Opinion
PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (Docket Entry 14); DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (Docket Entry 22)
R. GARY KLAUSNER, District Judge.
I. FACTUAL BACKGROUND
This is an action for declaratory relief filed by Plaintiff Western International Syndication Corporation ("Western" or "Plaintiff") against Defendant Gulf Insurance Company ("Gulf" or "Defendant"), seeking relief as to the duty to pay defense costs in full, and the duty to indemnify. Western's complaint arises out of an insurance policy ("Gulf Policy") issued by Defendant to Plaintiff and a dispute as to its coverage relating to an underlying action between Western and the Apollo Theater Foundation, Inc. ("Underlying Action").
A. The Underlying Action
The Underlying Action was filed in December 2002 by the Apollo Theater Foundation, Inc. ("Apollo") in the U.S. District Court for the Southern District of New York, and arises out of a dispute between Western and Apollo concerning the television program, "It's Showtime At the Apollo" ("Apollo Show"). Apollo claims that when Western lost the bid to distribute the Apollo Show for the 2002/2003 broadcast season, Western embarked on a systematic campaign of misconduct. Apollo alleges that, among other things, Western distributed a competing television program under the confusingly similar name, "Showtime in Harlem, " and used Apollo's trademarks in connection with that program. Moreover, Apollo alleges that Western's advertising and promotion have caused considerable actual confusion, not only among the viewing public, but also among advertisers, broadcasters, performers, and journalists. The First Amended Complaint ("FAC") in the Underlying Action alleges the following causes of action against Western:
(1) Infringement of Federally Registered Trademarks (15 U.S.C. § 1114(1));
(2) False Designation of Origin and Unfair Competition (15 U.S.C. § 1125(a));
(3) Dilution of Federally Registered Trademarks (15 U.S.C. § 1125(c));
(4) Deceptive Acts and Practices (N.Y. Gen. Bus. Law § 349);
(5) Trademark Dilution (N.Y. Gen. Bus. Law § 360-1);
(6) Unfair Competition; and
(7) Breach of the Duty of Good Faith and Fair Dealing.
B. The Current Action
In the current action, Western alleges that under the terms of the Gulf Policy, Gulf has a duty to defend Western in the Underlying Action. Gulf issued a primary insurance policy to Western which obligates Gulf to, among other things, defend Western against suits alleging advertising injury during the Gulf policy period. The Gulf Policy was further endorsed with a "Field of Entertainment Limitation" exclusion that removes from coverage various "personal injury" and advertising injury" offenses, such as (1) invasion of the right to privacy, (2) infringement of copyright or trademark, (3) libel, slander and defamation, (4) plagiarism, piracy and related unfair competition, and (5) breach of contract resulting from the alleged use of program, musical, or literary material used by the insured in the insured production. Additionally, the Gulf Policy excludes coverage for advertising injury arising out of an offense committed by an insured whose business is advertising, broadcasting, publishing, or telecasting, or for which the insured had assumed liability in a contract or agreement.
Gulf has denied Western coverage in the Apollo Lawsuit, alleging that they have no duty to defend Western against claims for trademark infringement. Western and Gulf have both submitted Motions for Summary Judgment, which are now before this Court.
II. JUDICIAL STANDARD
Under the Federal Rules of Civil Procedure, summary judgment is proper only where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is 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). Upon such a showing, the Court may grant summary judgment "upon all or any part thereof." Fed.R.Civ.P. 56(a), (b).
To prevail on a summary judgment motion, the moving party must show there are no triable issues of fact as to matters upon which it has the burden of proof at trial. See Celotex Corp. v. Catrett , 477 U.S. 317, 325 (1986). On issues where the moving party does not have the burden of proof at trial, the moving party is required only to show that there is an absence of evidence to support the nonmoving party's case. See Celotex Corp. v. Catrett , 477 U.S. at 326.
