S.B.C.C., INC v. ST. PAUL FIRE &
MARINE INSURANCE COMPANY
Filed 6/11/10;
pub. order 7/1/10
(see end of opn.)
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH
APPELLATE DISTRICT
S.B.C.C., INC.,
Plaintiff and
Appellant,
v.
ST. PAUL FIRE & MARINE
INSURANCE COMPANY,
Defendant and
Appellant.
H034211
(Santa Clara
County
Super. Ct.
No. CV110374)
In this action for insurance bad faith, plaintiff S.B.C.C.,
doing business as South Bay Construction Company (South Bay) alleged that its
insurer, defendant St. Paul Fire & Marine Insurance Company (St. Paul) had
wrongfully refused to defend South Bay in an action brought by its competitor,
San Jose Construction, Inc. (SJC). The
superior court found no duty to defend because an exclusion in South Bay's liability policy eliminated any potential
coverage for advertising injury, and the harm to SJC was not "personal
injury" within the meaning of the policy language. The court accordingly denied South Bay's motion for summary adjudication and granted summary
judgment to St.
Paul. We conclude that the allegations of SJC's
complaint did not trigger a duty to defend South Bay under the contract terms. We therefore must affirm the judgment.
Background
St. Paul insured South Bay under a "Contractors Commercial General
Liability Protection" (CGL) policy which was effective between June 4,
2003 and June 4,
2004. It covered both the company and its employees
if they were engaged in work within the scope of their employment or performing
duties related to the conduct of the business.
One of these employees was Richard Foust, who began his employment with South Bay in late March of 2004. Foust's previous employer was SJC, where he
was a project manager.
SJC filed the underlying action
against both Foust and South Bay on April 2, 2004. In
its first amended complaint SJC asserted 11 causes of action related to the
allegation that Foust had taken valuable confidential information about SJC's
existing customers, including details about ongoing "design build"
contracts, and that he had used the information to solicit those customers for
the benefit of South Bay, SJC's competitor.[1] The
claims against South Bay were for misappropriation of trade secrets,
intentional interference with prospective economic advantage, common-law unfair
competition, violation of Business and Professions Code section 17200, et. seq.
(the unfair competition law), and interference with contract.
South Bay tendered the defense to St. Paul on August 30, 2005, but St. Paul denied coverage. A lengthy exchange followed, but St. Paul refused to accept the defense, maintaining
that coverage did not exist because (a) SJC was not alleging personal injury,
advertising injury, property damage, or bodily injury within the meaning of South Bay's liability policy, and (b) the policy
excluded claims related to breach of contract or infringement of intellectual
property. Upon SJC's amendment of its
complaint, South Bay again tendered the defense to St. Paul, but again to no avail.
In the course of the SJC litigation South Bay moved for summary judgment, which the trial
court granted. On appeal from the January
3, 2007 judgment,
SJC challenged the ruling as to all of the claims against South Bay except interference with contract. This court reversed, finding triable issues of fact on all four of the
remaining causes of action against South Bay. (See
San Jose Construction, Inc. v.
S.B.C.C., Inc., supra, 155 Cal.App.4th at pp. 1538-1546.)
On April 14, 2008, South Bay brought the present action against St. Paul for breach of contract, breach of the
covenant of good faith and fair dealing, and declaratory relief. In the first cause of action South Bay alleged that St. Paul had "breached its contractual
obligations by refusing to defend [South Bay], by failing to take reasonable steps to
settle the Underlying Action against [South Bay], and by continuing to deny its obligations
under its policies." The second
cause of action contained allegations of bad faith for denying coverage
"without proper cause," for failing to investigate the underlying
allegations thoroughly to determine whether they were covered, and for failing
to work toward a settlement of the underlying action.
Both parties moved for summary
judgment or summary adjudication of the issue of St. Paul's duty to defend.[2] The
cross-motions focused on the question of whether there was potential coverage
under either the "advertising injury" provision or the "personal
injury" provision. After
considering the parties' written and oral arguments, the trial court determined
that St.
