A. Meyers & Sons Corp. v. Zurich American Ins. Group
| Decision Date | 17 October 1989 |
| Citation | 74 N.Y.2d 298,545 N.E.2d 1206,546 N.Y.S.2d 818 |
| Court | New York Court of Appeals Court of Appeals |
| Parties | , 545 N.E.2d 1206, 58 USLW 2327 A. MEYERS & SONS CORP., Appellant, v. ZURICH AMERICAN INSURANCE GROUP, et al., Respondents. |
Gregory E. Galterio, New York City, for appellant.
Ignatius John Melito and S. Dwight Stephens, New York City, for respondents.
Plaintiff A. Meyers & Sons Corp. commenced this declaratory judgment action against its insurer, defendant Zurich American Insurance Group, alleging that Meyers has been named defendant in a proceeding before the International Trade Commission (ITC) accusing it of causing an "advertising injury". It contends that Zurich is obliged to provide it with a defense against the claim. The question on appeal is whether the complaint before the ITC alleged "advertising injury" within the meaning of plaintiff's general comprehensive liability insurance policy thus obligating Zurich to provide Meyers with a defense.
Under the policy Zurich promised to defend any suit against Meyers "seeking damages" on account of "advertising injury" arising out of Meyers' "advertising activities". The relevant clauses state:
"The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of * * * advertising injury to which this insurance applies, sustained by any person or organization and arising out of the conduct of the named insured's business * * * and the Company shall have the right and duty to defend any suit against the insured seeking damages on account of such injury
* * *
" 'Advertising Injury ' means injury arising out of an offense committed during the policy period occurring in the course of named insured's advertising activities, if such injury arises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition or infringement of copyright, title, or slogan" (emphasis added).
On May 7, 1986, Dennison Manufacturing Company filed a complaint with the United States International Trade Commission pursuant to the Tariff Act of 1930 (19 U.S.C. § 1337) alleging that several companies, including Meyers, engaged in "unlawful manufacture, importation and sale of patented plastic fasteners" infringing upon Dennison's patents. With respect to Meyers, Dennison alleged specifically that it ordered and received plastic fasteners from a Meyers price list which were found to have been manufactured by processes protected by one or more of Dennison's patents. Dennison requested the Commission to immediately investigate the allegations and conduct a hearing on them. The relief sought was an exclusion order banning further importation of the infringing products and directing Meyers to cease and desist selling any infringing products previously imported into the United States.
On June 13, 1986 the ITC served a notice of investigation on Meyers informing it that a complaint had been filed alleging "unfair methods of competition and unfair acts in the importation [and sale] of certain plastic fasteners into the United States". The notice described the "Scope of Investigation" as limited to determining whether an unlawful importation or sale of plastic fasteners occurred, thus infringing several Dennison patents. After receiving the notice, Meyers requested Zurich to provide a defense to the proceeding basing its claim on the advertising injury coverage provided in its comprehensive general liability policy. When Zurich refused to do so Meyers commenced this declaratory judgment action and moved for summary judgment. Zurich filed a similar motion seeking a declaration that it had no duty to defend Meyers because the allegations in the Dennison complaint before the ITC arose out of illegal importation and selling of products in violation of certain patents, not out of Meyers' advertising activities.
Supreme Court granted Zurich summary judgment, declaring that the complaint did not allege false or misleading advertising and, therefore, was not within the scope of the policy. The court held further that Zurich was not obligated to defend Meyers because the ITC proceeding was limited to injunctive relief and did not seek money damages. The Appellate Division affirmed, without opinion, and we granted leave to appeal.
The duty of a liability insurer to defend an action brought against an insured is determined by the allegations in the complaint (see, Servidone Constr. Corp. v. Security Ins. Co., 64 N.Y.2d 419, 424, 488 N.Y.S.2d 139, 477 N.E.2d 441). If the facts alleged raise a reasonable possibility that the insured may be held liable for some act or omission covered by the policy, then the...
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