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Crum & Forster Specialty Insurance Co. v. Willowood USA, LLC

United States District Court, D. Oregon

August 1, 2014

CRUM & FORSTER SPECIALTY INSURANCE COMPANY, Plaintiff,
v.
WILLOWOOD USA, LLC; ALLIED WORLD ASSURANCE COMPANY (U.S.); COLONY INSURANCE COMPANY; and REPAR CORPORATION, Defendants.

OPINION AND ORDER

MICHAEL J. McSHANE, District Judge.

Plaintiff, Crum & Forster Specialty Insurance Company (Crum), along with defendant insurance providers Allied World Assurance Company (Allied) and Colony Insurance Company (Colony), seek a legal declaration against defendant Willowood USA, LLC (Willowood) that they have no duty to defend Willowood in a companion case before this Court, Repar Corporation v. Willowood USA, LLC et al., Civ. No. 6:13-cv-01043-MC (underlying action).

This Court is asked to consider whether Crum, Allied, and/or Colony owe Willowood a duty to defend based upon the allegations in the underlying action. Because (1) the allegations in the underlying action do not state a potential claim for either trade libel or defamation and (2) the claims in the underlying action are excluded and/or not covered under the respective policies, this Court finds that neither Crum, Allied, nor Colony owe Willowood a duty to defend in the underlying action. Thus, motions for summary judgment, ECF No. 51 (Allied), ECF No. 55 (Crum), and ECF No. 58 (Colony), are GRANTED, and Willowood's motion for partial summary judgment, ECF No. 53, is DENIED.

PROCEDURAL AND FACTUAL BACKGROUND

This action arises out of an insurance coverage dispute. Because this action relies on the factual allegations in the underlying action, this Court looks to the First Amended Complaint (FAC).[1]

Repar, a corporation in the business of distributing agricultural pesticides, began distributing an agricultural pesticide containing tebuconazole under the trade names TEBUCON 45 DF and TEBUCON 3.6F in 2008. Decl. of Seth H. Row 2-3, ECF No. 57-6. On August 23, 2011, Repar obtained "trademark registration No. 4, 015, 686 for the TEBUCON mark for various types of pesticide products." Id. at 7.

Willowood, also a corporation in the business of distributing agricultural pesticides, was formed in December 2009. Id. at 3. Sometime after formation, Brian Heinze, president of Willowood, contacted Bhushan Mandava, president of Repar, to discuss a potential business relationship. Id. at 4. Heinze proposed that Willowood "enter into distribution arrangements with Repar allowing Willowood to sell TEBUCON 45 DF and TEBUCON 3.6F under labels showing Willowood as the distributor." Id. Willowood subsequently agreed to "maintain the confidentiality of any confidential or proprietary information, " to not use "the name TEBUCON except for sales authorized under the EPA Form 8570-5 agreement, " and to allow Repar to "be the exclusive supplier of technical grade tebuconazole for both products." Id. at 4-5. As a result, Repar granted Willowood a "license to distribute and sell products in connection with the TEBUCON mark as an EPA subregistrant of Repar for the TEBUCON 45 DF and 3.6F products and subject to Repar's quality control." Id. at 5.

Willowood later approached Repar and sought permission to cite Repar's product chemistry data in support of Willowood's primary EPA registration applications for the 45 DF and 3.6F tebuconazole formulations. Id. Repar granted Willowood this permission after Willowood again promised to "maintain the confidentiality of this data, to use Repar as its sole supplier of technical-grade tebuconazole, and to use a trade name other than TEBUCON in connection with Willowood's own products containing tebuconazole." Id. at 5-6.

After submitting its EPA registration applications, Willowood informed Repar "that [Willowood] would not be purchasing tebuconazole from Repar in the future" and "entered into subregistration agreements with another registration of the two tebuconazole formulations, thereby circumventing Repar as a supplier of technical tebuconazole." Id. at 6. Repar withdrew its support for Willowood's EPA registration applications; forcing Willowood to refile. Id.

Willowood successfully refiled its EPA registration applications using product chemistry data from another supplier. Id. In its refiled EPA registration applications, Willowood identified its products as WILLOWOOD TEBUCON 45DF and WILLOWOOD TEBUCON 3.6 SC. Id. "Willowood subsequently began using Repar's TEBUCON mark in connection with the sale and distribution of its own tebuconazole products." Id.

Repar now seeks damages and injunctive relief under theories of implied-in-fact contract, quasi-contract/unjust enrichment, Federal Trademark Infringement (15 U.S.C. § 1114), and Federal Unfair Competition (15 U.S.C. § 1125(a)). See id. at 9-13.

