Eighth Floor Promotions, L.L.C. v. Cincinnati Ins. Cos.
Decision Date | 11 October 2016 |
Docket Number | No. 10–15–19.,10–15–19. |
Citation | 2016 Ohio 7259,71 N.E.3d 1262 |
Parties | EIGHTH FLOOR PROMOTIONS, L.L.C. Plaintiff–Appellant, v. The CINCINNATI INSURANCE COMPANIES, Defendant–Appellee. |
Court | Ohio Court of Appeals |
Stuart E. Scott, Cleveland, and Daniel Frech for appellant.
Nancy K. Tordai and D. Wesley Newhouse for appellee.
{¶ 1} Plaintiff–Appellant, Eighth Floor Promotions, L.L.C. ("Eighth Floor"), appeals the judgment of the Court of Common Pleas of Mercer County granting summary judgment in favor of Defendant–Appellee, The Cincinnati Insurance Companies ("Cincinnati Insurance"). On appeal, Eighth Floor argues that the trial court erred in finding that Cincinnati Insurance did not have a duty to defend it against allegations of copyright infringement. For the reasons that follow, we affirm in part, and reverse in part, the judgment of the trial court, and remand for further consideration.
{¶ 2} This case arises out of an insurance coverage dispute between Eighth Floor and Cincinnati Insurance. Eighth Floor is a Nevada limited liability company with its principal place of business in Celina, Ohio. It manufactures and sells sports awards and business gifts. It is managed by a few officers, some of whom also sit on its board of directors.
{¶ 3} Eighth Floor's Operating Agreement provides that it will "indemnify and hold harmless" its officers and directors "[i]n any "threatened * * * claim, action or proceeding to which any officer or any [director] * * * is [a] party or is threatened to be made a party by reason of its or his activities on behalf of [Eighth Floor]." (Docket No. 35, Ex. 2, p. 15).
{¶ 4} In 2010, Eighth Floor purchased an insurance policy from Cincinnati Insurance ("the Policy"). The Policy provided that Cincinnati Insurance would "pay on behalf of the ‘company’ all ‘loss' which the ‘company’ [was] required to pay as indemnification to the ‘individual insureds' resulting from any ‘claim’ first made during the ‘policy period’ * * * for a ‘wrongful act’ ". (Docket No. 33, Ex. 1–A, p. 12). The Policy defined "company" as "the ‘insured entity’ and any ‘subsidiary’ " and "individual insureds" as "[a]ll persons who were, now are, or shall become directors, officers or employees, of the ‘company’ ". (Id. at p. 14).
{¶ 5} On May 11, 2011, Eighth Floor's Chief Executive Officer, Dave Willis, received the following letter from the Business Software Alliance ("the BSA"):
(Emphasis sic.) (Docket No. 35, Ex. 4). The letter ("the audit request") was forwarded to Eighth Floor's insurance agent, who forwarded it to Cincinnati Insurance.
{¶ 6} On May 20, 2011, Eighth Floor retained counsel to conduct a software compliance audit and prepare a summary of the results; assist it in its efforts to comply with all applicable software licensing requirements; attempt to negotiate a favorable settlement with the BSA; review its applicable insurance policies; and review proposed software license purchases.
{¶ 7} On May 26, 2011, Cincinnati Insurance denied coverage for losses incurred in connection with the audit request. It explained that the audit request did not constitute a "claim" under the Policy because it was neither a "written demand for monetary damages or non-monetary relief" nor a "civil proceeding commenced by filing a complaint or similar pleading." (Docket No. 33, Ex. 1–C, p. 2). It agreed, however, to treat the audit request as a "notice of circumstances" that may give rise to a claim covered under the Policy but warned that "based on the information currently known," coverage for a future claim may be limited or precluded under one of the Policy's exclusions. (Id. )
{¶ 8} On November 9, 2011, after Eighth Floor's software compliance audit revealed numerous unauthorized software installations, Eighth Floor's counsel received the following letter from the BSA:
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