To defeat a summary judgment, the non-moving party may not merely rely on its pleadings or conclusory statements. Fed.R.Civ.P. 56(e). Nor may the non-moving party merely attack or discredit the moving party's evidence. Nat'l Union Fire Ins Co. v. Argonaut Ins. Co. , 701 F.2d 95, 97 (9th Cir. 1983). The non-moving party must affirmatively present specific admissible evidence sufficient to create a genuine issue of material fact for trial. See Celotex Corp. v. Catrett , 477 U.S. at 324.
III. DISCUSSION
A. Gulf Policy Coverage
As stated by the California Supreme Court, to prevail on the issue of coverage, the insured must first prove the existence of a potential for coverage. See Montrose Chemical Corp. of Cal. v. Superior Court, 6 Cal.4th 287, 299-300. Once that burden is met, the insurer must prove the underlying claim cannot fall within the policy coverage. Id.
At issue before this Court, is whether, pursuant to the Gulf Policy, Gulf has a duty to defend and/or indemnify Western in the Underlying Action. According to Coverage B. Personal and Advertising Injury Liability ("Coverage B"), which is central to this dispute, Gulf is obligated to "pay those sums that [Western] becomes legally obligated to pay as damages because of personal injury' or advertising injury' to which this coverage part applies. [Gulf] will have the right and duty to defend any suit' seeking those damages." Declaration of Lisa Parker ("Parker Decl."), Exhibit B, pg.55.
The parties do not dispute that the injuries alleged in the Underlying Action fall within the category of "advertising injury, " which is defined as an injury arising out of one or more of the following offenses:
(a) 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; (b) Oral or written publication of material that violates a person's right to privacy; (c) Misappropriating of advertising ideas or style of doing business; or (d) Infringement of copyright, title, or slogan.
Id. at 60. However, at dispute is whether the claims alleged against Western in the Underlying Action are either barred from coverage as a result of untimely notice, or excluded from coverage based on one of the express policy exclusions discussed below.
B. Untimely Notice
According to the Commercial General Liability Conditions of the Gulf Policy, Western is required to notify Gulf when: (1) there is an offense which may result in a claim, and (2) Western receives a claim. Parker Decl., Exhibit B, pgs. 58-59. Furthermore, the Gulf Policy states that Western must immediately forward summons in connection with any suit. Id.
Gulf contends that Western was aware of the Underlying Action no later than January, 2003, but failed to tender its defense to Gulf until approximately fourteen month later. Tricker Decl., Exhibit B; Parker Decl., ¶ 6, Exhibit D. Therefore, Gulf argues that it has no duty to defend or indemnify due to Western's untimely notice.
Because the Underlying Action was filed in New York, the parties dispute whether New York or California law applies. Under California's "governmental interest" approach in deciding conflicts of law, a three step analysis is applied. Liew v. Official Receiver and Liquidator , 685 F.2d 1192, 1195-96 (9th Cir. 1982). First, the relevant substantive law of each state must be examined to assure that the laws differ. Second, if the laws do differ, the court must determine whether a "true conflict" exists, i.e., whether both New York and California have an interest in having its law applied. Finally, if a true conflict exists, the court must determine which state's interest would be more impaired if its policy was subordinated to the policy of the other. Id.
In the case at bar, there is no need to go beyond the first step of the analysis. Under California law, it is well settled that a defense based on an insured's failure to give timely notice requires the insurer to prove that it suffered substantial prejudice. Shell Oil v. Winterthur Swiss Ins. Co. , 12 Cal.App.4th 715, 760 (1993). This majority approach, which departs from the traditional approach, is also known as the "notice-prejudice" rule. In contrast, New York is one of a minority of states that still maintains the traditional no-prejudice exception, whereby an insured's failure to provide timely notice of claim relieves the insurer of its obligation to perform, whether or not it can show prejudice. Brandon v. Nationwide Mut. Ins. Co. , 97 N.Y.2d 491, 495-496 (2002). However, in recent years, New York has shifted away from the traditional approach to adopt the majority approach in cases pertaining to late notice of legal action. Id . Specifically, in Brandon, the court held that "insurers relying on the late notice of legal action defense should be required to demonstrate prejudice." Id. at 498. Based on the Brandon holding, there is no difference between New York and California as to the "notice-prejudice" rule when applied to notice of legal proceeding. Therefore, in order to prevail on its defense of untimely notice, Gulf must show that it was prejudiced by Western's late notice of legal action.
