Premier New England Trial Attorneys
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Melick & Porter Wins Summary Judgment for Insurance Carrier in “Duty to Defend” Claim

Congratulations to Melick & Porter partner Syd Saloman, who recently obtained summary judgment on behalf of an insurance carrier in a coverage dispute concerning the carrier’s duty to defend its insured. The insured, an investment company involved in the sale of high-end leather products, was embroiled in litigation following the acrimonious dissolution of a joint venture with a leather designer/manufacturer involving the design, manufacturing, and sale of leathers bags and briefcases. After the insured filed suit against the manufacturer, the manufacturer counterclaimed, alleging that the insured had copied his proprietary designs, produced imitations of his leather products, and damaged his reputation. The insured demanded that its liability carrier undertake the defense of the counterclaims under the “personal and advertising injury” coverage provided in the policy, but the insurer refused, maintaining that the coverage was inapplicable, that the claims preceded the policy period, and that various exclusions applied. After the insured settled its dispute with the manufacturer, it brought suit against the carrier, seeking reimbursement of approximately $900,000 in defense costs and alleging that the insurer had acted in bad faith.

The parties filed cross-motions for summary judgment, and the Court agreed with the insurer’s position. It ruled that the counterclaim against the insured in the underlying action did not allege slander, libel or disparagement – offenses which might be subject to “personal and advertising injury” coverage – but instead was premised upon the allegation that the insured improperly benefited from the manufacturer’s reputation by passing off his products as its own. Because such claims were not within the scope of potential coverage, the insurance carrier had no duty to defend, and the Court granted summary judgment in the insurer’s favor on all counts.

The Court’s ruling demonstrates that while an insurance carrier’s duty to defend is broad, it is not unlimited. While an insured is entitled to have any ambiguity resolved in its favor and need only show a possibility that any of the claims fall within the policy’s coverage, an insured must nevertheless demonstrate that the plain language of the pleading presents allegations that may be construed as potentially covered claims.