Looney Ricks Kiss Architects, Inc. v. Bryan

• Decision Date: 10 March 2014
• Docket Number: CIVIL ACTION NO. 07-0572
• Parties: LOONEY RICKS KISS ARCHITECTS, INC. v. STEVE H. BRYAN, ET AL.
• Court: U.S. District Court — Western District of Louisiana

LOONEY RICKS KISS ARCHITECTS, INC. v. STEVE H. BRYAN, ET AL.

CIVIL ACTION NO. 07-0572

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA SHREVEPORT DIVISION

Dated: March 10, 2014

JUDGE S. MAURICE HICKS, JR.

MAGISTRATE JUDGE HORNSBY

MEMORANDUM RULING

Before the Court are two motions: a Motion for Summary Judgment (Record Documents 615) filed by Defendant Chartis Specialty Insurance Company ("Chartis")¹ and a Motion for Summary Judgment or Alternative Motion for Partial Summary Judgment (Record Documents 624) filed by Defendant Tudor Insurance Company ("Tudor"). Plaintiff Looney Ricks Kiss Architects, Inc. ("LRK") opposes both motions.

The motions seek dismissal of all claims on the grounds that the insurance policies sued upon do not provide coverage for the alleged copyright infringement claims made in this lawsuit. Alternatively, Tudor moves for partial summary judgment on the issue of insurance coverage for LRK's claims to any profits of Tudor's insured, Grand Pointe Apartments, LLC, under Section 504(b) of the Copyright Act. Tudor argues such relief is not insured under its policy. For the reasons which follow, the motions are DENIED.

BACKGROUND²

This civil action is a claim on behalf of LRK, an architecture firm, for infringement of copyrights in the design of an apartment complex. The claim arises out of one or more of the Defendants' use of the design in connection with apartment complexes in Baton Rouge, Shreveport and Lafayette, Louisiana.

The only Defendants remaining in this litigation are CLA, LLC, Island Park Apartments, LLC, Grand Pointe Apartments, LLC (sometimes referred to as "Grand Pointe"), and their respective insurers. Each Defendant contests the validity of LRK's copyright registrations for its architectural works and technical drawings. All Defendants also assert multiple defenses and limitations on LRK's claim. State Farm Fire & Casualty Company intervened in this action seeking a declaration that there is no duty to defend CLA, LLC and that there is no coverage under its policies arising out LRK's claim for copyright infringement.

LRK has asserted direct actions against two insurance companies, Tudor and Chartis. Tudor and Chartis both issued policies of insurance to Grand Pointe. LRK alleges that these policies provide coverage for the acts of copyright infringement that it alleges were committed by Grand Pointe.

Grand Pointe is a company owned by Bryan Investments, LLC. Grand Pointe purchased land in Lafayette, Louisiana to be used for construction of apartments. Grand Pointe contracted with architect Stephen Hill to prepare construction drawings for theapartments to be constructed in Lafayette. Grand Pointe contracted with Bryan Construction Company to build the apartments. Grand Pointe contracted with the Bryan Company to operate the apartments. The apartments were named the Grand Pointe Apartments. In February 2009, Grand Pointe sold the Grand Pointe Apartments to Grand Pointe Apartments-NE Limited Partnership.

Chartis issued commercial umbrella policy no. EBU 2345707 to Grand Pointe for the policy period April 17, 2008 to April 17, 2009. See Record Document 615-2. The Chartis policy is an umbrella policy which provides potential coverage inexcess of Grand Pointe's underlying primary insurance provided by Tudor, subject to all terms, conditions, limitations, and exclusions in the Chartis policy. Tudor issued a commercial general liability policy no. GLO0005715 to Grand Pointe for the policy period April 17, 2008 to April 17, 2009. See Record Document 624-2. LRK alleges that these policies provide coverage for the acts of copyright infringement that it alleges were committed by Grand Pointe. Chartis and Tudor deny that they owe any coverage for any alleged acts of copyright infringement by Grand Pointe or for any claims asserted or damages sought by LRK. The only type of coverage at issue for Chartis and Tudor in this case is coverage for "advertising injury."

The key provisions of the Chartis policy are as follows:

I. Coverage

We will pay on behalf of the Insured those sums in excess of the Retained Limit that the Insured becomes legally obligated to pay by reason of liability imposed by law or assumed by the Insured under an Insured Contract because of . . . Advertising Injury that takes place during the Policy Period and is caused by an Occurrence happening anywhere in the world.

