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SAN DIEGO NATL. BANK v. CONTINENTAL INS. CO.

October 21, 1992

SAN DIEGO NATIONAL BANK, a Nationally chartered bank; SDNB FINANCIAL CORP., a California corporation; and CHARLES I. FEURZEIG, an individual, Plaintiffs,
v.
THE CONTINENTAL INSURANCE COMPANY, a New Hampshire corporation, Defendant.



The opinion of the court was delivered by: SAMUEL P. KING

 I. BACKGROUND

 Plaintiffs San Diego National Bank, SDNB Financial Corp., and Director Charles I. Feurzeig (collectively "SDNB") are named defendants in a case in this court, *fn1" and a parallel state action. *fn2" In those actions, SDNB allegedly aided and abetted Pioneer Mortgage Company in a securities fraud-related scheme ("The PMC Scheme").

 Continental Insurance Co. ("Continental") insured SDNB under a general liability insurance policy which expired on November 1, 1990. Continental's policy covers "bodily injury" and "property damage" caused by an "occurrence," as well as "personal injury" and "advertising injury." Continental has refused to defend or indemnify SDNB; SDNB's complaint alleges several causes of action against Continental: 1) Breach of Contract, 2) Breach of the Implied Covenant of Good Faith and Fair Dealing, and 3) Bad Faith Denial of Existence of Contract to Defend and Indemnify.

 Continental has moved for summary judgment, claiming there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of law because it has no duty to defend or indemnify SDNB against the claims made against it in Goldman3 or in Owens. *fn4"

 II. THE DISPOSITIVE ISSUE

 I have reviewed all the arguments raised by the parties. The dispositive issue is whether Continental Insurance potentially has a duty, *fn5" based upon the allegations or evidence discovered to date, to defend or indemnify SDNB in either Goldman or Owens or both. The answer is no.

 III. DISCUSSION

 Under the policy language, in order for SDNB to be covered, SDNB must become "legally obligated to pay" damages for "bodily injury" or "property damage" resulting from an "occurrence," or from "personal injury," or "advertising injury." Continental has the "right and duty to defend any 'suit' seeking those damages." The underlying causes of action are basically securities fraud-related, involving economic harm, not bodily-injury or property damage. There is no personal injury. There is no advertising injury. There is no "occurrence" within the meaning of the policy. There is no coverage. *fn6"

 1. "Personal Injury" or "Advertising Injury."

 The policy defines "personal injury" as the result of false arrest or imprisonment, malicious prosecution, wrongful entry, libel, slander, or invasion of privacy. There are no such allegations against SDNB in either underlying action, and the parties admit in oral argument that coverage for personal injury is not at issue.

 The policy defines "advertising injury" as libel, slander, invasion of privacy, misappropriation of ideas, or copyright infringement. Owens alleges it. Goldman does not. The Owens complaint states that underlying plaintiffs suffered "'advertising injuries' as such injuries are commonly defined by comprehensive general liability insurers in California" in a paragraph alleging that the PMC scheme constituted unfair competition.

 Continental argues that its policy definition of "advertising injury" does not cover unfair competition. That is, its policy is not like those which are "commonly defined by . . . insurers in California" and thus its policy does not cover claims against SDNB for advertising injury. I ...


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