Interstate Bakeries Corp.. v. Onebeacon Ins. Co.

• Citation: 773 F.Supp.2d 799
• Decision Date: 25 February 2011
• Docket Number: Case No. 09–00809–CV–W–SWH.
• Parties: INTERSTATE BAKERIES CORPORATION, Plaintiff,v.ONEBEACON INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Western District of Missouri

773 F.Supp.2d 799

INTERSTATE BAKERIES CORPORATION, Plaintiff,

v.ONEBEACON INSURANCE COMPANY, Defendant.

Case No. 09–00809–CV–W–SWH.

United States District Court, W.D. Missouri, Western Division.

Feb. 25, 2011.

Andrew M. Sussman, David A. Gauntlett, Gauntlett & Associates, Irvine, CA, Brian Edward Sobczyk, Scott C. Hecht, Stinson Morrison Hecker, LLP, Kansas City, MO, for Plaintiff.Laurence Robert Tucker, Tyson H. Ketchum, Armstrong Teasdale LLP, Kansas City, MO, for Defendant.

ORDER

SARAH W. HAYS, United States Magistrate Judge.

I. BACKGROUND

On October 2, 2009, plaintiff, Interstate Bakeries Corporation, (“IBC”) filed a Complaint for Declaratory Judgment against OneBeacon Insurance Company (“OneBeacon”) seeking to establish that OneBeacon has a duty to defend and pay IBC's defense costs in litigation pending in the United States District Court for the Northern District of Georgia, Flowers Bakeries Brands, Inc. v. Interstate Bakeries Corporation, Case No. 08–CV–2376. (Complaint, doc # 1)

On November 16, 2009, prior to any discovery having been conducted, IBC filed a motion for partial summary judgment on the issue of OneBeacon's duty to defend.¹ (Doc. # 19) According to IBC, it is one of the largest wholesale distributors of packaged breads and bakery products in the United States. (Doc. # 20 at 7) At issue is Advertiser Advantage Policy No. MEP–2458–07 which OneBeacon sold to the insured IBC for the period September 1, 2007 through September 1, 2008. A competitor of IBC, Flowers Bakeries Brands, Inc. (“Flowers”), alleges that IBC used the phrases “Nature's Pride” and “Nature's Choice” to advertise and promote IBC's bread products, thereby infringing Flowers' trademark “Nature's Own.” IBC tendered the defense of the Flowers lawsuit to OneBeacon on February 13, 2009, seeking coverage for claims in the Flowers litigation. Coverage was denied on February 26, 2009.

Defendant opposes the motion for partial summary judgment on the basis that there is no possibility of coverage, that any possible coverage is precluded by various exclusions in the policy and that, at the very least, material facts are in dispute as to coverage as well as OneBeacon's affirmative defenses of late notice and failure to cooperate. (Doc. # 52)

II. SUMMARY JUDGMENT STANDARD

A moving party is entitled to summary judgment “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). A party who moves for summary judgment bears the burden of showing that there is no genuine issue of material fact for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). However, “the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Id. at 247–48, 106 S.Ct. 2505. “Material” facts are those “that might affect the outcome of the suit under the governing law,” and a “genuine” material fact involves evidence “such that a reasonable jury could return a verdict for the nonmoving party.” Id. at 248, 106 S.Ct. 2505.

The initial burden of proof in a motion for summary judgment is placed on the moving party to establish the absence of any genuine issue of material fact. See Olson v. Pennzoil Co., 943 F.2d 881, 883 (8th Cir.1991). If the moving party meets its initial burden, the nonmoving party must then produce specific evidence to demonstrate genuine issues for trial. Id. When the burden shifts, the nonmoving party may not rest on the allegations in its pleadings, but, by affidavit and other evidence, must set forth specific facts showing that a genuine issue of material fact exists. See Fed.R.Civ.P. 56(e); Stone Motor Co. v. General Motors Corp., 293 F.3d 456, 465 (8th Cir.2002). When considering a motion for summary judgment, a court must scrutinize the evidence in the light most favorable to the nonmoving party and the nonmoving party “must be given the benefit of all reasonable inferences.” Mirax Chem. Prods. Corp. v. First Interstate Commercial Corp., 950 F.2d 566, 569 (8th Cir.1991).

The Court may not weigh the evidence in the record, decide credibility questions or determine the truth of factual issues, but merely decides if there is evidence creating a genuine issue for trial. See Bell v. Conopco, Inc., 186 F.3d 1099, 1101 (8th Cir.1999).

