Looney Ricks Kiss Architects, Inc. v. State Farm Fire & Cas. Co.

• Decision Date: 04 April 2012
• Docket Number: No. 11–30121.,11–30121.
• Citation: 102 U.S.P.Q.2d 1221,677 F.3d 250
• Parties: LOONEY RICKS KISS ARCHITECTS, INCORPORATED, Plaintiff–Appellant, Cross–Appellee, v. STATE FARM FIRE & CASUALTY COMPANY, Intervenor Plaintiff–Appellee, Cross–Appellant, v. Steve Bryan, et al., Defendants.Lafayette Insurance Company, Plaintiff–Appellee, Cross–Appellant, v. Looney Ricks Kiss Architects, Incorporated, Defendant–Appellant, Cross–Appellee, v. Steve H. Bryan; Bryan Construction Company, Incorporated; Bryan Company; Cypress Lake Development LLC, Defendants–Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

102 U.S.P.Q.2d 1221

677 F.3d 250

LOONEY RICKS KISS ARCHITECTS, INCORPORATED, Plaintiff–Appellant, Cross–Appellee,

v.STATE FARM FIRE & CASUALTY COMPANY, Intervenor Plaintiff–Appellee, Cross–Appellant,

v.Steve Bryan, et al., Defendants.Lafayette Insurance Company, Plaintiff–Appellee, Cross–Appellant,

v.Looney Ricks Kiss Architects, Incorporated, Defendant–Appellant, Cross–Appellee,

v.Steve H. Bryan; Bryan Construction Company, Incorporated; Bryan Company; Cypress Lake Development LLC, Defendants–Appellees.

No. 11–30121.

United States Court of Appeals, Fifth Circuit.

April 4, 2012.

Patrick Andrew Zummo (argued), Law Offices of Patrick Zummo, Houston, TX, for Plaintiff–Appellant, Cross–Appellee.

Gerald Martin Johnson, Jr., Lisa D. Lobrano (argued), Lunn, Irion, Salley, Carlisle & Gardner, Shreveport, LA, for Plaintiff–Appellee, Cross–Appellant.

Steven Harrison Smith, Steven H. Smith & Associates, P.L.L.C., Jackson, MS, for Defendants–Appellees.Jennifer P. McKay (argued), Barham, Warner, Stroud & McKay, Shreveport, LA, for Intervenor Plaintiff–Appellee, Cross–Appellant.Appeals from the United States District Court of the Western District of Louisiana.

Before BENAVIDES, STEWART and GRAVES, Circuit Judges.

CARL E. STEWART, Circuit Judge:

Looney Ricks Kiss Architects (“LRK”), an architecture firm, brought this action for copyright infringement against a former client, Steve Bryan, and his affiliated building companies (collectively, “the Bryan defendants”). Lafayette Insurance Company (“Lafayette”) and State Farm Fire and Casualty Company (“State Farm”), insurers of Bryan's Cypress Lake Development, sought declaratory judgments that, by virtue of exclusions set forth in their respective insurance policies, they have no obligation to provide coverage or duty to defend in LRK's suit. LRK appeals the district court's summary judgment ruling that Lafayette and State Farm have no duty to provide coverage, and Lafayette and State Farm appeal the district court's summary judgment ruling that they have a duty to defend. As we conclude that the exclusions relied upon by the insurers do not preclude coverage of LRK's copyright infringement claim, and, therefore, that the insurers owe both coverage and defense under their respective policies, we REVERSE in part and AFFIRM in part.

I.

LRK is an architecture firm with its principal place of business in Memphis, Tennessee. In 1996, LRK created a design known as the Island Park Apartments, which was constructed by companies associated with Steve Bryan. On October 10, 1996, LRK and Island Park, LLC, as represented by Steve Bryan, entered into a Standard Form of Agreement Between Owner and Architect (“the 1996 Agreement”). ¹ In pertinent part, Article 6.1 of the 1996 Agreement provided:

The Architectural Works, Drawings, Specifications, Technical Drawings and other documents prepared by the Architect for this Project are instruments of the Architect's service for use solely with respect to this Project and, unless otherwise provided, the Architect shall be deemed the author of these documents and shall retain all common law, statutory, and other reserved rights, including the copyright.... The Architect's Architectural Works, Drawings, Specifications, Technical Drawings or other documents shall not be used by the Owner or others on other projects, for additions to this Project or for completion of this Project by others, unless the Architect is adjudged to be in default under this Agreement, except by agreement in writing and with appropriate compensation to the Architect.²

LRK registered the Island Park Apartments with the United States Copyright Office as an Architectural Work and Technical Drawings.