STANDARD OF REVIEW

This Court must grant summary judgment if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). An issue is "genuine" if a reasonable jury could return a verdict in favor of the non-moving party. Phillip Morris, Inc., 395 F.3d 1142, 1146 (9th Cir. 2005) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A fact is "material" if it could affect the outcome of the case. Id. The court reviews evidence and draws inferences in the light most favorable to the non-moving party. Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 988 (9th Cir. 2006) (quoting Hunt v. Cromartie, 526 U.S. 541, 552 (1999)). When the moving party has met its burden, the nonmoving party must present "specific facts showing that there is a genuine issue for trial. " Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (quoting Fed.R.Civ.P. 56(e)) (emphasis in original).

DISCUSSION

The insurance providers contend that the claims and allegations in the underlying action are not covered under the respective policies and, to the extent that the claims and allegations are covered, the claims and allegations are excluded.

I. Policy Coverage

Willowood contends that all three insurance providers must defend because the allegations in the underlying action "fall squarely within the coverage for personal and advertising injury' provided by each of the policies." Willowood's Mem. in Supp. of Mot. Partial Summ. J. 19, ECF No. 54. Because all three providers contest coverage, this Court "turn[s] first to the question of whether the insurance policy covered [Repar's] claim." Marleau v. Truck Ins. Exch., 333 Or. 82, 89 (2001).

To answer that question, this Court must examine two documents: the insurance policy and Repar's complaint. See id. (citing Ledford v. Gutoski, 319 Or. 397, 399 (1994)). "In regard to the insurance policy, [this Court] must determine from its terms and conditions what the parties intended the policy to cover." Id. (citing Hoffman Constr. Co. of Alaska v. Fred S. James & Co., 313 Or. 464, 469 (1992)). This Court then examines the complaint to determine if it, without amendment, may impose liability for conduct covered by the policy. Id. (citation omitted).

"Oregon determines the intent of the parties to an insurance contract by looking first to the plain meaning of any disputed terms and then to the structure and context of the policy as a whole." Anderson Bros., Inc. v. St. Paul Fire & Marine Ins. Co., 729 F.3d 923, 931 (9th Cir. 2013) (citations omitted). "If the parties' intent cannot be determined by doing so, the policy is construed against the insurer, because any reasonable doubt as to the intended meaning of [an ambiguous] term will be resolved against the insurance company and in favor of extending coverage to the insured." Id. (citations and internal quotation marks omitted); see also Holloway v. Republic Indem. Co. of Am., 341 Or. 642, 650 (2006) ("If the ambiguity remains after the court has engaged in those analytical exercises, then any reasonable doubt as to the intended meaning of such [a] term[] will be resolved against the insurance company." (citations and internal quotation marks omitted)).

Colony's policy extends the "duty to defend the insured against any suit'[2] seeking damages'" for covered "personal and advertising injur[ies]." Decl. of Seth H. Row 8, ECF No. 57-3; see also Decl. of Seth H. Row 10, ECF No. 57-4 (Allied's policy); Decl. of Seth H. Row 3, ECF No. 57-1 (Crum's policy, effective 3/1/12-3/1/13); Decl. of Seth H. Row 4, ECF No. 57-2 (Crum's policy, effective 3/1/13-3/1/14). Colony's policy defines "personal and advertising injury" as:

[I]njury, including consequential "bodily injury", arising out of one or more of the following offenses:
...
d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services;
...
f. The use of another's advertising idea in your "advertisement"; or
g. Infringing upon another's copyright, trade dress or slogan in your "advertisement".

Decl. of Seth H. Row 29, ECF No. 57-3. This definition of "personal and advertising injury" is the same in Allied's policy, see Decl. of Seth H. Row 29, ECF No. 57-4, and is consistent with both of Crum's policies, see Decl. of Seth H. Row 27, ECF No. 57-1 (Crum's policy, effective 3/1/12-3/1/13); Decl. of Seth H. Row 28, ECF No. 57-2 (Crum's policy, effective 3/1/13-3/1/14).[3]

Willowood argues, in reliance upon the definition of "personal and advertising injury" above, that Repar, in the underlying action, alleges "disparagement" under subsection "d" and "use of another's advertising idea in your advertisement'" under subsection "f." Because the policies do not define either "disparagement" or "use of another's advertising idea in your advertisement, '" this Court first considers whether the phrases in question have a plain meaning, i.e., whether they are susceptible to only one plausible interpretation. See Holloway, 341 Or. at 650. If two or more plausible interpretations are shown, then this Court examines those interpretations in light of the particular context in which those terms are used in the policy and the broader context of the policy as a ...


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