Hyman v. Nationwide Mut. Fire Ins. Co., No. 01-15497.

Decision Date06 September 2002
Docket NumberNo. 01-15497.
PartiesLarry S. HYMAN, as Assignee of Double R Specialty Molding Co., Inc., Plaintiff-Appellant, v. NATIONWIDE MUTUAL FIRE INSURANCE CO., Defendant-Appellee.
CourtU.S. Court of Appeals — Eleventh Circuit

Michael J. Bradford, Tampa, FL, for Plaintiff-Appellant.

Anthony J. Russo, Butler, Burnette & Pappas, Tampa, FL, for Defendant-Appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before BARKETT and MARCUS, Circuit Judges, and HIGHSMITH*, District Judge.

MARCUS, Circuit Judge:

At issue in this appeal is whether a jury verdict against the Double R Specialty Molding Co., Inc. ("Double R") for violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), is covered under a commercial general liability insurance policy issued by Nationwide Mutual Fire Insurance Co. ("Nationwide"). Both parties moved for summary judgment and the district court granted summary judgment in favor of Nationwide. It found that the verdict was not covered under the terms of the liability insurance policy because the Lanham Act violation could not result in an "advertising injury," as that term is defined in the policy, and that, even if it could, the jury's conclusion that Double R had acted "willfully" invoked a policy exclusion precluding coverage for advertising injuries caused "by or at the direction of the insured with knowledge of its falsity."

Upon careful review, we conclude that the Lanham Act violation gave rise to a covered "advertising injury" under the policy, that there was a causal connection between the injury suffered and Double R's advertising activities, and therefore that the jury award is covered under the insurance policy. Moreover, we find that because the "knowledge of falsity" exclusion in the insurance policy is ambiguous and, under Florida law, must be construed narrowly, it does not bar coverage in this case. Accordingly, we reverse the district court's grant of summary judgment in favor of Nationwide and remand the case with instructions to grant Hyman's motion for summary judgment.

I.

The relevant facts and procedural history are straightforward. On March 1, 1988, a patent was issued to Dale Klaus, vice-president of Inter-Global, Inc. ("Inter-Global"), for the design of a mounting for a particular type of outdoor plastic light.1 Klaus assigned his rights to that patent to DAL Limited Liability Company ("DAL"), which then granted Inter-Global the right to manufacture and sell the mounting. Inter-Global, in turn, sold the mounting in two pieces designated as the B-1 and B-1S bases. In April 1989, Double R began manufacturing a similar mounting with pieces designated as DRB-1, DRB-1S, DRB-3, and DRB-3S bases. Both Inter-Global and Double R marketed their products to equipment manufacturers, which then sold completed lighting fixtures to retail stores.

In November 1994, Inter-Global and DAL filed suit against Double R in the United States District Court for the Eastern District of Missouri alleging patent infringement and unfair competition. The suit subsequently was transferred to the Middle District of Florida. The complaint alleged three causes of action: direct patent infringement; indirect or contributory infringement; and unfair competition in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). The Lanham Act claim alleged that Double R had used artwork from Inter-Global's brochures in its advertisements and designated its products using model numbers similar to those used by Inter-Global.2

The case proceeded to trial in November 1998. The jury found in favor of Double R on the direct and indirect patent infringement counts, but found for Inter-Global and DAL on the Lanham Act claim.3 The jury also found that Double R had acted willfully. Accordingly, it awarded DAL and Inter-Global $400,000 in damages. That award was modified by the district court in February 1999 to include $206,892 in prejudgment interest, for a total judgment of $606,892.

Subsequently, Double R sought indemnity for the judgment from Nationwide Mutual Fire Insurance Co., the insurance company from which it had purchased a commercial general liability insurance policy in December 1992. The policy provides coverage for "`[a]dvertising injury' caused by an offense committed in the course of advertising [Double R's] goods, products or services." It defines "advertising injury" to include:

injury arising out of one or more of the following offenses:

a. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organizations' goods, products or services;

b. Oral or written publication of material that violates a person's right of privacy;

c. Misappropriation of advertising ideas or style of doing business; or

d. Infringement of copyright, title or slogan.