In 2001, Cypress Lake Development, a company associated with Bryan, applied for and obtained permits to construct the Cypress Lake Apartments in Baton Rouge, Louisiana. LRK's complaint alleges that these apartments infringe on its copyrighted work without LRK's consent or permission. The complaint further alleges that the Bryan defendants used depictions of its copyrighted works in promotional and advertising materials in the operation of the Cypress Lake Apartments.

From June 28, 2000, through June 28, 2001, the Cypress Lake real estate development was insured by a policy issued to the Bryan defendants by Lafayette. Coverage B of the policy provided coverage for personal and advertising injury liability. The policy states, in pertinent part: “ ‘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’.” The policy defines “advertisement” as “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.” The policy further provides that the personal and advertising injury insurance does not apply to “ ‘Personal and advertising injury’: ... (6) Arising out of a breach of contract, except an implied contract to use another's advertising idea in your ‘advertisement[ ]’....”

From June 28, 2002, through June 28, 2005, Cypress Lakes Apartments was insured by State Farm under three Apartment Policies. From September 6, 2002, through September 6, 2005, Cypress Lakes Apartments was insured by State Farm under three Umbrella Policies. Each of the policies provides coverage for personal and advertising injury. Advertising injury is defined as “injury arising out of one or more of the following offenses: ... d. infringement of copyright, title or slogan ....” Each of the policies states that the insurance does not apply “to advertising injury arising out of: a. breach of contract other than misappropriation of advertising ideas under an implied contract ....”

On March 27, 2007, LRK initiated this action for copyright infringement against the Bryan defendants, their successors in interest, and an architect. ³ On July 27, 2007, State Farm intervened in the suit, seeking a determination that it owed no coverage for the damages sought by LRK against the Bryan defendants. In March 2009, Lafayette filed a separate action seeking a declaration that it owed no coverage and had no duty to defend in the lawsuit. On July 2, 2009, the two actions were consolidated, forming the present case.

On August 4, 2009, LRK moved for partial summary judgment against Lafayette, seeking a declaration that Lafayette owes a duty of defense to the Bryan defendants. On August 31, 2010, Lafayette also moved for summary judgment, seeking a declaration that it has no duty to defend in the lawsuit or to provide coverage. On September 14, 2010, State Farm moved for summary judgment, seeking a declaration that it owes no coverage and no duty to defend.

On December 30, 2010, the district court, in two separate rulings, concluded that both insurance companies owe their insureds a duty to defend in the lawsuit, but neither insurer has a duty to provide coverage pursuant to the operation of the “breach of contract” exclusions. LRK appealed the district court's determination that Lafayette and State Farm have no duty to provide coverage, and Lafayette and State Farm appealed the district court's determination that they have a duty to defend.

II.

This court reviews a district court's grant of summary judgment de novo, applying the same standards as the trial court. See Urbano v. Cont'l Airlines, Inc., 138 F.3d 204, 205 (5th Cir.1998). Summary judgment is proper if the evidence shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Kee v. City of Rowlett, 247 F.3d 206, 210 (5th Cir.2001). The Court views all evidence in the light most favorable to the non-moving party and draws all reasonable inferences in that party's favor. Crawford v. Formosa Plastics Corp., 234 F.3d 899, 902 (5th Cir.2000). “Even if we do not agree with the reasons given by the district court to support summary judgment, we may affirm the district court's ruling on any grounds supported by the record.” Lifecare Hosps., Inc. v. Health Plus, Inc., 418 F.3d 436, 439 (5th Cir.2005).

III.

A.

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...