America's Recommended Mailers v. Maryland Cas. Co.

• Decision Date: 24 September 2008
• Docket Number: Case No. 4:07-CV-348.
• Citation: 579 F.Supp.2d 791
• Parties: AMERICA'S RECOMMENDED MAILERS, INC., Plaintiff, v. MARYLAND CASUALTY COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Texas

579 F.Supp.2d 791

AMERICA'S RECOMMENDED MAILERS, INC., Plaintiff, v. MARYLAND CASUALTY COMPANY, Defendant.

Case No. 4:07-CV-348.

United States District Court, E.D. Texas, Sherman Division.

September 24, 2008.

Order Denying Motion to Alter or Amend Judgment October 17, 2008.

Thomas Butler Alleman, Winstead PC, Dallas, TX, for Plaintiff.

Ellen L. Van Meir, Mariah Baker Quiroz, Thompson Coe Cousins & Irons, Dallas, TX, for Defendant.

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT

RICHARD A. SCHELL, District Judge.

The following motions are pending before the court:

1. Defendant's motion for summary judgment (docket entry # 18);

2. Plaintiff's suggestions in opposition to Defendant's motion for summary judgment (docket entry # 23);

3. Plaintiff's cross-motion for partial summary judgment and supporting memorandum of law (docket entry #24); and

4. Defendant's reply to Plaintiff's suggestions in opposition to Defendant's summary judgment motion, and response to Plaintiff's cross-motion for partial summary judgment (docket entry # 25).

Having considered the parties' motions for summary judgment and the respective responses, the court is of the opinion that the Plaintiff's motion for summary judgment should be denied and the Defendant's motion for summary judgment should be granted.

BACKGROUND

The relevant facts of this case are not in dispute. The Defendant, Maryland Casualty Company ("Maryland"), issued a commercial property and general liability insurance policy to the Plaintiff, America's Recommended Mailers, Inc. ("ARM"), under policy number PAS 35847491. The policy was effective from December 1, 2003 to December 1, 2004. The policy was subsequently renewed twice. The first renewal was effective December 1, 2004 to December 1, 2005 and the second renewal was effective December 1, 2005 to December 1, 2006.

In September 2006, AARP sued ARM and others in the General Court of Justice, Superior Court Division, Guilford County, North Carolina, in a lawsuit styled AARP v. American Family Prepaid Legal Corporation, Inc., et al., cause number 06-CVS-10216. As alleged by AARP, the underlying facts leading to the instant lawsuit are as follows (see Def.'s Mtn. for Summary Judgment, Exhibit 1—Plaintiff's Amended Complaint):

1. AARP's insurance and financial services are advertised, provided and sold under the mark "AARP". AARP licenses its mark to certain companies that offer financial services. AARP receives licensing fees for the use of its mark in connection with the sale of financial and insurance services. (¶ 15);

2. As a result of AARP's continuous and widespread use of its mark, the mark has become famous and has acquired significant goodwill and widespread public recognition throughout the United States. (¶ 17);

3. ARM and others¹ sold unauthorized lead cards featuring AARP's trademark to insurance agencies and financial services companies. (¶ 19);

4. The Mail House Defendants mailed the AARP cards through the United States mail by the tens of millions to seniors throughout the United States. (¶ 20) 5. Recipients of the Mail House Defendants' AARP cards falsely believed that such cards came from AARP. The Mail House Defendants designed the cards to create such an impression. (¶ 21);

6. The cards misrepresented AARP's views concerning probate matters. (¶ 22);

7. Certain other Defendants, known as the Financial Services Defendants, purchased the AARP cards from the Mail House Defendants. The Financial Services Defendants hired ARM to mail the AARP cards via the United States mail to senior citizens throughout the United States. The completed AARP cards were then returned to a post office box that is owned and operated by the Mail House Defendants. The Mail House Defendants subsequently sent the cards to the Financial Services Defendants. (¶¶ 26 & 27);

8. Thereafter, the Financial Services Defendants contacted the senior citizens who completed and returned the cards to set up an appointment to provide the free information offered on the card. The free information was actually a guise for a high pressure sales pitch about financial services and living trusts. Because the senior citizens believed that the AARP cards actually came from AARP, they also believed that the Financial Services Defendants, as well as their products and services, were endorsed by, or connected to, AARP. (¶ 28);

