Gibson v. First Mercury Ins. Co.
| Decision Date | 30 September 2022 |
| Docket Number | 3:21-cv-1522 (SRU) |
| Parties | CIELO JEAN GIBSON, et al., Plaintiffs, v. FIRST MERCURY INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — District of Connecticut |
RULING ON DEFENDANT'S MOTION TO DISMISS
In 2018 and 2019, three groups of professional models each brought a lawsuit against three different gentlemen's clubs alleging that each club unlawfully used the models' images and likenesses. Each club requested a defense and sought indemnification from its commercial general liability insurer, First Mercury Insurance Company (“First Mercury”). In each case, First Mercury denied having duties to defend and indemnify the club. Eventually, each suit came to a resolution by which the club assigned its rights under the salient First Mercury policy to the plaintiffs.
Many of the plaintiffs in the underlying lawsuits now bring suit as assignees of the clubs, seeking a declaration that First Mercury owes each club a duty to defend it and indemnify it in the underlying litigation, and seeking damages arising from First Mercury's failure to do so. First Mercury continues to deny any duty to defend or indemnify the underlying insureds, and it moves to dismiss this coverage action.
Because the Plaintiffs plausibly allege that First Mercury had a duty to defend its insureds and because it would be premature to rule on First Mercury's duty to indemnify the underlying defendants at this time, I deny First Mercury's motion to dismiss.
1. The Underlying Lawsuits[1]
Plaintiffs Cielo Jean Gibson, Dessie Mitcheson, Marketa Kazdova, Brooke Taylor, Jessica Burciaga, Brooke Banx, Lina Posada, Joanna Krupa, Marta Andretti, Arianny Celeste Lopez, Abigail Ratchford, and Tara Leigh Patrick are twelve professional models who were plaintiffs in one or more lawsuits filed against three gentlemen's clubs insured by First Mercury under a materially identical commercial liability insurance policy (“the Policy”): Mr. Happy's, Inc., in Connecticut; Liberty Entertainment Group, LLC, in Arizona and KHG of San Antonio, L.L.C., in Texas. Compl., Doc. No. 1 at 4 ¶ 20.
Plaintiffs Cielo Jean Gibson, Dessie Mitcheson, Marketa Kazdova, Brooke Taylor (collectively, “the Connecticut Plaintiffs”) sued Mr. Happy's, Inc. d/b/a Mr. Happy's Cafe (“Mr. Happy's”), and its owner Frederick Toupin (collectively, “the Mr. Happy's Defendants”), in the United States District Court for the District of Connecticut. Id. at 2 ¶ 4; Nobriga, et al. v. Mr. Happy's Inc., Dkt. No. 19-cv-868 (JAM) (D. Conn. June 5, 2019) (“the Connecticut Action”).
The Connecticut Plaintiffs principally alleged that the Mr. Happy's Defendants used each plaintiff's image in advertising without her consent to “promote” the “strip club,” even though each plaintiff had never been “employed by . . . or otherwise . . . affiliated or associated with” Mr. Happy's, received no remuneration for the club's use of her images, and the use “create[d] the false impression” that each plaintiff had “worked at” or “endorsed” the club. Conn. Compl., Doc. No. 19-1, at 1 ¶ 1, 11 ¶¶ 48-50, 12 ¶ 54, 13 ¶¶ 61-65 (“Connecticut Complaint”). As a result, each plaintiff was “deprive[d]” of income “relating to the commercialization of [her] Images;” and harmed by the “implication” that she is a “stripper, endorse[s] a strip club, or [is] otherwise associated or affiliated with a strip club.” Id. at 12 ¶¶ 57, 59. The Connecticut Plaintiffs alleged, on information and belief, that the Mr. Happy's Defendants did so “with the intent of causing” each plaintiff “irreparable harm.” Id. at 13 ¶ 66.
In addition, the Connecticut Plaintiffs alleged that the Mr. Happy's Defendants were “at least negligent” in publishing the relevant images, because the Mr. Happy's Defendants “knew, or should have known, that Plaintiffs were not employed by the Club, had no affiliation with the Club, had not consented to the use of their Images, and had not been compensated for the use of their Images;” that the Mr. Happy's Defendants were “negligent in their failure to promulgate policies and procedures concerning the misappropriation of the Images of models that were used on the Mr. Happy's Cafe websites and social media accounts;” or that the Mr. Happy's Defendants “negligently failed to enforce those policies, communicate them to employees, and/or supervise their employees in order to ensure that these policies, along with [f]ederal and Connecticut [law], were not violated.” Id. at 20 ¶ 147, 22 ¶¶ 155-157.
The Connecticut Plaintiffs brought suit for (1) violation of section 43 of the Lanham Act, 15 U.S.C. § 1125(a)(1), which prohibits false or misleading representations of fact in commercial advertising, and the false or misleading use of a person's image for commercial purposes; (2) violation of the plaintiffs' common law right of privacy, with respect to the defendants' appropriation of the plaintiffs' likenesses; (3) violation of the plaintiffs' common law right of privacy, based on publicity that unreasonably placed the plaintiff in a false light before the public; (4) violation of the Connecticut Unfair Trade Practices Act (“CUTPA”), Conn. Gen. Stat.§ 42-110b; (5) defamation; and (6) various common law torts, including conversion. Id. at 1 ¶ 2.
