Laney Chiropractic & Sports Therapy, P.A. v. Nationwide Mut. Ins. Co.

• Decision Date: 28 July 2017
• Docket Number: No. 16-11183,16-11183
• Citation: 866 F.3d 254
• Parties: LANEY CHIROPRACTIC AND SPORTS THERAPY, P.A., Plaintiff–Appellant v. NATIONWIDE MUTUAL INSURANCE COMPANY, Defendant–Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

866 F.3d 254

LANEY CHIROPRACTIC AND SPORTS THERAPY, P.A., Plaintiff–Appellant

v.NATIONWIDE MUTUAL INSURANCE COMPANY, Defendant–Appellee

No. 16-11183

United States Court of Appeals, Fifth Circuit.

FILED July 28, 2017

Scott Randall Hoyt, Esq., Pia Anderson Moss & Hoyt, L.L.C., Southlake, TX, Christopher Guy Lyster, Lacy Lyster Malone & Steppick, P.L.L.C., Fort Worth, TX, for Plaintiff–Appellant.

Rhonda J. Thompson, Ashley Mason, Dallas, TX, Wade Crosnoe, Austin, TX, Thompson, Coe, Cousins & Irons, L.L.P., for Defendant–Appellee.

Before JONES, CLEMENT, and HIGGINSON, Circuit Judges.

STEPHEN A. HIGGINSON, Circuit Judge:

Defendant–Appellee Nationwide Mutual Insurance Company ("Nationwide") issued a series of insurance policies (collectively, the "Policy") to Plaintiff–Appellant Laney Chiropractic Sports Therapy, P.A. ("Laney"). In March 2015, ART Corporate Solutions, Inc. and Active Release Techniques, LLC (collectively, the "ART Companies") sued Laney (the "Underlying Complaint"). Laney sought coverage under the Policy, and Nationwide refused to defend. In response, Laney sued, seeking a declaration that Nationwide was required to defend it. On cross-motions for summary judgment, the district court agreed with Nationwide. Laney appealed. We affirm.

I

The following allegations come from the Underlying Complaint. In 1985, Dr. Michael Leahy developed "Active Release Techniques," or "ART." ART is a soft-tissue, movement-based massage technique, which includes over 500 treatment protocols. The ART Companies hold trademarks for the terms "ART" and "Active Release Techniques." Dr. Leahy also received several patents for the ART system. Dr. Leahy monetized ART by training and licensing others to use the technique.

Laney began providing ART treatments in 2004 pursuant to a licensing agreement with the ART Companies. However, around 2011, Laney began competing with the ART Companies by providing ART services directly to customers outside of any licensing agreement. For a time, Laney's website explicitly referred to ART. But "sometime after" September 2014, Laney changed its website to refer to non-trademarked phrases such as "soft tissue techniques," "STT," or "500 unique deep tissue protocols." Later, Laney changed its website again to refer to "Fascial Distortion Model" or "FDM." Nonetheless, although the verbiage changed, "[t]he actual description of the services provided ... remained exactly the same." The Underlying Complaint alleges the following causes of action against Laney: federal trademark infringement, false and/or misleading advertising, deceptive business practices, unfair competition, breach of contract, and breach of the duty of good faith and fair dealing.

Contending that the Underlying Complaint alleged facts and claims potentially within the coverage, Laney tendered the complaint to Nationwide. Nationwide refused to defend.

The Policy provides the following coverage:

a. We will pay those sums up to the applicable Limit of Insurance that the insured becomes legally obligated to pay as damages because of "personal and advertising injury" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages for which there is coverage under this policy....

"Personal and advertising injury" is relevantly defined as follows:

"Personal and advertising injury" means injury, including consequential "bodily injury[,"] arising out of one or more of the following offenses: ...

f. The use of another's advertising idea in your "advertisement"; or

g. Infringing upon another's copyright, trade dress or slogan in your "advertisement[."]

After Nationwide denied coverage, Laney sued, seeking a declaratory judgment that Nationwide had a duty to defend. Laney and Nationwide cross-moved for summary judgment. The district court denied Laney's motion and granted Nationwide's, finding that the Underlying Complaint did not assert a covered claim.

II

"We review de novo a district court's award of summary judgment, applying the same standard as the district court." Trinity Universal Ins. Co. v. Emp'rs Mut. Cas. Co. , 592 F.3d 687, 690 (5th Cir. 2010). Under Texas law, which governs here, "insurance policies are construed as are contracts generally, and must be interpreted to effectuate the intent of the parties at the time the contracts were formed." Mid–Continent Cas. Co. v. JHP Dev., Inc. , 557 F.3d 207, 212 (5th Cir. 2009) (citing Kelley–Coppedge, Inc. v. Highlands Ins. Co. , 980 S.W.2d 462, 464 (Tex. 1998) ; Glover v. Nat'l Ins. Underwriters , 545 S.W.2d 755, 761 (Tex. 1977) ). "When the words of a policy are unambiguous, they are to be given their plain, ordinary, and generally accepted meaning, unless the policy clearly indicates that the contractual terms have been used in a different or technical sense." Id. "However, when the language of a policy is susceptible to more than one construction, it should be construed strictly against the insurer and liberally in favor of the insured." Id. (citing Barnett v. Aetna Life Ins. Co. , 723 S.W.2d 663, 666 (Tex. 1987) ).