Paul
was entitled to judgment. The court
found no potential coverage under the "personal injury" provisions of
the policy. It found a triable issue of
fact as to the claim that SJC had alleged "advertising injury," but
there was nonetheless no coverage because the policy excluded underlying claims
resulting from intellectual property infringement. The court accordingly granted St. Paul's motion, denied South Bay's, and entered judgment for St. Paul. Both
parties filed timely appeals.
Discussion
1. Principles of Review
"The
purpose of the law of summary judgment is to provide courts with a mechanism to
cut through the parties' pleadings in order to determine whether, despite their
allegations, trial is in fact necessary to resolve their dispute." (Aguilar v. Atlantic Richfield Co. (2001)
25 Cal.4th 826, 843 (Aguilar).)
Summary judgment is appropriate "if all the papers submitted show
that there is no triable issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law." (Code Civ. Proc., § 437c, subd. (c).) A defendant who moves for summary judgment or
summary adjudication bears the initial burden to show that the action or cause
of action has no merit--that is, "that one or more elements of the cause
of action, even if not separately pleaded, cannot be established, or that there
is a complete defense to that cause of action." (Code Civ. Proc., § 437c, subds. (a),
(p)(2).) When the burden of proof at
trial will be on the plaintiff by a preponderance of the evidence, the moving
defendant "must present evidence that would preclude a reasonable trier of
fact from finding that it was more likely than not that the material fact was
true [citation], or the defendant must establish that an element of the claim
cannot be established, by presenting evidence that the plaintiff 'does not
possess and cannot reasonably obtain, needed evidence' " to support a
necessary element of the cause of action.
(Kahn v. East Side Union High School Dist. (2003) 31 Cal.4th 990,
1003, quoting Aguilar, supra,
25 Cal.4th at p. 854; Guz v. Bechtel National, Inc. (2000) 24 Cal.4th
317, 334.) And where the plaintiff has
also moved for summary judgment--or, as in this case, summary adjudication--
that party has the burden of showing there is no defense to a cause of action. (Code Civ. Proc., § 437c, subd. (a).) That burden can be met if the plaintiff
"has proved each element of the cause of action entitling the party to
judgment on that cause of action."
(Code Civ. Proc., § 437c, subd. (p)(1).)
If the plaintiff meets this burden, it is up to the defendant "to
show that a triable issue of one or more material facts exists as to that cause
of action or a defense thereto." (Code Civ. Proc., § 437c, subd.
(p)(1).) "We need not defer to the
trial court and are not bound by the reasons for the summary judgment ruling;
we review the ruling of the trial court, not its rationale." (Knapp v. Doherty (2004) 123
Cal.App.4th 76, 85.)
The central issue between the
parties was whether the liability policy potentially covered SJC's lawsuit,
thereby giving rise to St. Paul's duty to defend South Bay in the action. As this is a question requiring
interpretation of the policy provisions, it is determined independently by the
reviewing court. (Powerine Oil Co., Inc. v. Superior Court (2005) 37 Cal.4th 377,
390; cf. MacKinnon v. Truck Ins. Exchange
(2003) 31 Cal.4th 635, 641.)
Established rules assist in that
interpretation. Whether an insurer has a
duty to defend "depends, in the first instance, on a comparison between
the allegations of the complaint and the terms of the
policy. . . . If any
facts stated or fairly inferable in the complaint, or otherwise known or
discovered by the insurer, suggest a claim potentially covered by the policy,
the insurer's duty to defend arises and is not extinguished until the insurer
negates all facts suggesting potential coverage. On the other hand, if, as a matter of law,
neither the complaint nor the known extrinsic facts indicate any basis for
potential coverage, the duty to defend does not arise in the first
instance." (Scottsdale Ins. Co. v. MV Transp. (2005) 36 Cal.4th 643,
654-655.)
