Allstate Ins. Co. v. Airport Mini Mall, LLC

• Decision Date: 26 September 2017
• Docket Number: CIVIL ACTION NO. 1:15–cv–3086–AT
• Citation: 265 F.Supp.3d 1356
• Parties: ALLSTATE INSURANCE COMPANY, Petitioner, v. AIRPORT MINI MALL, LLC, a Georgia Limited Liability Company doing business as Old National Discount Mall, Yes Assets, LLC, a Georgia Limited Liability Company, Chienjung Yeh, also known as Jerome Yeh, and Donald Yeh, Individually, Respondents.
• Court: U.S. District Court — Northern District of Georgia

265 F.Supp.3d 1356

ALLSTATE INSURANCE COMPANY, Petitioner,

v.AIRPORT MINI MALL, LLC, a Georgia Limited Liability Company doing business as Old National Discount Mall, Yes Assets, LLC, a Georgia Limited Liability Company, Chienjung Yeh, also known as Jerome Yeh, and Donald Yeh, Individually, Respondents.

CIVIL ACTION NO. 1:15–cv–3086–AT

United States District Court, N.D. Georgia, Atlanta Division.

Signed September 26, 2017

Erica L. Parsons, Samuel Hancock Sabulis, Lueder, Larkin & Hunter, LLC, Atlanta, GA, for Petitioner.

Jeffrey D. Diamond, Law Offices of Jeffrey D. Diamond, Atlanta, GA, for Respondents.

ORDER

Amy Totenberg, United States District Judge

This insurance coverage dispute arises out of the contributory trademark infringement action brought by Luxottica Group, S.p.A., and Oakley, Inc.¹ , against Respondents Airport Mini Mall, LLC ("AMM"), Yes Assets LLC ("Yes"), Jerome Yeh, and Donald Yeh for the sale of counterfeit Ray–Ban and Oakley sunglasses at Respondents' discount mall. See Luxottica Group, S.p.A., et al v. Airport Mini Mall, LLC, et al , Civil Action No. 1:15–cv–01422–AT. Respondents obtained Commercial General Liability Insurance Policies from Allstate Insurance Company ("Allstate") in connection with their ownership and operation of the discount mall. Allstate filed a Motion for Summary Judgment [Doc. 51], seeking a declaration that Luxottica's trademark infringement claims are not covered under the Policies. Alternatively, Allstate seeks summary judgment in its favor that Respondents failed to comply with the Policies' notice provision as a condition precedent to coverage. For the reasons set forth below, the Court GRANTS Allstate's Motion for Summary Judgment.

I. BACKGROUND

At all times relevant to this action, Respondents had Commercial General Liability Policies issued by Allstate to Yes Assets, LLC, Policy No. 648564370, and to Airport Mini Mall, LLC, Policy No. 648129676 (collectively "Policies") in connection with their ownership and operation of the Old National Discount Mall ("discount mall"). (Allstate SMF ¶ 19; Resp. SMF ¶ 19.) The Policies provide coverage for "Personal and Advertising Injury² " as follows:

COVERAGE B PERSONAL AND ADVERTISING INJURY

1. Insuring Agreement

a. We will pay those sums 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. However, we will have no duty to defend the insured against any "suit" seeking damages for "personal and advertising injury" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" or any offense and settle any claim or "suit" that may result.

....

b. This insurance applies to "personal and advertising" injury caused by an offense arising out of your business but only if the offense was committed in the "coverage territory" during the policy period.

(Allstate SMF ¶ 20; Resp. SMF ¶ 20.) The Policies define "advertising injury" as injury "arising out of one or more" specifically identified offenses, including "the use of another's advertising idea in your 'advertisement';" and "infringing upon another's copyright, trade dress or slogan in your 'advertisement.' " (Id. ) "Advertisement" is defined as "a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters." (Id. )

The Policies contain certain coverage exclusions:

2. Exclusions

This insurance does not apply to:

a. Knowing Violations Of Rights Of Another

"Personal and advertising injury" caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict "personal and advertising injury;

b. Material Published With Knowledge Of Falsity

"Personal and advertising injury" arising out of oral or written publication of material, if done by or at the direction of the insured with knowledge of its falsity.

....

i. Infringement of Copyright, Patent, Trademark or Trade Secret

"Personal and advertising injury" arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights. Under this exclusion, such other intellectual property rights do not include the use of another's advertising idea in your "advertisement."

However, this exclusion does not apply to infringement, in your "advertisement," of copyright, trade dress or slogan.

....

l. Unauthorized Use Of Another's Name Or Product

"Personal and advertising injury" arising out of the unauthorized use of another's name or product in your e-mail address, domain name, or metatag or any other similar tactics to mislead another's potential customers.

(Id. )

Finally, the Policies also include the following notice provision:

SECTION IV—COMMERCIAL GENERAL LIABILITY CONDITIONS

....