In Varrichio v. Chicago Ins. Co., the Second Circuit reviewed an appeal, which involves the same issue. In Varrichio, the Court states that the Brandon holding "casts doubt on the traditional New York rule that... an insurer need not show prejudice in order to refuse coverage." Id. at 548. However, in questioning the scope of the holding, Court stops short of adjudging the issue and defers to the New York Court of Appeals to rule on the scope of Brandon. Id. at 549.
Based on a review of the evidence, this Court finds that Gulf has failed to make an adequate showing of prejudice. In support of its contention, Gulf has submitted evidence that: (1) Western failed to demand arbitration in response to Apollo's Complaint (Tricker Decl., Exhibit C); (2) there were substantial negotiations regarding settlement, whereby the Underlying Action could have been settled on more beneficial terms long ago (Tricker Decl., Exhibit L, pgs. 103-105); and (3) Western failed to tender the Underlying Action until after the close of discovery (Tricker Decl., Exhibit J). As stated by the California courts, "the insurer must show actual prejudice, not the mere possibility of prejudice." Shell Oil Co. , 12 Cal.App.4th at 761. While the above evidence shows an increase in the possibility of prejudice, it fails to show actual prejudice. As such, this Court determines that Gulf's defense of untimely notice fails as a matter of law.
C. Exclusion Based On Gulf Policy's Entertainment Limitation
Attached to the Gulf Policy is an endorsement entitled "Field of Entertainment Limitation Endorsement" ("Entertainment Limitation"). Under the Entertainment Limitation, the following is excluded from coverage:
Advertising Injury arising out of the Field of Entertainment Business' of the insured with respect to the following offenses:... Infringement of copyright or trademark whether under common law or statutory law.... Plagiarism, piracy, or unfair competition resulting from the alleged unauthorized use of titles, formats, ideas, characters, plots, performances of artists or performers or other material.... Breach of contract, implied in fact or law, resulting from the alleged submission, acquisition or use of program, musical or literary material used by the Insured in the insured production.
Parker Decl., Exhibit B, pg. 66.
For the following reasons, this Court finds that Apollo's federal and state claims arising solely from the unauthorized use of Apollo's trademarks are excluded from policy coverage based on the Entertainment Limitation.
1. Trademark Infringement And Trademark Dilution
As to Apollo's federal and state trademark infringement claims, the Entertainment Limitation clearly excludes "[i]nfringement of copyright or trademark whether under common law or statutory law." Id . Based on the express language of the contract, this Court finds that the Entertainment Limitation applies to Apollo's trademark infringement claims as a matter of law.
As to the trademark dilution claims, Gulf contends that allegations of trademark dilution arise out of trademark infringement, and are thus barred. Western argues that claims for trademark dilution are at least potentially covered because they constitute a covered advertising injury, and therefore must be defended.
A claim for dilution of trademark concerns "another person's commercial use in commerce of a mark or trade name ... [that] causes dilution of the distinctive quality of the mark." 15 U.S.C. § 1125(c) (emphasis added). As implied by the statute, dilution claims necessarily arise out of the wrongful use of a person's mark or name. Apollo's allegations further support this contention. Specifically, in the Third Count for Dilution of Federally Registered Trademarks, Apollo alleges that Western has and is using "the Registered Showtime Mark and the Registered Apollo Mark... in connection with the advertising and promotion of goods and services sold or offered by [Western]." FAC, ¶ 118, Declaration of Mark Terry ("Terry Decl."), Exhibit B. Similarly, in Apollo's Fifth Count for Trademark Dilution Under New York Law, Apollo alleges that, "[Western's] conduct as alleged above is likely to cause dilution of the distinctive quality of [Apollo's] trademarks." FAC, ¶ 125, Terry Decl., Exhibit B.