"While insurance contracts have
special features, they are still contracts to which the ordinary rules of
contractual interpretation apply.
[Citation.] The fundamental goal
of contractual interpretation is to give effect to the mutual intention of the
parties. (Civ. Code, § 1636.) If
contractual language is clear and explicit, it governs. (Civ. Code, § 1638.) On the other hand, '[i]f the terms of a
promise are in any respect ambiguous or uncertain, it must be interpreted in
the sense in which the promisor believed, at the time of making it, that the
promisee understood it.'
[Citations.] This rule, as applied
to a promise of coverage in an insurance policy, protects not the subjective
beliefs of the insurer but, rather, 'the objectively reasonable expectations of
the insured.' [Citation.] Only if this rule does not resolve the
ambiguity do we then resolve it against the insurer." (Bank
of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264-1265, quoting
Cal.3d 807, 822.)
Policy terms will be considered
ambiguous if they are "capable of two or more constructions, both of which
are reasonable. [Citation.] But language in a contract must be
interpreted as a whole, and in the circumstances of the case, and cannot be
found to be ambiguous in the abstract. (
1265.) Courts will not strain to create
an ambiguity where none exists." (
(1995) 11 Cal.4th 1, 18-19; see also TRB
Investments, Inc. v. Fireman's Fund Ins. Co. (2006) 40 Cal.4th 19,
27-28.)
2. Comparison of The Policy Terms
and the Underlying Complaint
The
disputed policy provisions pertain to "Advertising Injury Liability"
and "Personal Injury Liability," the grounds of South
Bay's complaint and summary
adjudication motion. The coverage
provision of the first ground states: "Advertising
injury liability. We'll pay
amounts any protected person is legally required to pay as damages for covered
advertising injury that:
·
results from the advertising of your products,
your work, or your completed work; and
·
is caused
by an advertising injury offense committed while this agreement is in
effect."
"Advertising
injury" is defined as "injury, other than bodily injury or personal
injury, that's caused by an advertising injury offense." "Advertising injury offense" is
defined to include defamation, disparagement of another's work or business,
disclosure of "covered material that violates a person's right of
privacy," and the circumstance invoked by South
Bay--that is, "Unauthorized use
of any advertising idea or advertising material, or any slogan or title, of
others in your advertising."
The term
"advertising" is itself defined in the policy: "
attention of others by any means for the purpose of:
·
seeking customers or supporters; or
·
increasing sales or business."
An "advertising idea" is "a manner or style
of advertising that others use and intend to attract attention in their
advertising. [¶] But we won't consider information used to
identify or record customers or supporters, such as a list of customers or
supporters, to be an advertising idea."
Finally, "advertising material" is "any covered material
that
·
is subject to copyright law; and
·
others
use and intend to attract attention in their advertising."
The promise
to pay damages for "personal injury liability" is contained in the
following statement: "
legally required to pay as damages for covered personal injury that: [¶]
results from your business activities; and [¶] is caused by a personal injury offense
committed while this agreement is in effect." The term "[p]ersonal injury means injury, other than bodily injury or
advertising injury, that's caused by a personal injury offense." A "personal injury offense"
consists in any of a number of listed wrongful acts, including "[m]aking
known to any person or organization covered material that violates a person's
right of privacy."[3] Finally, "covered material means any
material in any form of expression, including material made known in or with
any electronic means of communication, such as the Internet," but
excluding such material as the content of the protected person's online
chatroom or bulletin board or a Web site designed by a protected person whose
business is designing or maintaining Web sites for others.
The other
controversial provision was an exclusion for suits involving intellectual
property. The policy stated: "We won't cover injury or damage or
medical expenses that result from any actual or alleged infringement or
violation of any of the following rights or laws:
·
Copyright
·
Patent.
·
Trade dress.
·
Trade name.
·
Trade secret.
·
Trademark.
