Adolfo House Distrib. v. Travelers Property

• Decision Date: 07 July 2001
• Docket Number: No. 000708CIV.,000708CIV.
• Citation: 165 F.Supp.2d 1332
• Parties: ADOLFO HOUSE DISTRIBUTING CORP., d/b/a Adolfo's House, Adolfo Perez Jr. and Adolfo Perez Sr., Plaintiffs, v. TRAVELERS PROPERTY AND CASUALTY INSURANCE CO., Defendants.
• Court: U.S. District Court — Southern District of Florida

165 F.Supp.2d 1332

ADOLFO HOUSE DISTRIBUTING CORP., d/b/a Adolfo's House, Adolfo Perez Jr. and Adolfo Perez Sr., Plaintiffs, v. TRAVELERS PROPERTY AND CASUALTY INSURANCE CO., Defendants.

No. 000708CIV.

United States District Court, S.D. Florida.

July 7, 2001.

COPYRIGHT MATERIAL OMITTED

Stephen Michael Gaffigan, Esq., Shepherd Finkelman & Graffigan, Miami, for Plaintiff.

Thomas Albert Boyd, Jr., Esq., Sullivan Boyd & Goldsberry, Jacksonville, William T. Corbett, Jr., Esq., Melissa H. Raksa, Esq., Drinker, Biddle & Shanley, Florham Park, NJ, Francis A. Anania, Esq., Anania, Bandklayder, Blackwell & Baumgarten, Miami, for Defendant.

FINAL SUMMARY JUDGMENT

HURLEY, District Judge.

In the lead action styled above, plaintiffs Adolfo House Distributing Corp. d/b/a/ Adolfo's House ("Adolfo House"), Adolfo Perez, Jr. ("Perez Jr.") and Adolfo Perez, Sr. ("Perez Sr.") (collectively "the insureds") sue Travelers Property and Casualty Insurance Company ("Travelers") for a declaratory judgment that Travelers was obligated to defend them in a lawsuit that has now been settled. The case is now before the court on the parties' cross motions for summary judgment, including plaintiffs' motion for summary judgment against Travelers [DE# 37] and Traveler's motion for summary judgment against plaintiffs [DE# 31].

All parties seek a judicial determination as to whether Travelers had a duty to defend and indemnify plaintiffs in an underlying lawsuit asserting claims for, inter alia, trademark and trade dress infringement. For reasons set forth below, plaintiffs' motion for summary judgment shall be granted, and defendant's motion for summary judgment denied.

I. Factual Background

In October, 1999, Razac Products Co., Inc. ("Razac") sued Adolfo House and the Perezes, along with various other entities, alleging that Adolfo House violated federal and state laws prohibiting trademark and trade dress infringement, trademark dilution, and unfair competition by advertising for sale and distribution hair care products and hand lotions bearing certain trademarks allegedly identified with and owned by Razac.

Travelers issued a Commercial General Liability ("CGL") Policy, No. Y660-446-N532A-TIL-99 ("the policy"), to Adolfo House which was in effect between July 12, 1999 through July 12, 2000. Immediately upon service of the Razac complaint, the insureds tendered the claim to Travelers for a defense. Travelers declined coverage and denied defense of the claim by letter dated January 7, 2000. This lawsuit ensued.

Thus, on February 23, 2000, the insureds filed suit in this court seeking a declaration of coverage and determination of damages allegedly resulting from Travelers' wrongful refusal to defend and indemnify it against the Razac claim. During the pendency of this suit, the insureds settled the underlying claim with Razac for payment of monetary and non-monetary damages, including forfeiture of allegedly infringing beauty products to Razac.

II. Standard of Analysis

This case is before the court under exercise of its diversity jurisdiction. Therefore, the court must look to the Florida's choice of law rules to determine the law applicable to this action. LaFarge Corp. v. Travelers Indem. Co., 118 F.3d 1511, 1515 (11th Cir.1997); Bituminous Casualty Corp. v. Advanced Adhesive Technology, Inc., 73 F.3d 335, 337 (11th Cir.1996). Under Florida's choice of law rules, interpretation of insurance contracts governing mobile risks is traditionally governed by the law of the place of making, which is generally considered to be the place where the policy is delivered. Sturiano v. Brooks, 523 So.2d 1126 (Fla.1988); Bloch v. Berkshire Ins. Co., 585 So.2d 1137 (Fla. 3d DCA 1991). In this case, the contract for business liability insurance was issued in Florida to a Florida policy holder, and the insured's business is physically located in Florida. It is therefore clear, and the parties do not dispute, that Florida law governs interpretation of the policy.