9. The Salesman Defendants, who are representatives of some of the Financial Services Defendants, followed-up on the completed and returned AARP cards by attempting to sell living trusts and financial services to senior citizens. (¶ 34). In doing so, the Salesman Defendants deceived consumers into believing that the cards came from, and were endorsed by, AARP. (¶ 36);

10. "The Financial Services Defendants and the Mail House Defendants constitute an enterprise that is engaged, and have conspired to engage, in a scheme to pass off living trusts, annuities and other financial and insurance products as AARP-endorsed. The Financial Services Defendants and the Mail House Defendants use the United States Mail and the United States Post Office Boxes in furtherance of that scheme. The predicate acts for the racketeering are mail fraud and trademark counterfeiting." (¶ 39);

11. "The Financial Services Defendants and the Mail House Defendants have conspired together to design and create and then mail counterfeit AARP cards to millions of seniors throughout the United States via the United States Mail and have used United States Post Office Boxes in furtherance of that scheme. The scheme is aimed at millions of seniors and has been ongoing between the Financial Services Defendants and the Mail House Defendants since at least as early as July 2004. The counterfeit AARP cards used and designed by the Financial Services Defendants and the Mail House Defendants cause seniors to believe that they are dealing with AARP and that the financial and insurance products and services of the Financial Services Defendants' [sic] are AARP-endorsed." (¶ 40);

12. AARP sued the Defendants as follows:

A. Violations of the Racketeering Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962; B. Trademark counterfeiting in violation of 15 U.S.C. § 1114 ("Defendants use a counterfeit AARP mark in connection with the advertising, promotion, distribution and sale of financial and insurance products, including annuities and living trusts, and in connection with printed materials on certain subjects, which constitutes trademark counterfeiting in violation of 15 U.S.C. section 1114(a).") (¶ 103);

C. Trademark infringement, false designation of origin and unfair competition in violation of 15 U.S.C. § 1114 ("Defendants are using AARP in connection with advertising, promotion, distribution and sale of lead cards, mailers, living trusts, annuities and other financial and insurance products and services.") (¶ 108);

D. Trademark infringement, false designation of origin and unfair competition in violation of 15 U.S.C. § 1125 ("Defendants are using AARP in connection with the advertising, promotion, distribution and sale of their lead cards, mailers, living trusts, annuities and other financial products and services.") (¶ 114);

E. Trademark dilution in violation of 15 U.S.C. § 1125 ("Defendants are using Plaintiff's identical mark AARP in connection with the advertising, promotion, distribution and sale of Defendants' products and services.") (¶ 120); and

F. Violations of North Carolina laws.

LEGAL STANDARD

The purpose of summary judgment is to isolate and dispose of factually unsupported claims or defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED.R.CIV.P. 56(c). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The substantive law identifies which facts are material. See id. at 248, 106 S.Ct. 2505.

The party moving for summary judgment has the burden to show that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. See id. at 247, 106 S.Ct. 2505. If the movant bears the burden of proof on a claim or defense on which it is moving for summary judgment, it must come forward with evidence that establishes "beyond peradventure all of the essential elements of the claim or defense." Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). But if the nonmovant bears the burden of proof, the movant may discharge its burden by showing that there is an absence of evidence to support the nonmovant's case. Celotex, 477 U.S. at 323, 325, 106 S.Ct. 2548; Byers v. Dallas Morning News, Inc., 209 F.3d 419, 424 (5th Cir. 2000). Once the movant has carried its burden, the nonmovant "must set forth specific facts showing that there is a genuine issue for trial." FED.R.CIV.P. 56(e). The nonmovant must adduce affirmative evidence. See Anderson, 477 U.S. at 257, 106 S.Ct. 2505.

DISCUSSION AND ANALYSIS

1. DUTY TO DEFEND

The issue for determination is whether Maryland has a duty to defend ARM in the underlying state court action. Maryland argues that the claims against ARM in the underlying lawsuit do not state a claim for "personal and advertising injury" as that term is defined in Maryland's policies. Additionally, Maryland argues that the following exclusions bar coverage:

1. trademark exclusion;

2. insureds in media exclusion;

3. prior publication exclusion; and

4. knowing violation of rights...