted a TRO based on the dramatic change between Spectrum’s 1998 and 2001 labels.
 

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The court found that no duty to defend arose in a trade secret misappropriation case because an exclusion provided coverage for “any claim arising out of any misappropriation of trade secret” and professional liability policy issued by the defendant, National Union Fire Insurance Company of Pittsburgh, Pennsylvania (“National Union”) to the plaintiff Uniscribe Professional Services, Inc. (“Uniscribe”).

The issue before the Supreme Court of Massachusetts was of the absence of any language as to whose acts may trigger the exclusion for trade secrets results in ambiguity.

National Union, laying emphasis on the words “any claim arising out of,” asserts that the exclusion unambiguously covers all claims alleging misappropriation of a trade secret. Uniscribe responds that the exclusion is silent as to whether it applies to third-party conduct and therefore is ambiguous.

Id. at 697.

An exclusion barred a defense because the exclusionary phrase “arising out of”

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In a per curiam decision a New Jersey state trial court analyzing a 1986 ISO policy provision found allegations for breach of a confidentiality agreement between two pharmaceutical companies triggered a defense. The court disagreed and found that these sole conduct in issue was violation of the written confidentiality agreement thereby triggering contract exclusion.

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The Court affirmed the trial court’s finding that the insurer was required to indemnify its insured under the terms of a broadened garage coverage contained in a commercial general liability policy which included personal injury coverage for libel and slander. The court reached a distinct result under the umbrella policy which excluded coverage for

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In a decision which took over a year to issue from date of submission, the court found a defense arose for fact allegations for defamation, affirming the trial court’s ruling. At issue were allegations that Starplex intentionally interfered with the Pierre plaintiffs’ business relationships based on their race or national origin; and that the Port intentionally discriminated against the plaintiffs by impairing their ability to contract with fair paying customers based on the plaintiffs’ race or national origin.

In a section of the verdict form captioned “Hostile Environment,” the jury found that the Starplex employees and the Port intentionally discriminated against the plaintiffs by creating a hostile work environment based on the plaintiffs’ race or national origin. Id. at 338.

The trial court, finding defamation and disparagement, ultimately determined that one of the carriers, Scottsdale, had indemnity obligations. Nevertheless, it reasoned that statements allegedly made to the Pierre plaintiffs were “derogatory and defamatory,” that, under the circumstances, they were published, and that the plaintiffs suffered special harm consisting of loss of business and wages and injury to their reputations. Id. at 339 n.2.
 

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The court found a duty to defend under an E&O policy for Defendant and Counter-Plaintiff Amerix’s past and future costs in responding to an administrative subpoena issued by the Consumer Protection Division of the Maryland office of the Attorney General and a civil investigative demand issued by the Consumer Protection Division of the Texas office of the Attorney General.

The court noted that Maryland permits review of facts beyond the four corners of the subpoena and investigative demand in determining whether there was a duty to defend, citing Aetna Cas. & Sur. Co. v. Cochran, 337 Md. 98, 107, 651 A.2d 859, 863 (1995), wherein the Maryland Court of Appeals rejected an approach not looking beyond the four corners of the operative pleading as “misguided” and permitting the insured to permit extrinsic evidence to establish a potentiality of coverage. Id. at *6.

The court also found instructive Richardson Electronics, Ltd., v. Federal Ins. Co., 120 F. Supp. 2d 698, 701 (N.D. Ill. 2000) “(holding that a Civil Investigative Demand and subpoenas issued by the Antitrust Division of the Justice Department constituted a

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Sony Computer Entm’t Am., Inc. v. American Home Assur. Co., ___ F.3d ___, 2008 WL 2736012 (9th Cir. (Cal.) 2008) (Hall, Schroeder; dissent by Bybee)

Affirming district court Judge Hamilton, the court found no duty to defend arising out of negligent misrepresentation, false advertising under BPC § 17500, unfair business practices under BPC § 17200, and other related claims.

The pertinent policy, issued through an AIG entity, American Home Assurance Co., provided multimedia professional liability coverage and supplemented a policy, also issued by the same insurer, for commercial general liability coverage. The court appears to have assumed applicable law to be that the insurer’s construction of policy terms must be reasonable as opposed to a viable potential definition, in direct contrast to the Supreme Court of California’s recent analysis in MacKinnon. Thus, it stated:
 

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Wausau Business Ins. Co. v. Fisher Printing Co., Inc., 2008 WL 2704874 (N.D. Ill. July 8, 2008) (Kennelly)

The underlying suit asserted unlawful intentional copying of copyrighted images and repeated use of Ashley’s protected trademarks and images. The court, applying Illinois law, focused principally on the exclusions.
The court found the exclusion inapplicable, following Taco Bell Corp. v. Continental Cas. Co., 388 F.3d 1069 (7th Cir. (Ill.) 2004):

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North Plainfield Bd. of Educ. v. Zurich American Ins. Co., No. 05-4398 (MLC), 2008 WL 2074013 (D.N.J. May 15, 2008)

Few courts have found what one court recently mischaracterized as the “knowing violation of rights of another” exclusion bars even a defense for otherwise potentially covered claims.  The court found this exclusion evidenced an additional reason for not finding a defense due.

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