UMG Recordings, Inc. v. American Home Assur. Co., No. 06-56076, 2008 WL 4107315 (9th Cir. (Cal.) Sept. 2, 2008)
The Ninth Circuit affirmed the district court ruling by Judge Pregerson. It concluded that American did not have a duty to defend Island Def Jam Music Group, a division of UMG, from a suit filed against Def Jam by TVT Records, Inc. and TVT Music, Inc. in a contract dispute respecting the right to produce and market recording music performances by a rap group known as Cash Money Click (CMC).
Property damage was unavailable because there was no “occurrence” as the damage was the result of an intended or expected event.
Shell Oil Co. v. Winterthur Swiss Ins. Co., 15 Cal. Rptr. 2d 815, 838 (Ct. App. 1993).
The allegations did not concern UMG’s good as TVT maintained ownership rights to the CMC album. Thus, it was of no moment that the Irv Gotti CD “announces the upcoming release of the CMC Album in November 2002,” making the album itself an “advertisement” so as to fall within the Policy’s coverage for infringement of copyright in your advertisement.
The court also found no personal injury coverage for disparagement:
Here, the statement that Def Jam mischaracterized something to the artists about TVT’s efforts to protect its own rights does not concern TVT’s goods or products. Neither does it state any inadequacy about TVT’s services to the artists. The allegation is so vague it is hard to say exactly what it means, but at most it merely alleges that TVT will not stand on its own rights, which is not disparagement of TVT’s services.
Id. at *2.
The slander argument was waived as it was not raised in the trial court pursuant to Monetary II Ltd. P’ship v. Comm’r, 47 F.3d 342, 347 (9th Cir. 1995). Id. at *3.
Judge Graber concurred and dissented in part, finding Atlantic Mut. Ins. Co. v. J. Lamb, Inc., 123 Cal.Rptr.2d 256, 269-72 (Ct. App. 2002) pertinent under disparagement coverage and requiring a defense thereunder:
False statements that may influence a third party not to use the plaintiff’s services, to the financial detriment of the plaintiff, trigger the duty to defend a claim of disparagement of services.
Id. at *3.
The dissent was willing to look at the contextual scenario where the allegations that TVT will not stand on its own rights could disparage TVT’s services to third parties because TVT depends on the willingness of others to put themselves in its hands to release albums.