Since the basis of Apollo's claim for trademark dilution depends on Western's alleged infringement of Apollo's registered marks, for purposes of the Entertainment Limitation, the trademark infringement and trademark dilution claims are inextricably intertwined. This type of contractual interpretation has been upheld in cases involving similar policies. In Superformance Int'l, Inc. v. Hartford Cas. Ins. Co. , 332 F.3d 215 (4th Cir. 2003), the insurance policy at issue contained an exclusion for injury "arising out of the infringement of trademark, trade name, service mark or other designation of origin or authenticity." Id. at 218. The court found that complaints alleging various trademark violations and related claims based on those violations that fall "within the scope of the Lanham Act are precisely the type excluded from coverage" by the insurance policy's trademark exclusion. Id. at 222. In reaching this conclusion, the court rejected the argument that trademark dilution was different from straightforward trademark violations. Id . Rather, the court noted that the legal avenues in which one can pursue a trademark claim all protect a trademark owner against loss of, or damage to, his trademark interests. Id . As such, this Court finds that, as to these claims, there is no potential for coverage under the Gulf Policy. Therefore, Gulf has no duty to defend or indemnify Western against these claims as a matter of law.
2. False Designation Of Origin/Unfair Competition
Gulf further contends that it has no duty to defend Western against allegations of false designation of origin/unfair competition because such claims are premised on Western's infringing use of Apollo's trademarks. Western argues that Apollo's allegations of false designation of origin/unfair competition in the Underlying Action refer only to Western's misappropriation of Apollo's advertising ideas and disparagement of the Apollo Show. Western therefore contends that the allegations supporting Apollo's claims are factually and legally distinct claims from a claim for trademark infringement.
California courts have interpreted insurance policy exclusions for trademark infringement to also exclude claims for false designation of origin and unfair competition. See Industrial Indem. Co. v. Apple Computer, Inc. , 79 Cal.App.4th 817 (1999). The Apple Computer Court cited to a Sixth Circuit decision, which held that a policy exclusion for "advertising offense" arising out of trademark or trade name infringement precludes any duty to defend a third party complaint alleging false designation of origin and unfair competition. See Industrial Indem. Co. v. Apple Computer, Inc. , 79 Cal.App.4th at 832; see also Parameter Driven Software v. Massachusetts Bay Ins. , 25 F.3d 332, 333-337 (6th Cir. 1994).
As provided in 15 U.S.C. § 1125, a person shall be civilly liable for false designation of origin if he/she, "in connection with any goods or services... uses in commerce any word, term, name, or symbol, or device, or any combination thereof... [which] is likely to cause confusion... or to deceive as to the affiliation, connection, or association of such person with another person."
In the Underlying Action, Apollo alleges that Western's "conduct and unauthorized use of the Showtime Marks and Apollo Marks have caused and are likely to cause confusion...." FAC ¶ 113, Terry Decl., Exhibit B. Because Apollo's claims for false designation of origin and unfair competition are premised on Western's alleged infringement of Apollo's trademark, these causes of action are barred from coverage under the Entertainment Limitation as a matter of law. Moreover, the Entertainment Limitation explicitly excludes "unfair competition" resulting from unauthorized use of titles, formats, ideas, characters, plots, performances or other material. Id., Exhibit A. Therefore, as to this cause of action, this Court finds no potential for coverage and no duty on the part of Gulf to defend or indemnify.
D. Exclusions As To Apollo's Remaining Claims
As to the facts giving rise to Apollo's remaining claims for Deceptive Acts and Practices and Breach of the Duty of Good Faith and Fair Dealing, the causes of action are generally alleged. Apollo merely incorporates by reference all prior allegations.
For instance, in its FAC under the heading "Western's Additional Acts of Bad Faith, " Apollo alleges that Western publicized the allegations of a lawsuit it had filed against Heritage and dePasse in an attempt to impede the production and distribution of the Apollo Show. FAC, ¶ 73, Terry Decl., Exhibit B. Apollo also alleges that Western communicated with banks financing the Apollo Show with the express purpose of informing them that ownership rights in the trademarks to the Apollo Show are contested. Id. at 85. In addition, Apollo alleges that Western began to inform certain network affiliates and television stations that Western would be distributing a like show instead of the Apollo Show, even while Western was still negotiating for a renewal of its license to distribute the Apollo Show. Id. at ¶ 88.