The "advertising injury" coverage is subject to the following exclusions:

This insurance does not apply to:

a. "Personal injury" or "advertising injury:"

(1) Arising out of oral or written publication of material, if done by or at the direction of the insured with knowledge of its falsity;

(2) Arising out of oral or written publication of material whose first-publication took place before the beginning of the policy period (3) Arising out of the willful violation of a penal statute or ordinance committed by or with the consent of the insured....

In response to Double R's claim under the "advertising injury" provision of the policy, Nationwide sent Double R a letter dated November 16, 1994, in which it denied coverage. Specifically, the letter stated that the Lanham Act claim did not constitute an "advertising injury" as that term is defined by the policy and that the claim was subject to one or more of the exclusions described above. It also said that the policy did not cover "willful" patent infringement or unfair competition.4

In December 1999, Double R effected an "Assignment for the Benefit of Creditors," in which it assigned all assets, including "proceeds from insurance policies" to Larry Hyman. In his capacity as Double R's assignee, Hyman filed suit in state court in Hillsborough County, Florida on July 20, 2000 against Nationwide. He sought a declaratory judgment establishing that the judgment against Double R was covered by the insurance policy. Nationwide removed the case to the Middle District of Florida. At the close of discovery, both Hyman and Nationwide moved for summary judgment.

On August 23, 2001, the district court granted Nationwide's motion for summary judgment and denied Hyman's motion. The district court concluded that the "advertising injury" provision of the insurance policy did not cover Double R's Lanham Act violation. Specifically, it found that the violation did not fall under the coverage for "misappropriation of advertising ideas or style of doing business." In addition, the district court found that, even if the violation gave rise to a covered "advertising injury," summary judgment in favor of Nationwide still would be proper because the "knowledge of falsity" exclusion barred coverage. Specifically, the district court concluded that the jury's finding that Double R had acted "willfully" invoked the policy exclusion precluding coverage for injuries "[a]rising out of oral or written publication of material, if done by or at the direction of the insured with knowledge of its falsity." On appeal, Hyman argues that the district court erred in reaching those conclusions.

II.

We review a "district court's grant of summary judgment de novo, applying the same legal standards used by the district court." Gerling Global Reinsurance Corp. of Am. v. Gallagher, 267 F.3d 1228, 1233 (11th Cir.2001) (citing Hilburn v. Murata Elecs. N. Am., Inc., 181 F.3d 1220, 1225 (11th Cir.1999)); see also Gray v. Manklow (In re Optical Techs., Inc.), 246 F.3d 1332, 1334-35 (11th Cir.2001). Thus, summary judgment is appropriate where "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). In making this assessment, we "view the evidence and all factual inferences therefrom in the light most favorable to the party opposing the motion," and resolve "[a]ll reasonable doubts about the facts ... in favor of the non-movant.'" Burton v. City of Belle Glade, 178 F.3d 1175, 1187 (11th Cir.1999) (quoting Clemons v. Dougherty County, 684 F.2d 1365, 1368-69 (11th Cir.1982)).

Further, we are required to apply Florida law to determine the meaning of the insurance policy. Thus, we look at the policy as a whole and give every provision its full meaning and operative effect. See Dahl-Eimers v. Mut. of Omaha Life Ins. Co., 986 F.2d 1379, 1381 (11th Cir. 1993); Excelsior Ins. Co. v. Pomona Park Bar & Package Store, 369 So.2d 938, 941 (Fla.1979). We start with the plain language of the policy, as bargained for by the parties. See Auto-Owners Ins. Co. v. Anderson, 756 So.2d 29, 34 (Fla.2000). If that language is unambiguous, it governs. Under Florida law, however, if the "relevant policy language is susceptible to more than one reasonable interpretation, one providing coverage and the [ ]other limiting coverage, the insurance policy is considered ambiguous," and must be "interpreted liberally in favor of the insured and strictly against the drafter who prepared the policy." Id. (internal citations and punctuation omitted).

The jury in the underlying infringement suit found that Double R had engaged in unfair competition in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a),5 which creates a federal cause of action for false designation of origin or trade dress infringement, see Epic Metals Corp. v. Souliere, 99 F.3d 1034,...

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