"In Texas, the insurer's duty to defend is governed by the ‘eight corners rule,’ which holds that the duty to defend is determined solely from the terms of the policy and the pleadings of the third-party claimant." Ooida Risk Retention Grp., Inc. v. Williams , 579 F.3d 469, 472 (5th Cir. 2009). "The duty to defend does not depend upon the truth or falsity of the allegations; a plaintiff's factual allegations that potentially support a covered claim are all that is needed to invoke the insurer's duty to defend." JHP Dev. , 557 F.3d at 212. "When reviewing the pleadings, courts must focus on the factual allegations, not the asserted legal theories or conclusions." Test Masters Educ. Servs., Inc. v. State Farm Lloyds , 791 F.3d 561, 564 (5th Cir. 2015) (citing Ewing Constr. Co. v. Amerisure Ins. Co. , 420 S.W.3d 30, 33 (Tex. 2014) ). "If the underlying pleading alleges facts that may fall within the scope of coverage, the insurer has a duty to defend; if, on the other hand, the pleading only alleges facts excluded by the policy, there is no duty to defend." Ooida , 579 F.3d at 472. "Thus, even if the allegations are groundless, false, or fraudulent the insurer is obligated to defend." Test Masters , 791 F.3d at 564 (quoting Zurich Am. Ins. Co. v. Nokia, Inc. , 268 S.W.3d 487, 491 (Tex. 2008) ). "Courts may not, however, (1) read facts into the pleadings, (2) look outside the pleadings, or (3) imagine factual scenarios which might trigger coverage." Id. (quoting Gore Design Completions, Ltd. v. Hartford Fire Ins. Co. , 538 F.3d 365, 369 (5th Cir. 2008) ).

III

Laney argues that the Underlying Complaint alleges facts that describe an advertising injury in three ways: (1) by alleging the use of the ART Companies' advertising ideas, (2) by alleging trade dress infringement, and (3) by alleging slogan infringement. We reject each argument.

A

Laney first argues that the district court erred when it concluded that the Underlying Complaint did not allege the use of another's "advertising idea." Laney contends that the Underlying Complaint alleges that the ART Companies' advertising ideas were used by Laney in promoting its treatment by using phrases "soft tissue techniques," "soft tissue therapy," and "more than 500 techniques" on its website and including ART testimonial videos focusing on the benefits and effectiveness of ART treatments.

Although the Policy defines "advertisement" it does not define "advertising idea." Absent a policy definition, terms are "given their plain, ordinary, and generally accepted meaning" unless the insurance contract indicates otherwise. Ramsay v. Md. Am. Gen. Ins. Co. , 533 S.W.2d 344, 346 (Tex. 1976) ; see also U.S. Metals, Inc. v. Liberty Mut. Grp., Inc. , 589 Fed.Appx. 659, 662 (5th Cir. 2014) (unpublished) (applying Ramsay ). "The Fifth Circuit and Texas'[s] courts have not spoken directly to the definition of an advertising idea in [commercial general liability] policies...." Cont'l Cas. Co. v. Consol. Graphics, Inc. , 656 F.Supp.2d 650, 658–59 (S.D. Tex. 2009), aff'd , 646 F.3d 210 (5th Cir. 2011). Other courts, however, have persuasively defined "advertising idea." For example, the Eleventh Circuit defines "advertising idea" as "any idea or concept related to the promotion of a product to the public." Hyman v. Nationwide Mut. Fire Ins. Co. , 304 F.3d 1179, 1188 (11th Cir. 2002). Other circuits have adopted similar definitions, see, e.g. , Green Mach. Corp. v. Zurich–Am. Ins. Grp. , 313 F.3d 837, 839 (3d Cir. 2002) (an advertising idea is "an idea about the solicitation of business and customers."), as have district courts in this circuit, see, e.g. , Gemini Ins. Co. v. Andy Boyd Co., LLC. , No. CIV.A. H-05-1861, 2006 WL 1195639, at *2 (S.D. Tex. May 3, 2006) ("An advertising idea is a concept about the manner a product is promoted to the public."), aff'd , 243 Fed.Appx. 814 (5th Cir. 2007) (unpublished).¹ Under these definitions, the Underlying Complaint does not allege the use of the ART Companies' advertising ideas in Laney's advertising.

Preliminarily, allegations that Laney used the ART Companies' trademarks do not allege the use of the ART Companies' advertising ideas because under Texas law, a trademark is not a marketing or advertising device. Sport Supply , 335 F.3d at 464. Accordingly, Laney's use of trademarked phrases, such as "ART" or "Active Release Techniques," is not the use of another's advertising idea. Id. at 464–65.

Likewise, allegations that Laney used non-trademarked phrases, such as "STT," "soft tissue techniques," and "more than 500 techniques," do not allege the use of the ART Companies' advertising ideas.

The Underlying Complaint alleges that Laney—but not the ART Companies—used phrases like "STT," "soft tissue techniques," and "more than 500 techniques." True, occasionally the Underlying Complaint refers to ART as a "soft tissue system," or an "extremely effective soft tissue...