. . .

IV. Definitions

A. Advertising Injury means injury arising solely out of your advertising activities as a result of one or more of the following offenses:

. . .

4. Infringement of copyright, title or slogan.

. . .

H. Occurrence means:

. . .

(3) As respects Advertising Injury, an offense committed in the course of advertising your goods, products and services that results in Advertising Injury. All damages that arise from the same or related injurious or related injurious material or act shall be considered as arising out of one Occurrence, regardless of the frequency or repetition thereof, the number and kind of media used and the number of claimants.

. . .

V. Exclusions

This insurance does not apply to:

. . .

K. . . . Advertising Injury:

. . .

2. Arising out of oral or written publication of material whose first publication took place before the beginning of the policy period.

. . .

Record Document 615-2. The key provisions of the Tudor policy are as follows:

COVERAGE B PERSONAL AND ADVERTISING INJURY LIABILITY

1. Insuring Agreement

. . .

(b) This insurance applies to "personal and advertising injury" caused by an offense arising out of your business but only if the offense was committed in the "coverage territory" during the policy period.

2. Exclusions

This insurance does not apply to:

a. "Personal or advertising injury":

(1) Caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict "personal or advertising injury";

. . .

(3) Arising out of oral or written publication of material whose first publication took place before the beginning of the policy period;

?. . .

SECTION V - DEFINITIONS

1. "Advertisement" means a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters.

. . .

14. "Personal and advertising injury" means injury, including consequential "bodily injury", arising out of one or more of the following offenses:

. . .

g. Infringing upon another's copyright, trade dress or slogan in your "advertisement."

Record Document 624-2.³

LAW AND ANALYSIS

I. Summary Judgment Standard.

Summary judgment is proper pursuant to Rule 56 of the Federal Rules of Civil Procedure when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Quality Infusion Care, Inc. v. Health Care Serv. Corp., 628 F.3d 725, 728 (5th Cir.2010). "A genuine issue of material fact exists when the evidence is such that a reasonable jury could return a verdict for the nonmoving party." See id. "Rule 56[(a)] mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Patrick v. Ridge, 394 F.3d 311, 315 (5th Cir.2004). If the movant demonstrates the absence of a genuine dispute of material fact, "the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Gen. Universal Sys., Inc. v. Lee, 379 F.3d 131, 141 (5th Cir.2004). Where critical evidence is so weak or tenuous on an essential fact that it could not support a judgment in favor of the nonmovant, then summary judgment should be granted. See Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir.2005).

II. Interpretation of Insurance Policies.⁴

The parties agree that Louisiana law governs the interpretation of the insurance policies at issue in this case. "An insurance policy is a contract between parties and should be construed according to contract principles." Michelet v. Scheuring Sec. Servs. Inc., 680 So.2d 140, 147 (La.App. 4 Cir. 1996). "When the language of a policy is clear and not ambiguous, the insurance contract must be enforced as written. When the wording is clear, the courts lack the authority to alter or change the terms of the policy under the guise of interpretation." Id. "In interpreting insurance contracts the judicial responsibility is to determine the parties' common intent. Such intent is to be determined according to the ordinary, plain and popular meaning of words used in a policy." Id. "Words in an insurance contract must be ascribed their generally prevailing meaning, unless the words have acquired a technical meaning, in which case the words must be ascribed their technical meaning." In re St. Louis Encephalitis Outbreak, 939 So.2d 563, 566 (La.App. 4 Cir. 2006).

"The parties are free to select the types of risks to be covered." Michelet, 680 So.2d at 147. "A policy should not be interpreted in an unreasonable or strained manner so as to enlarge or restrict the provisions beyond what the parties contemplated." Id. "Absent a conflict with statutory provisions or public policy, insurers, like other individuals, are entitled to limit their liability and to impose and to enforce reasonable conditions upon the policy obligations they contractually assume." La. Ins. Guar. Assoc. v. Interstate Fire & Cas. Co., 630 So.2d 759, 763 (La. 1994).

"Ambiguous or equivocal provisions which seek to narrow the insurer's obligations are construed against the insurer." Michelet, 680 So.2d at 147. "The insurer has the burden of proving that a policy claimed loss falls within [an] exclusion." Everett v. Philibert, 13 So.3d 616, 618 (La.App. 1 Cir. 2009).

III. Arguments Advanced by Both Tudor and Chartis.

A. Known Loss or Fortuity Doctrine.

LRK filed its Complaint in this...