Superformance Intern. v. Hartford Cas. Ins.

• Decision Date: 31 May 2002
• Docket Number: No. Civ.A. 4:01-CV-113.,Civ.A. 4:01-CV-113.
• Citation: 203 F.Supp.2d 587
• Parties: SUPERFORMANCE INTERNATIONAL, INC., Plaintiff, v. HARTFORD CASUALTY INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

203 F.Supp.2d 587

SUPERFORMANCE INTERNATIONAL, INC., Plaintiff, v. HARTFORD CASUALTY INSURANCE COMPANY, Defendant.

No. Civ.A. 4:01-CV-113.

United States District Court, E.D. Virginia, Newport News Division.

Filed: May 31, 2002.

COPYRIGHT MATERIAL OMITTED

Douglas E. Miller, Patten Wornom Hatten & Diamonstein, Newport News, VA, James A. Lowe, Gauntlett & Associates, Irvine, CA, for plaintiff.

Thomas B. Shuttleworth, II, Lisa Palmer O'Donnell, Shuttleworth Ruloff & Giordano, Virginia Beach, VA, Matthew W. Lee, Stacey A. Moffet, Eccleston and Wolf, Washington, DC, Richard W. Driscoll, Duff Law Firm, Fairfax, VA, for defendant.

OPINION AND ORDER

FRIEDMAN, District Judge.

This matter is before the court on cross-motions for summary judgment. Plaintiff Superformance International, Inc. ("Superformance") brings this action against the defendant, Hartford Casualty Insurance Co. ("Hartford"). Superformance requests a declaratory judgment and alleges breach of contract claims against Hartford. Jurisdiction is premised upon diversity of citizenship pursuant to 28 U.S.C. § 1332. The motions have been fully briefed, and the court held a hearing on this matter on April 26, 2002. For the reasons that follow, Superformance's motion for summary judgment is DENIED and Hartford's motion for summary judgment is GRANTED.

FACTUAL AND PROCEDURAL BACKGROUND

This case involves a dispute about the scope of insurance coverage under an insurance policy issued by Hartford to Superformance. Superformance seeks reimbursement of defense costs incurred by it in a lawsuit pending in the United States District Court for the District of Massachusetts. The suit in Massachusetts alleges that Superformance, a company that produces replica automobiles of the Ford Cobra, infringed upon the trademark rights of Ford Motor Co. ("Ford") and Carroll Shelby, Carroll Shelby Licensing, Inc., Shelby American, Inc. (collectively: "Shelby").

The Initial Complaint Against Superformance

On December 19, 2000, Shelby filed suit against Superformance in the United States District Court for the District of Massachusetts in a case captioned Carroll Shelby, et al. v. Superformance International, Inc., d/b/a Superformance Complete Replicars, U.S.D.C. (Mass.) Case No. 00-CV-12581 ("the Shelby complaint"). In its original complaint, Shelby alleges claims for infringement of federally registered trademarks under the Lanham Act, 15 U.S.C. § 1125(a) (Count 1); trademark counterfeiting under the Lanham Act, 15 U.S.C. § 1125(a) (Count II); federal trademark dilution under the Lanham Act, 15 U.S.C. § 1125(c) (Count III); trademark dilution under Massachusetts law, ch. 110B § 12 (Count IV); unfair competition under the Lanham Act, 15 U.S.C. § 1125(a) (Count V); and unfair competition in violation of the Massachusetts Unfair Business Practices Act, ch. 93A, §§ 2, 11 (Count VI).

According to the Shelby complaint, Ford maintains a contractual agreement with Shelby under which Ford grants Shelby the exclusive worldwide license for the use of the Cobra and Cobra Snake Design for vintage automobiles created, designed, and made by Shelby. Under its agreement with Ford, Shelby advertises and sells automobiles and related products, including Cobra roadsters and accessories, using the "Cobra" and "Shelby" trademarks. Shelby alleges that Superformance infringed upon their trademarked designs by Superformance's manufacture and marketing of Cobra motor vehicles, kit cars, parts and accessories for kit cars, and automotive parts and accessories with the Cobra mark. Shelby contends that Superformance markets and sells its infringing products, including through the use of an internet web site. The use of the infringing trademarks allegedly misleads prospective purchasers of the affiliation of Superformance with Shelby or Shelby's approval of plaintiff's goods. Shelby further alleges that Superformance diluted the value of Shelby's trademarks through its unauthorized use of the marks.

The Policy

On March 10, 2001, several months after Shelby filed its initial complaint, Superformance purchased a Commercial General Liability insurance policy from Hartford ("the Policy"). The Policy provided coverage from March 9, 2001 to March 9, 2002. Superformance invoked the Policy to cover the suit originally filed several months prior.

