Gulf & Western Industries, Inc. v. Seaboard Sur. Co.

• Decision Date: 24 April 1984
• Citation: 100 A.D.2d 820,474 N.Y.S.2d 754
• Court: New York Supreme Court — Appellate Division
• Parties: GULF & WESTERN INDUSTRIES, INC. et al., Plaintiffs-Respondents, v. SEABOARD SURETY COMPANY, Defendant-Appellant.

Page 754

474 N.Y.S.2d 754

100 A.D.2d 820

GULF & WESTERN INDUSTRIES, INC. et al., Plaintiffs-Respondents, v. SEABOARD SURETY COMPANY, Defendant-Appellant.

Supreme Court, Appellate Division,

First Department.

April 24, 1984.

H.J. Smith, New York City, for plaintiffs-respondents.

J.F. Rittinger, New York City, for defendant-appellant.

Before KUPFERMAN, J.P., and SULLIVAN, ASCH, BLOOM and MILONAS, JJ.

MEMORANDUM DECISION.

Order, Supreme Court, New York County, entered March 11, 1983, which, inter alia, denied defendant's motion for partial summary judgment dismissing that portion of the first cause of action seeking "incidental expenses" in the amount of $442,586 and money damages in the sum of $175,000, unanimously modified, on the law, without costs or disbursements, to grant the motion insofar as the claim for incidental expenses is concerned, and, except as thus modified, affirmed.

Plaintiff, an insured under an Advertiser's Liability Policy, settled a lawsuit against it by Consolidated Foods Corporation for trademark infringement and unfair competition arising out of the packaging and advertising of plaintiff's product, L'Eggs pantyhose. Trademark infringement was excluded under the policy. Unfair competition was not. Shortly after the commencement of the underlying action plaintiff and defendant had agreed that except for a trademark infringement cause of action all coverage questions with respect to the complaint would be reserved for determination pending the outcome of the underlying action. At that time defendant had obligated itself to pay the legal fees of one of the law firms plaintiff had engaged to defend that action. As part of the settlement of the underlying action plaintiff was required to pay $175,000 to Consolidated as liquidated damages on its unfair competition claim. Recovery of that sum is sought in this action as well as the "incidental expenses", totalling $442,586, allegedly expended by plaintiff in complying with the injunctive provisions of the consent judgment entered on the settlement agreement. Those expenses were incurred in changing certain of plaintiff's hosiery packages, point-of-sale material, promotional displays and consumer targeted material. On its motion for summary judgment, defendant sought, inter alia, dismissal of the claims for incidental expenses and reimbursement of the $175,000 payment. It claimed that incidental expenses are not covered under the policy and that the payment of $175,000 was made...