2. Duties In The Event Of Occurrence, Offense, Claim Or Suit

a. You must see to it that we are notified as soon as practicable of an "occurrence" or an offense which may result in a claim. To the extent possible, notice should include:

(1) How, when and where the "occurrence" or offense took place;

(2) The names and address of any injured persons and witnesses; and(3) The nature and location of any injury or damage arising out of the "occurrence" or offense.

(Id. )

On November 21, 2014, officers from the United States Department of Homeland Security and the College Park Police Department raided the Discount Mall and seized several thousand counterfeit items, including counterfeit Ray–Ban and Oakley products. (Compl., Ex. A, Doc. 2–1 ¶ 36; Allstate SMF ¶ 8; Resp. SMF ¶ 8.) The raid resulted in the arrest of 16 of the discount mall's tenants. (Compl., Ex. A, Doc. 2–1 ¶ 36.)

On December 9, 2014, Luxottica sent a cease and desist letter to Respondents AMM, Jerome Yeh and Donald Yeh. (Allstate SMF ¶ 9; Resp. SMF ¶ 9; Ex. A, Allstate MSJ, Doc. 51–4 at 34–37.)³ The December 9, 2014 letter was written by litigation counsel for Luxottica, Jason Groppe, and advised Respondents of the following: (1) tenants of the discount mall were engaged in selling counterfeit Ray–Ban and Oakley merchandise; (2) on November 21, 2014 law enforcement personnel seized more than 3,400 counterfeit Ray–Ban and Oakley products that were being sold by the tenants; (3) Luxottica could bring a civil action for damages and other relief under the Lanham Act for trademark infringement; (4) Respondents could be held liable as landlords for the trademark violations of their tenants if they knew of, had reason to know of, or were willfully blind to the sale of counterfeit goods; and (5) Luxottica intended to hold Respondents responsible for all damages if they failed to take action to prevent the sale of counterfeit products by the tenants at the discount mall. (Id. ) The letter also demanded that Respondents take steps to prevent any further sale of the counterfeit goods and submit information to Luxottica detailing the steps Respondents would take to correct the problem as well as the names and contact information for the tenant-vendors responsible for selling the counterfeit merchandise. (Allstate SMF ¶ 10; Resp. SMF ¶ 10.)

On April 22, 2015, Luxottica sent Respondents a second cease and desist letter.⁴ (Ex. A, Allstate MSJ, Doc. 51–4 at 48–52.) In the April 22, 2015 letter, Luxottica advised Respondents that on March 30, 2015, Luxottica's undercover investigator purchased counterfeit Ray–Ban products from four different vendors at the discount mall. Luxottica again advised Respondents that they could be held liable for the trademark violations of their tenants and that Luxottica intended to hold them responsible for all damages if they failed to take appropriate action to police the sale of counterfeit merchandise bearing Luxottica's trademarks. (Id. )

On April 29, 2015, Luxottica filed a Complaint against Respondents AMM, Yes, Jerome Yeh, and Donald Yeh for contributory trademark infringement under the Lanham Act.⁵ (Allstate SMF ¶¶ 5, 12; Resp. SMF ¶¶ 5, 12; Compl., Ex. A, Doc. 2–1.) Respondents were served with the lawsuit on May 27, 2015. (Add'l SMF ¶ 17; Allstate Resp. ¶ 17.)

The Complaint, as amended, alleged that Respondents engaged in contributory trademark infringement through their "ownership, operation, control, and management" of the discount mall. (Allstate SMF ¶ 2; Resp. SMF ¶ 2.) On several occasions Luxottica "discovered multiple vendors advertising, displaying, offering for sale, and/or selling in plain view counterfeit Ray–Ban and Oakley merchandise on property jointly owned, managed and operated by" the Respondents. (Id. ¶¶ 34–43; Allstate SMF ¶ 11; Resp. SMF ¶ 11.) Luxottica alleged that the discount mall vendors had engaged in direct trademark infringement and that Respondents' conduct constituted "contributory trademark infringement." (Allstate SMF ¶ 12; Resp. SMF ¶ 12.)

Specifically, Luxottica alleged that Respondents were "contributorily liable for the infringing activities" of their tenants because Respondents: (1) facilitated the counterfeiting activities of its tenants at the discount mall by supplying the means for the tenants to infringe Luxottica's trademarks and "with knowledge of such activities, deliberately or recklessly willfully blinded themselves to th[e] illegal conduct" in order to profit from the revenues it produced; (2) "acted with reckless disregard for, and in bad faith and with willful blindness toward Luxottica Group and Oakley's trademarks;" and (3) "either intentionally and deliberately, or with reckless disregard and willful blindness, benefitted from the illegal counterfeiting activities described herein." (Compl., Ex. A, Doc. 2–1; Allstate SMF ¶¶ 13–15; Resp. SMF ¶¶ 13–15.)

Respondents contracted with Greg Dickerson to provide property management services for the discount mall, and in that role Dickerson was responsible for overseeing the mall's day to...