In Florida, as in other jurisdictions, an insurer's duty to defend hinges on whether the allegations of the complaint state a claim which potentially falls within the coverages defined by the policy. This question is resolved strictly by reference to the allegations of the underlying complaint, not by the actual facts, the insured's version of the facts or the insurer's defenses. Within these confines, the central inquiry is whether the allegations "fairly and potentially" bring the transaction within the coverage provisions of the policy. Trizec Properties, Inc. v. Biltmore Construction Co., 767 F.2d 810, 811 (11th Cir.1985); State Farm Fire & Cas. Co. v. Higgins, 788 So.2d 992 (Fla. 4th DCA 2001). Thus, it is said that the duty to defend is broader than the duty to indemnify, in the sense that the insurer must defend even if the facts alleged are actually untrue, or the legal theories unsound. Id.

Where there is any doubt as to whether the duty to defend exists in a particular case, this question must be resolved against the insurer and in favor of the insured. See Marr Investments, Inc. v. Greco, 621 So.2d 447, 449 (Fla. 4th DCA 1993); Baron Oil Co. v. Nationwide Mutual Fire Ins., 470 So.2d 810 (Fla. 1st DCA 1985). Moreover, where multiple claims are lodged, some within and some outside coverage, the insurer is obligated to defend the entire case so long as the underlying complaint alleges facts constituting at least one cause of action covered by the policy. Lime Tree Village Community Club v. State Farm General Insurance Co., 980 F.2d 1402 (11th Cir.1993); Sunshine Birds & Supplies, Inc. v. U.S. Fidelity & Guaranty Co., 696 So.2d 907 (Fla. 3d DCA 1997); Klaesen Bros., Inc. v. Harbor Ins. Co., 410 So.2d 611 (Fla. 4th DCA 1982).

In laying the allegations of the complaint against the terms of the policy in determining the potential for coverage, the interpretational analysis begins with the basic legal principle in Florida that insurance contracts are to be construed in accordance with the plain language of the policies as bargained for by the parties, with any ambiguities interpreted liberally in favor of the insured and strictly against the insurer who prepared the policy. Auto-Owners Ins. Co. v. Anderson, 756 So.2d 29 (Fla.2000); Siegle v. Progressive Consumers Ins. Co., ___ So.2d ___, 2001 WL 456531 (Fla. 4th DCA, opinion filed May 2, 2001). If the relevant policy language is susceptible to more than one reasonable interpretation, one providing coverage and another limiting coverage, an ambiguity is deemed to exist by definition and the court is bound to adopt the interpretation which favors coverage. Anderson, supra.

Florida law is equally well-settled that insuring or coverage clauses are to be construed in the broadest possible manner to effect the greatest extent of coverage. See Westmoreland v. Lumbermens Mutual Casualty Co., 704 So.2d 176 (Fla. 4th DCA 1997), and cases cited infra. On the other hand, insurance policy exclusions are construed in the narrowest possible manner, again with an eye toward maximizing the coverages afforded. See Anderson, supra; Demshar v. AAACon Auto Transport, Inc., 337 So.2d 963, 965 (Fla.1976); Blue Cross and Blue Shield of Florida, Inc. v. Steck, 778 So.2d 374 (Fla. 2d DCA 2001); St. Paul Fire & Marine Ins. Co. v. Thomas, 273 So.2d 117 (Fla. 4th DCA), cert. den., 282 So.2d 638 (Fla.1973)(espousing well settled and almost universally accepted principle of construing exclusion in a manner which affords the broadest possible coverage). More generally, in interpreting an insurance policy in accordance with these precepts, Florida law requires the court to look at the policy as a whole, and to give meaning to all of its terms. See Excelsior Ins. Co. v. Pomona Park Bar & Package Store, 369 So.2d 938, 941 (Fla.1979).

III. The Policy

The insuring agreement and exclusionary passages pertinent to the present discussion are set forth in the policy at Section 1, "Coverages," Sub-Section B, "Personal and Advertising Injury Liability" as follows:

Coverage B. Personal and Advertising Injury Liability

1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to pay as damages cause of "personal injury" or "advertising injury" to which this insurance applies....

.....

b. This insurance applies to:

(1) "Personal injury" caused by an offense arising out of your business, excluding advertising publishing, broadcasting or telecasting done by or for you (2) "Advertising injury" caused by an offense committed in the course of advertising your goods, products or services;

but only if the offense was committed in the "coverage territory" during the policy period.

2. Exclusions

This insurance does not apply to:

a. "Personal injury" or advertising injury':

(1) arising out of oral or written publication of material if done by or at the direction of the insured with knowledge of its falsity;

(2) arising out of oral or written publication of material whose first publication took place before the beginning of the policy period;

(3) arising out of the willful violation of penal statute or ordinance committed by or with the consent of the insured; or

(4) for which the insured has assumed liability in a contract or agreement. This exclusion does not apply to liability for damages that the insured would have in the absence of the contract or agreement.

The term "advertising injury," in turn, is defined at Section V "Definitions" as follows:

1. "Advertising injury" means injury arising out of one or more of the following offenses:

a. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services;

b. Oral or written publication of material that violates a person's right of privacy;

c. Misappropriation of advertising ideas or style of doing business; or

d. Infringement of copyright, title or slogan

IV. Analysis

The primary...