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Burgett, Inc v. American Zurich Insurance Company

November 22, 2011

BURGETT, INC.,
PLAINTIFF,
v.
AMERICAN ZURICH INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

MEMORANDUM AND ORDER

This matter arises out of Plaintiff, Burgett Inc.'s ("Plaintiff" or "Burgett") motion for partial summary judgment regarding Defendant's alleged duty to defend the underlying action filed against Plaintiff by Persis International Inc.*fn1 and Edward F. Richards (collectively, "Persis").

Defendant, American Zurich Insurance, Inc. ("Defendant"), Plaintiff's general liability insurance carrier opposes the motion. For the reasons set forth below, Plaintiff's motion is GRANTED.*fn2

BACKGROUND*fn3

Plaintiff is a corporation organized under the laws of the State of California with its principal place of business in Sacramento, California. (UF ¶ 1.) Defendant is a corporation licensed to sell insurance in the State of California, with its principal place of business in Illinois. (UF ¶ 2.)

Zurich issued to Burgett, the named insured, a general commercial liability policy for the period May 9, 2003, through May 9, 2004. (UF ¶ 3.) This policy provides indemnity for any personal or advertising injury caused by an offense committed by Burgett during the policy period and promises a defense of suits that potentially seek those types of damages. (UF ¶ 4.)

According to the relevant language of the policy, "'[a]dvertisement' means a notice that is a broadcast published to the general public of specific market segments of [Plaintiff's] goods, products or services for the purpose of attracting customers or supporters."*fn4 (UF ¶ 5.) Personal or advertising injury encompasses "[o]ral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's organizations's good, products or services." (Id.) The policy also includes an exclusion for "'personal and advertising' injury arising out of the infringement of copyright, patent, trademark trade secret or other intellectual property." (UF ¶ 6.)

In the matter underlying this duty to defend action, Persis filed a first amended complaint on March 26, 2010, in the Northern District of Illinois, alleging that Plaintiff made false statements to another company, Samick, about its ownership of the "SOHMER" trademark, a trademark Persis alleges it owned. (UF ¶¶ 8-9.) The Persis complaint, in pertinent part, alleges as follows:

In 2003, Samick began advertising and selling pianos bearing the SOHMER and SOHMER & CO. trademarks in the United States, including through an [i]nternet website. At all relevant times, Burgett's representing to samick that it had valid and enforceable rights in and to the SOHMER trademark, negotiating and entering into the purported licensing agreement with Samkick, accepting compensation from Samick under the purported licensing agreement, and holding itself out to Samick and the world as the rightful owner of the SOHMER trademark, constituted an inducement of Samick's act of infringement and unfair competition under federal and common law.

(UF ¶ 11.) The gravamen of Persis' underlying complaint is that by "holding itself out to Samick and the world as the rightful owner of the SOHMER trademark...Burgett is contributorily liable for Samick's acts of trademark infringement and unfair competition under federal law and common law arising out of Samick's use of SOHMER & SOHMER & CO. trademarks." (Id.)

There is no dispute that the alleged wrongful conduct occurred within Defendant's 2003, 2004 and 2005 policy periods. (UF ¶ 12.)

Plaintiff provided Defendant notice of the Persis action on November 3, 2010, thereby tendering defense of that matter in accordance with the terms of the policy. (UF ¶ 13.) Zurich responded on December 13, 2010, declining to defend or indemnify Plaintiff in the underlying Persis action. (UF ¶ 15.) Defendant denied defense of the action on the basis that "the definition of 'personal and advertising injury' ha[d] not been met" and because the trademark exclusion under the policy would apply to excuse Defendant from defending the action. (UF ¶ 16.)

STANDARD

A motion for partial summary judgment is resolved under the same standard as a motion for summary judgment. See California v. Campbell, 138 F.3d 772, 780 (9th Cir. 1998). Summary judgment is appropriate when it is demonstrated that there exists no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970).

Under summary judgment practice, the moving party always bears the initial responsibility of informing the district court of the basis of its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "[W]here the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the 'pleadings, depositions, answers to interrogatories, and admissions on file.'" Id. at 324. Indeed, summary judgment should be entered against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Id. at 322. In such a circumstance, summary judgment should be granted, "so long as whatever is before the district court demonstrates that the standard for entry of summary judgment, as set forth in Rule 56(c), is satisfied." Id. at 323.

If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87 (1986); First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 288-289 (1968). In attempting to establish the existence of this factual dispute, the opposing party may not rely upon the denials of its pleadings, but is required to tender evidence of specific facts in the form of affidavits, and/or admissible discovery material, in support of its contention that the dispute exists. Fed. R. Civ. P. 56(c). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986), and that the dispute is genuine, i.e., the evidence is such that a reasonable jury could return a verdict for the nonmoving party, Id. at 251-52.

In the endeavor to establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." First Nat'l Bank, 391 U.S. at 289. Thus, the "purpose of summary judgment is to 'pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.'" Matsushita, 475 U.S. at 587 (quoting Rule 56(e) advisory committee's note on 1963 amendments).

In resolving the summary judgment motion, the Court examines the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any. Rule 56(c); SEC v. Seaboard Corp., 677 F.2d 1301, 1305-06 (9th Cir. 1982).

The evidence of the opposing party is to be believed, and all reasonable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party. Anderson, 477 U.S. at 255. Nevertheless, inferences are not drawn out of the air, and it is the opposing party's obligation to produce a factual predicate from which the inference may be drawn. Richards v. ...


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