The opinion of the court was delivered by: PHYLLIS HAMILTON, District Judge
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT; DENYING
PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
The parties' cross-motions for summary judgment came on for
hearing on November 16, 2005 before this court. Plaintiff Sony
Computer Entertainment America Inc. ("Sony") appeared through its
counsel, Martin H. Myers, and defendant American International
Specialty Lines Insurance Company ("AISLIC") appeared through its
counsel, Thomas H. Sloan. Having read all the papers submitted
and carefully considered the relevant legal authority, the court
hereby GRANTS defendant AISLIC's motion for summary judgment and
DENIES plaintiff Sony's motion for partial summary judgment, for
the reasons stated at the hearing, and as follows.
In 2001, AISLIC sold Sony a "Multimedia Professional Liability
Policy" covering liability for certain specified "wrongful acts,"
provided such acts arose and were tendered during the period
covering July 1, 2001 through July 1, 2002. See Declaration of
Norman Rafsol in Support of AISLIC's Motion for Summary Judgment ("Rafsol Decl."),
In July 2002, Sony was sued in state court in two class actions
(the Kim/Kaen actions), in which the class plaintiffs alleged
that Sony's Playstation 2s ("PS2"s) suffered from a design defect
that rendered them unable to play DVDs and certain game discs.
See Declaration of Jennifer Liu in Support of Sony's Motion for
Summary Judgment ("Liu Decl."), Exs. A-B. Specifically, the
Kim/Kaen complaints alleged causes of action for breach of
warranty, negligent misrepresentation, unfair business practices
(Cal. Bus. & Professions Code § 17200), and false advertising
(Cal. Bus. & Professions Code § 17500), among other claims. Id.
Sony tendered the Kim/Kaen claims to AISLIC for coverage
pursuant to the AISLIC policy. On June 17, 2003, AISLIC denied
The AISLIC policy has the following relevant provisions:
Wrongful Act: AISLIC agrees to pay "for each wrongful act or
series of continuous, related or repeated wrongful act(s) . . .".
See Rafsol Decl., Ex. C at 00102 (Policy, Declarations).
"`Wrongful act' means the following committed by the insured in
the business of the insured: . . . (g) defective advice,
incitement, or negligent publication, including bodily injury or
property damage or death arising out of the foregoing." See
Rafsol Decl., Ex. C at 00122-23 (Policy, section VII
Certain exclusions have also been singled out in the policy.
First, the AISLIC policy excludes coverage for any claim
"arising out of . . . unfair or deceptive business practices
including but not limited to, violations of any local, state or
federal consumer protection laws . . .". Rafsol Decl., Ex. C at
00105-109 (Policy, section II (Exclusion C)).
Second, the policy also excludes coverage for any claim
"alleging or arising out of a breach of any express warranties, representations or guarantees."
Id. (Policy, section II (Exclusion J)).
Finally, the policy excludes coverage for any claim "arising
out of false advertising or misrepresentation in advertising."
Id. (Policy, section II (Exclusion P)). Significantly, however,
this exclusion has an important "exception", which provides:
"However, we will defend suits alleging any of the foregoing
conduct until there is a judgment, final adjudication, adverse
admission or finding of fact against you as to such conduct at
which time you shall reimburse us for claim expense . . .". Id.
On February 5, 2004, Sony filed the instant action against
AISLIC (along with several other insurers), alleging that AISLIC
had improperly refused to tender a defense to Sony in the
Kim/Kaen actions. Specifically, Sony asserts five causes of
action against AISLIC: (1) breach of contract for failure to
defend Sony; (2) breach of contract for failure to indemnify
Sony; (3) breach of the implied covenant of good faith and fair
dealing; (4) ...