Coverage under the Policy is subject to the terms and conditions set forth therein, including all definitions and exclusions. Under the Policy, Hartford agreed to defend and indemnify Superformance in any suit seeking damages for, inter alia, "personal and advertising injury." Specifically, the Policy provides that Hartford:

will pay on behalf of the insured those sums that the insured becomes legally obligated to pay as damages because of ... `personal and advertising injury' to which this insurance applies. [Hartford] will have the right and duty to defend the insured against any `suit' seeking those damages. However, [Hartford] will have no duty to defend the insured against any `suit' seeking damages for ... `personal and advertising injury' to which this insurance does not apply.

Pl.Ex. 1 at 1. The Policy excludes Hartford from coverage of any "personal and advertising injury:"

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

* * * * * *

(7) Arising out of the failure of goods, products or services to conform with any statement of quality or performance made in your `advertisement';

* * * * * *

(9) Arising out of the infringement of trademark, trade name, service mark, or other designation of origin or authenticity.

Id. at 8. The Policy defines "personal and advertising injury" in relevant part as "injury, including consequential `bodily injury', arising out of one or more of the following offenses:"

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

e. Oral or written publication of material that violates a person's rights of privacy; or

f. Copying, in your `advertisement', a person's or organization's `advertising idea' or style of `advertisement'....

Id. at 20. In addition, the Policy defines "advertisement" as a "means of information or images that has the purpose of inducing the sale of goods, products or services through: (1) Radio; (2) Television; (3) Billboard; (4) Magazine; (5) Newspaper; or any other publication that is given widespread public distribution." Id. at 16. However, the Policy further states that "advertisement" does not "include the design, printed material, information or images contained in, on or upon the packaging or labeling of any goods or products." Id. Finally, the Policy defines "advertising idea" as "any idea for an `advertisement.'" Id. The parties dispute the meaning of virtually all of the Policy's applicable provisions and definitions.

Subsequent Complaints Against Superformance

Superformance states that it does not seek recovery under the terms of Shelby's complaint filed December 19, 2000. Instead, Superformance invoked the Policy when Shelby filed an amended complaint after the inception of Hartford's policy coverage. Shelby's amended complaint includes the claims alleged in the original complaint with an additional claim for violation of import statutes. The facts contained in the amended complaint are virtually identical to the original complaint.

On November 21, 2001, Ford intervened in the lawsuit as a plaintiff against Superformance. Ford's intervening complaint was filed during the Hartford policy period. Both Shelby and Ford contend that they manufacture and sell hundreds of thousands (in the case of Ford, millions) of dollars worth of automobiles, automobile parts and accessories, and replica automobiles with the Cobra trademarks and the Cobra Snake Design. Ford contends that through the unauthorized use of the marks, Superformance misleads prospective purchasers that Ford is connected with or approves the products sold by Superformance.

The complaint filed by Ford ("Ford complaint") alleges infringement of federally registered trademarks under the Lanham Act, 15 U.S.C. § 1125(a) (Count I); trademark counterfeiting under the Lanham Act, 15 U.S.C. § 1125(a) (Count II); federal trademark dilution under the Lanham Act, 15 U.S.C. § 1125(c) (Count III); trademark dilution under Massachusetts law, ch. 110B § 12 (Count IV); unfair competition under the Lanham Act, 15 U.S.C. § 1125(a) (Count V); and unfair competition in violation of the Massachusetts Unfair Business Practices Act, ch. 93A §§ 2, 11 (Count VI).

On August 24, 2001, after service of Shelby's amended complaint, Superformance invoked the Policy and requested that Hartford defend the Shelby action. Hartford acknowledged Superformance's request on October 6, 2001 but later denied coverage. On October 29, 2001, Superformance filed suit in this court. On November 27, 2001, Superformance requested that Hartford defend the Ford complaint. Hartford again denied coverage. Both parties subsequently moved for summary judgment to determine whether Hartford has a duty to defend.

ANALYSIS

I. STANDARD FOR SUMMARY JUDGMENT

Summary judgment is appropriate when it is apparent from the entire record, viewed in the light most favorable to the non-moving party, that there are no genuine disputes of material fact and the moving party is entitled to judgment as a matter of law. See Clark v. Alexander, 85 F.3d 146, 150 (4th Cir.1996); see also, Celotex Corp. v. Catrett, 477 U.S. 317, 322-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). The court may properly deny summary judgment when there is sufficient evidence favoring the nonmoving party that would allow a reasonable jury to return a verdict for that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). However, entry of summary judgment is mandated "...