III. UNDISPUTED FACTS

The following facts are uncontroverted unless otherwise noted:

1. Plaintiff Hostess Brands, Inc., fka Interstate Bakeries Corporation, is a Delaware corporation with principal executive offices and headquarters located in Kansas City, Missouri, until June 1, 2009. They are now located in Irving, Texas. [Declaration of J. Randall Vance (“Vance Decl.”), ¶ 2; IBC's Notice of Change of Name (Docket No. 13) ] (Plaintiff's Uncontroverted Fact # 1 (hereafter “PUF”))

2. Defendant OneBeacon Insurance Company is an insurance company organized in Pennsylvania with its principal place of business in Boston, Massachusetts. [IBC Complaint (Docket No. 1), ¶ 2 and OneBeacon Answer (Docket No. 17), ¶ 2] (PUF # 2)

3. OneBeacon transacts insurance business in the State of Missouri. [IBC Complaint (Docket No. 1), ¶ 3 and OneBeacon Answer (Docket No. 17), ¶ 3] (PUF # 3)

4. OneBeacon sold Advertiser Advantage Policy no. MEP–2458–07 to named insured IBC, with a policy term of September 1, 2007 through September 1, 2008. [Vance Decl. ¶ 3 and Exhibit “1” (hereafter “Policy”), p. 1 declarations] (PUF # 4)

5. OneBeacon issued the policy to IBC at its Kansas City, Missouri office, where IBC negotiated the terms of the policy. [Vance Decl. ¶ 4 and Policy (declarations), p. 1] (PUF # 5)

6. Flowers Bakeries Brands, Inc. (“Flowers”) filed suit against IBC on July 23, 2008 in litigation styled as Flowers Bakeries Brands, Inc. v. Interstate Bakeries Corporation, U.S.D.C., Northern District of Georgia, Case No. 1:08–CV–2376 (“the Flowers suit”). [Exhibit “2” (hereafter “Flowers' Complaint”) and Vance Decl. ¶ 13] (PUF # 15) ²

7. Flowers filed a first amended complaint against IBC in the Flowers suit on August 8, 2008. [A copy of the First Amended Complaint in the Flowers suit is attached as Exhibit “3” (hereafter “Flowers' Amended Complaint”) and Vance Decl. ¶ 14] (PUF # 16) ³ 8. Flowers filed a second supplemental complaint against IBC in the Flowers suit on November 17, 2008. Flowers alleged causes of action for: (1) Federal Trademark Infringement (under the Lanham Act); (2) Federal Unfair Competition (under Section 43(a) of the Lanham Act, i.e., 15 U.S.C. § 1125(a)); (3) State Trademark Dilution; (4) Common Law and State Unfair Competition; (5) Unfair and Deceptive Trade Practices. [The Second Supplemental Complaint in the Flowers suit is attached as Exhibit “4” (hereafter “Flowers' Supplemental Complaint”) and Vance Decl. ¶ 14]. (PUF # 17)

9. Flowers' Supplemental Complaint alleges that IBC's use of the phrases “Nature's Pride” and “Nature's Choice” to promote its bakery products infringed Flowers' trademark in “Nature's Own” and also constitutes various forms of unfair competition. (PUF # 18)

10. Flowers alleges in the amended complaint that its “Nature's Own” phrase, as well as the accused phrases “Nature's Pride” and “Nature's Choice,” were used in “advertising,” “promotions” and “marketing” of the parties' respective bread products. (PUF # 19)

11. IBC provided notice of the Flowers suit to OneBeacon on February 13, 2009, through the addressee requested in the policy, First Media. IBC provided OneBeacon a copy of Flowers' August 8, 2008 amended complaint with the notice. [Vance Decl. ¶ 20] (PUF # 28)

12. By letter dated February 26, 2009, from First Media, a division of OneBeacon Professional Partners, OneBeacon denied IBC a defense and any insurance coverage for the Flowers suit. [Exhibit “13” (hereafter “OneBeacon Denial”) and Vance Decl. ¶ 21; Exhibit “14” to RJN, p. 2] (PUF # 29)

13. The denial described the OneBeacon policy as “a named perils professional liability” despite the absence of any such moniker in the “Advertiser's Advantage Policy” OneBeacon issued to IBC. [OneBeacon Denial, p. 2] (PUF # 30)

14. The denial letter stated that:

In the claim in question, there are no allegations of any named perils arising from an occurrence in advertising or scheduled advertising as defined in and required by the Policy.... From the information received to date, there are not any allegations that there has been actual advertising of the insured's products at issue. The only causes of action against the insured are for marketing activities rather than from the content of advertising itself. Advertising is a specialized component of marketing and can include types of media to be utilized, placement and frequency of advertisements and the actual advertisements themselves.... Notwithstanding allegations of marketing, we have no evidence advertising is at issue.

[OneBeacon Denial, p. 2 (emphasis in original) ] (PUF # 31)

15. The denial also relies upon exclusion G for trademark infringement and H for certain deceptive trade practices to deny policy benefits. [OneBeacon Denial, p. 3] (PUF # 32)

16. IBC first began to explore the idea of using the brand name “Nature's Pride” in connection with its products during the first calendar quarter of 2008. ( See Seban Dep. at 28:10–12, 29:22–30:15, attached as Exhibit 2) (Defendant's Additional Facts # 8 (hereafter “DAF”))

17. During the Policy Term ( i.e., between September 1, 2007 and September 1, 2008) the only materials used by IBC which bore the “Nature's Pride” mark were the Trade Customer Brochures prepared by IBC which were shown to Wal–Mart, Kroger, Target and Safeway. ( See Seban Dep. at 31:8–11, 31:23–32:7, 32:18–33:2, 33:25–34:4, 48:22–25, Exhibit 2 thereto and pages 14–27 of Exhibit 3...