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Scott, Blane and Darren Recovery LLC v. Auto-Owners Insurance Co.

United States District Court, C.D. California

August 27, 2014

SCOTT, BLANE AND DARREN RECOVERY LLC, Plaintiff,
v.
AUTO-OWNERS INSURANCE COMPANY, Defendant.

ORDER GRANTING DFENDANT AUTO-OWNERS INSURANCE COMPANY'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION [17]

OTIS D. WRIGHT, II, District Judge.

I. INTRODUCTION

This case is the sequel to the Lanham Act litigation that King Tuna, Inc. instituted against its competitor Anova Food, Inc. in 2007. After King Tuna first filed suit against Anova in the United States District Court for the District of Oregon, Anova tendered the action to its insurer, Defendant Auto-Owners Insurance Company. Auto-Owners rejected the claim, contending that it did not fall within the coerage of the general liability policy. King Tuna subsequently refiled its suit in this Court. After two trials, the Court awarded Anova over $3.3 million against King Tuna on its counterclaims.

Plaintiff Scott, Blane and Darren Recovery LLC ("SBD"), Anova's successor in interest, now sues Auto-Owners for alleged bad faith in refusing to defend Anova in the King Tuna litigation. But since Auto-Owners has absolutely no ties to California, the Court finds that it is not subject to personal jurisdiction in this state. The Court accordingly GRANTS Auto-Owners's Motion to Dismiss for Lack of Personal Jurisdiction and DENIES AS MOOT the other bases for the Motion.[1] (ECF No. 17.)

II. FACTUAL BACKGROUND

SBD is a Virginia limited-liability company, which is the successor in interest to Anova Food, Inc. (Compl. ¶ 1.) Anova has since discontinued active operations. ( Id. ) Auto-Owners is an insurance company with its principal place of business in Michigan. ( Id. ¶ 2.)

1. Auto-Owners issues two insurance policies to Anova

Anova obtained two general-liability policies from Auto-Owners, which together were in effect between July 8, 2005, and July 8, 2007. ( Id. ¶ 10; Exs. 1, 2.) Anova acquired the policies through Noell Insurance Agency in Tampa, Florida, and Auto-Owners delivered the policies to Anova's headquarters in Riverview, Florida. ( Id. ¶ 10.)

The policies' coverage territory included the United States, Puerto Rico, and Canada. ( Id. Ex. 1.) They covered Anova for, among others, "those sums that the insured becomes legally obligated to pay as damages because of personal injury' or advertising injury.'" ( Id. Exs. 1, 2.) Auto-Owners had "the right and duty to defend any suit' seeking those damages." ( Id. ) The policies also specified that coverage applied to advertising injury "caused by an offense committed in the course of advertising [the insured's] goods, products or services, " subject to several exclusions. ( Id. )

2. King Tuna first files suit; Anova tenders the action

On July 30, 2007, King Tuna-an Anova competitor-filed suit against Anova in the United States District Court for the District of Oregon alleging claims for false marketing under the Lanham Act, 15 U.S.C. § 1125(a); and Oregon's Unlawful Trade Practices Act, Or. Rev. Stat. § 646.608. ( Id. ¶ 11, Ex. 4); King Tuna, Inc. v. Anova Food, Inc. , No. 07-6191-TC (D. Or. case filed July 30, 2007). King Tuna's contentions largely arose out of Anova's claim that it used wood smoke from the Clearsmoke® process, the ingredients used to make its filtered wood smoke, and that the Clearsmoke® products were "generally recognized as safe" by the Food and Drug Administration. ( Id. ¶¶ 11-14.)

On August 6 and 10, 2007, Anova's counsel tendered the Oregon action to Auto-Owners. ( Id. ¶ 18; Ex. 5.) On August 22, 2007, Auto-Owners sent a letter from its Clearwater, Florida, office to Anova rejecting the claim. ( Id. ¶ 19; Ex. 6.) SBD contends that Auto-Owners had a duty to defend Anova, arguing that King Tuna's lawsuit arose from an "advertising injury" covered under the policies. ( Id. ¶¶ 20-25.)

3. King Tuna refiles in California and loses

On November 2, 2007, King Tuna voluntarily dismissed its Oregon action without prejudice. (Marcus Decl. Ex. B.) One week later, King Tina filed a nearly identical action in this Court. King Tuna, Inc. v. Anova Food, Inc. , No. 2:07-cv-07451-ODW(AJWx) (C.D. Cal. case filed Nov. 14, 2007); (Compl. Ex. 3.) The action proceeded to a bench trial at which the Court found against King Tuna. (Compl. ¶¶ 26-27; Ex. 8.) The Court later awarded Anova $1, 517, 019.00 under the Lanham Act and $1, 845, 522.00 in punitive damages under the Patent ...


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