After the Connecticut Action was filed, the Mr. Happy's Defendants tendered the complaint to First Mercury. Compl., Doc. No. 1, at 6 ¶ 34, 8 ¶¶ 48-49. First Mercury, asserting that the Policy excluded the alleged conduct from coverage, denied a defense and indemnification. Id.
The Connecticut Action ultimately settled. Connecticut Action, Doc. No. 76. The terms of the settlement were not provided to the Court. As a result of the settlement, instant plaintiffs Cielo Jean Gibson, Dessie Mitcheson, Marketa Kazdova, and Brooke Taylor were assigned the Mr. Happy's Defendants' rights in its First Mercury insurance policy. Compl., Doc. No. 1, at 3 ¶¶ 12, 13.
Plaintiffs Jessica Burciaga, Brooke Banx, Lina Posada, Joanna Krupa, Marta Andretti, Arianny Celeste Lopez, and Abigail Ratchford (collectively, “the Arizona Plaintiffs”) sued Liberty Entertainment Group, LLC (“Liberty”), owner of the Dream Palace, in the Superior Court of Arizona, Maricopa County. Id. at 2 ¶ 5; see also Burciaga, et al. v. Liberty Entertainment Group, LLC, et al., Dkt. No. CV2018-052191 (Ariz. Super. Ct. Apr. 24, 2018) (“the Arizona Action”).
The Arizona Plaintiffs principally alleged that Liberty used each plaintiff's image in advertising for the purpose of “promoting, advertising, and marketing” the Dream Palace, even though she did not consent to or authorize such use. See generally Ariz. Compl., Doc. No. 19-3 (“Arizona Complaint”). The Arizona Plaintiffs also alleged that Liberty “acted “at a minimum . . . with reckless indifference” by “expressly permitting, allowing and condoning” the use of the plaintiffs' images on its website and/or social media and, thereby, potentially creating a “false and misleading impression” about the plaintiffs. Id. at 18 ¶ 56, 23 ¶ 88.
The Arizona Plaintiffs brought suit for (1) violation of the common law right of publicity, with respect to misappropriation of their likeness; (2) violation of section 43 of the Lanham Act, 15 U.S.C. § 1125(a)(1); and (3) violation of plaintiffs' Brooke Banx and Abigail Ratchford's common law right of privacy based on publicity that unreasonably places each of them in a false light before the public. See generally Ariz. Compl., Doc. No. 19-3.
After the Arizona Action was filed, Liberty tendered the complaint to First Mercury, and First Mercury denied defense and coverage, asserting that the relevant commercial general liability policies excluded the alleged conduct from coverage. Compl., Doc. No. 1, at 11 ¶ 7071.
The parties to the Arizona Action entered into a consent judgment of $540,000 (“Arizona Judgment”). Id. at 3 ¶ 10, 12 ¶ 79-80; see also Ariz. Judgment, Doc. No. 16-5. The Arizona Judgment summarized the plaintiffs' allegations: “Plaintiffs alleged in the Complaint that Defendant used their images without consent or remuneration, and that the advertisements depicted Plaintiffs in a manner that stated or implied that they were promoting Dream Palace, worked thereat, or were otherwise associated, affiliated, or connected with same.” Id. at 3 ¶ 2. In addition, the parties stipulated that the amount was “reasonable in light of what a jury might reasonably award in compensation attributable to Defendant's alleged conduct coupled with the amount of attorneys' fees and costs....” Id. at 4 ¶ 7.
As a result of the Arizona Judgment, instant plaintiffs Jessica Burciaga, Brooke Banx, Lina Posada, Joanna Krupa, Marta Andretti, Arianny Celeste Lopez, and Abigail Ratchford were assigned Liberty's rights in its First Mercury insurance policy. Compl., Doc. No. 1., at 3 ¶¶ 12, 13.
Plaintiffs Tara Leigh Patrick and Cielo Jean Gibson (collectively “the Texas Plaintiffs”) sued KHG of San Antonio in the United States District Court for the Western District of Texas.[2]Compl., Doc. No. 1, at 3 ¶ 6; Patrick, et al. v. KHG of San Antonio, et al., Dkt. No. 18-cv-910 (W.D. Tex. Aug. 31, 2018) (“the Texas Action”).
The Texas Plaintiffs alleged that KHG, owner of Tiffany's Cabaret, had used their images in advertising without their authorization “to promote [KHG's] strip clubs,” even though they had never been “associated with” KHG, received no renumeration for its use of their images, and the use “create[d] the false impression . . . that [they] worked as strippers at . . . or endorsed” KHG's club. See generally Tex. Compl., Doc. No. 19-2 (“Texas Complaint”).
The Texas Plaintiffs...
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