According to Apollo's FAC, Western sued Heritage and dePasse for tortious interference with Western's contracts with television stations for distribution of the Apollo Show and with Western's business relations with advertising agencies and advertisers. FAC, ¶ 70, Terry Decl., Exhibit B.
Taking into account all of the facts generally alleged, the claims stating misconduct reach beyond unauthorized use of trademarks and therefore are not barred by the trademark clause of the Entertainment Limitation. Gulf asserts that any claims not excluded by the Entertainment Limitation are excluded by other exclusions within the Gulf Policy.
For the following reasons, this Court finds that: (1) based on the Gulf Policy's Contract Exclusion, there is no potential for coverage and therefore, no duty to defend or indemnify Apollo's claim for Breach of the Duty of Good Faith and Fair Dealing; and (2) based on Gulf's failure to show no potential for coverage, there is a duty to defend and indemnify Apollo's claim for Deceptive Acts and Practices.
1. Breach Of The Duty Of Good Faith And Fair Dealing
Coverage B excludes from coverage, advertising injury arising out of a "[b]reach of contract, other than misappropriation of advertising ideas under an implied contract." ("Contract Exclusion") Parker Decl., Exhibit B, pg. 55.
According to the FAC, on September 22, 1998, Apollo entered into a Licensing Agreement with Western granting Western the exclusive worldwide right and license to use Apollo's marks relating to "It's Showtime At The Apollo." FAC, ¶ 34, Terry Decl., Exhibit B. By License Renewal Agreement, dated August 1, 1999, the 1998 Licensing Agreement was renewed and extended though September 22, 2002. FAC, ¶ 37, Terry Decl., Exhibit B.
Based on the above allegations, as well as admissions by Western and Gulf, it is clear that a contractual relationship existed between Apollo and Western. See Gulf's Memorandum of Points and Authorities in Opposition to Plaintiff's Motion for Summary Judgment, pg. 14, lines 4-18; Western International Syndication's Reply Brief in Further Support of Motion for Summary Judgment, pg. 2, lines, 8-19. Under New York law, "parties to an express contract are bound by an implied duty of good faith, but breach of that duty is merely a breach of the underlying contract."' Fasolino Foods Co., Inc. v. Banca Nazionale Del Lavoro , 961 F.2d 1052, 1056 (2d Circuit 1992) (citing Geler v. National Westminster Bank USA , 770 F.Supp.210, 215 (S.D.N.Y. 1991)); see also N.Y. U.C.C. Law § 1-203 (duty of good faith applies to enforcement and performance of contracts). As such, even though some of the alleged wrongful acts purportedly occurred after the expiration of the Licensing Agreement, Apollo's claim for breach of the implied covenant necessarily arises out of a breach of contract. Therefore, as a matter of law, this cause of action is excluded from policy coverage under the contract exclusion clause of the Gulf Policy. Since there is no potential for coverage as a result of this exclusion, there is no duty to defend or indemnify Western against Apollo's claims for Breach of the Duty of Good Faith and Fair Dealing.
It is unclear whether there was a choice of law issue in the Underlying Action. Based on the facts presented, it appears that New York law applies to Apollo's claim for Breach of the Duty of Good Faith and Fair Dealing. However, even if California law were to apply, it is well established in California that there is no obligation to deal fairly or in good faith absent an existing contract. Racine & Laramie, Ltd. v. Dept. of Parks and Recreation , 11 Cal.App.4th 1026, 1032 (1992). Furthermore, "[i]f there exists a contractual relationship between the parties, ..., the implied covenant is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated in the contract." Id . Although tort damages are available in California for breach of the implied covenant, the courts have held that such damages are available only in limited circumstances where a "special relationship" exists. Foley v. Interactive Data Corp. , 47 Cal.3d 654, 683-86 (1988).
2. Deceptive Acts And Practices
Based on the review of the FAC and the various relevant policy exclusions, and for the following reasons, this Court finds that Gulf has a duty to defend and indemnify against Apollo's Deceptive Acts and Practices claim.
a. Contract Exclusion
As stated above, the "Additional Acts of Bad Faith" allegations reach beyond the unauthorized use of trademarks. While some of the allegations clearly involve wrongful acts occurring before September 2002, when the Licensing Agreement expired, other alleged acts occurred after the parties' contractual relationship terminated. For example, Apollo alleges that on October 7, 2003, October 21, 2002 and January 6, 2003, after three prior requests, Western requested from the U.S. Patent and Trademark Office 60-day extensions to oppose Apollo's applications for registration of one of Apollo's trademarks. FAC, ¶¶ 78-83, Terry Decl., Exhibit B. Apollo further alleges that these requests were not intended to protect any legitimate rights of Western, but rather to disrupt the production financing arranged for the Apollo Show. FAC, ¶ 84, Terry Decl., Exhibit B. Moreover, Apollo alleges that Western "communicated with banks involved in the production financing for the Apollo show for the purpose of informing them that ownership of rights in the trademarks relating to the show were contested." FAC, ¶ 85, Terry Decl., Exhibit B. According to Apollo, Western intended to place a cloud on Apollo's title to its trademarks and made it difficult for Apollo to obtain errors and omissions insurance necessary for the production financing of the show. Id.
The above acts allegedly occurred after the contractual relationship between Apollo and Western terminated. Moreover, Gulf has not shown a direct connection between the post-Licensing Agreement allegations and the duties, obligations and responsibilities that arose out of the Licensing Agreement. As such, the allegations incorporated into Apollo's Deceptive Acts and Practices claim include allegations that do not arise out of a breach of contract. Therefore, as a matter of law, Gulf has not met its burden of showing no potential for coverage under the Contract Exclusion as to this cause of action.
b. Business Exclusion
Coverage B also states that the policy does not apply to "[a]n offense committed by an insured whose business is advertising, broadcasting, publishing or telecasting" ("Business Exclusion"). Parker Decl., Exhibit B, pg. 56. Gulf argues that Apollo's claims against Western are excluded under the Business Exclusion because Western, which is in the business of syndicating television programs, is also considered a "telecaster."
Western has introduced evidence that it distributes television programs, and is neither a "broadcaster" nor a "telecaster, " as it does not transmit programs to the public. See Declaration of Mark Terry, ¶2. As evidence to the contrary, Gulf has submitted Western's Insurance Application, which refers to an exclusion for motion picture and television production. Declaration of Lisa Parker, Exhibit A. However, there is no evidence showing that the business of motion picture and television production necessarily involves broadcasting and/or telecasting. As such, Gulf has failed to show no potential for policy coverage based on this exclusion.
This Court notes that the parties do not dispute that Western's business is neither advertising nor publishing.
c. First Publication Exclusion
Coverage B further states that the Gulf Policy does not apply to advertising injury "[a]rising out of oral or written publication of material whose first publication took place before the beginning of the policy period" ("First Publication Exception"). Parker Decl., Exhibit B, pg. 55.
According to Gulf, by letter dated May 21, 2002 ("May 21 Letter"), Apollo informed Western that Western exceeded the scope of the Licensing Agreement by: (1) hosting a kids' talent search called, "It's Showtime At The Apollo Kids Talent Search;" (2) offering for sale merchandise on which the Apollo name is prominently displayed; (3) registering the domain name "itsshowtimeattheapollo.com" under Western's name; (4) registering the domain name "apolloshowtime.com" under the name Inner City; (5) using "apolloshowtime.com as a website address on which the unauthorized activities and products described in the letter are advertised and sold; and (6) using the phrase "Apollo Kids" on the website. Parker Decl., Exhibit D, pgs. 202-204. Gulf further asserts that the May 21 Letter also claimed that the unauthorized use of the subject marks constitute infringement and dilution of Apollo's intellectual property rights. Id . Gulf argues that since the Gulf Policy was not effective until July 27, 2002, the First Publication Exception applies because Western allegedly infringed Apollo's trademark prior to the inception of the Gulf Policy.
As an initial matter, this Court notes that the wrongful acts described in the May 21 Letter constitute only a portion of the wrongful acts alleged in the FAC. More importantly, however, the subject matter of the letter relates solely to Apollo's trademarks. As previously discussed, this Court has determined that all of Apollo's claims arising out of Western's unauthorized use of Apollo's trademarks are excluded by the Entertainment Limitation. As the May 21 Letter constitutes Gulf's only evidence involving this exclusion, this Court finds that Gulf has not met its burden of showing no potential for coverage based on the First Publication Exclusion.
E. No Entitlement To Pre-Tender Defense Costs
Section IV(2)(d) of the Gulf Policy provides that "[n]o insureds will, except at their own cost, voluntarily make a payment, assume any obligations or incur any expenses, other than for first aid, without our consent." Parker Decl., Exhibit B, pg. 59.
The general validity of such no-voluntary-payment provisions in insurance policies is well-established. See Insua v. Scottsdale Ins. Co. , 104 Cal.App.4th 737 (2002). As stated in Insua:
Under a no-voluntary-payments provision, only " previous voluntary payments by the insured are barred from indemnification." Once the insured has requested and been denied a defense by the insurer, "the insured may ignore the policy's provisions forbidding the incurring of defense costs without the insurer's prior consent...."
Id. at 743 (citing Tradewinds Escrow Inc. v. Truck Ins. Exch. , 97 Cal.App.4th 704, 710 (2002); Gribaldo, Jacobs, Jones & Assoc. v. Agrippina Versicherunges A.G. , 3 Cal.3d 434, 449 (1970)).
Gulf has introduced evidence that Western did not tender defense of the Underlying Action until March 8, 2004. Parker Decl., ¶ 6, Exhibit D. Western does not dispute this fact. As such, Gulf has no duty to reimburse Western for any pre-tender expenses.
IV. EVIDENTIARY OBJECTIONS
To the extent this Court relied on the parties' evidence, objections to that evidence are overruled.
V. CONCLUSION
In light of the foregoing, this Court ORDERS:
(1) Gulf's Motion for Summary Judgment with respect to the following claims in the Underlying Action is GRANTED:
(a) Infringement of Federally Registered Trademarks (15 U.S.C. § 1114(1));
(b) False Designation of Origin and Unfair Competition (15 U.S.C. § 1125(a));
(c) Dilution of Federally Registered Trademarks (15 U.S.C. § 1125(c));
(d) Trademark Dilution (N.Y. Gen. Bus. Law § 360-1);
(e) Unfair Competition (New York common law); and
(f) Breach of the Duty of Good Faith and Fair Dealing.
(2) Gulf's Motion for Summary Judgment is also GRANTED with respect to the issue of pre-tender defense costs.
(3) Western's Motion for Summary Judgment with respect to the following claim in the Underlying Action is GRANTED:
(a) Deceptive Acts and Practices (N.Y. Gen. Bus. Law § 349).
(4) Western's Motion for Summary Judgment is DENIED with respect to all other claims and issues.
It is FURTHER ORDERED that each party shall bear its own costs.
It is FURTHER ORDERED that the parties jointly lodge a Proposed Judgment consistent with this Court's ruling on the matter. The Proposed Judgment shall be submitted to this Court no later than 20 days from the date of this Order.
IT IS SO ORDERED.
In November 2003, the New York Court of Appeals affirmed a dismissal of a complaint against a defendant-insurer for failure to give timely notice of the underlying action following an accident. In its decision, the court reasons that the insureds were unable to provide an excuse for their failure to comply with the policy's notice provisions. The court further states, "Unlike [Brandon], this is not a case where the carrier had prior notice of the claim before the action was commenced.