·
Other intellectual property rights or laws.
Nor will we cover any other injury or damage that's alleged
in any claim or suit which also alleges any such infringement or
violation. [¶] But we won't apply this exclusion to bodily
injury or property damage that results from your products or your completed
work. [¶] Nor will we apply this exclusion to
advertising injury that results from the unauthorized use of any :
·
copyrighted advertising material;
·
trademarked slogan; or
·
trademarked title;
of others
in your advertising."
a. Advertising Injury
In its
motion for summary judgment St. Paul
argued that SJC's confidential customer information could not reasonably be considered
advertising material or an advertising idea; hence, there could have been no
advertising injury offense. St.
Paul further asserted that South
Bay would not be able to show
causation between the solicitation and the injury, because it was the misappropriation
that caused the alleged damage to SJC.
In opposition to St. Paul's
summary judgment motion and in its own summary adjudication motion, South
Bay contended that its conduct
amounted to "advertising" and "advertising injury" because
it was accused of having used the confidential information obtained from Foust
to solicit SJC's customers. The trial
court agreed with South Bay that triable issues of fact existed on the
questions of (1) whether South Bay's solicitations constituted advertising, (2)
whether the allegedly misappropriated information constituted "advertising
ideas," and (3) "whether the use of the information . . . potentially
caused SJC damage." Nevertheless,
because it also found applicable the exclusion for intellectual property
claims, the court granted summary judgment to St. Paul.
On appeal,
the parties describe the efforts of numerous courts that have analyzed policy
coverage of advertising injury. Even
though several of these decisions arose in the same context--that is, misappropriation
and use of the plaintiff's confidential customer information to solicit the
plaintiff's customers--the policy terms relating to advertising injury are not
identical. In Hameid v. National Fire Insurance of Hartford (2003) 31 Cal.4th 16,
for example, the policy did not define advertising, but defined
"advertising injury" to include "misappropriation of advertising
ideas or style of doing business."
(Id. at p. 22.) Confronting the term "advertising"
itself, the Supreme Court adopted the interpretation relied on by the majority
of courts in other jurisdictions--that is, "widespread promotional
activities usually directed to the public at large." (Id.
at p. 24; see also Bank of the West v.
Superior Court (1992) 2 Cal.4th 1254, 1276, fn. 9 [recognizing majority
definition].) This definition comported
with the commonly understood sense of the word "advertising." It precluded personal solicitations of
individual customers, the basis of the underlying plaintiff's lawsuit.
The court
in We Do Graphics v. Mercury Casualty
Company (2004) 124 Cal.App.4th 131 did not identify any definition of
advertising in the policy, but only explained why "advertising
injury" as defined in the policy did not include the alleged use of stolen
customer information to solicit a former employer's customers. The court further held that the stolen
customer information did not constitute advertising ideas, though again it did
not define that term. And in
Motorists Insurance Co. (2000) 82 Cal.App.4th 995, the policy did not
define "advertising"; consequently, the appellate court used the
majority definition and held that advertising did not include soliciting a
single customer with a tailor-made product in the course of a competitive
bidding process. (Id. at p. 1012.) Likewise,
the policy considered in Sentex Systems,
Inc. v. Hartford Accident & Indemnity Company (9th Cir. 1996) 93 F.3d
578 defined neither "advertising" nor "advertising
idea." The Ninth Circuit did
"not necessarily agree" with the district court's broad
interpretation of these concepts to permit coverage for allegations of
misappropriating a customer list, but it nonetheless held that there was
potential coverage given the broader scope of the underlying action, which
included misappropriation of marketing techniques. (Id. at p. 580, 581; see also
& Indemnity Company (C.D. Cal. 1995) 882 F.Supp. 930.)
The
liability policy in Rombe Corporation v.
Allied Insurance Company (2005) 128 Cal.App.4th 482 did contain a
definition of "advertisement":
"a notice that is broadcast or published to the general public or
specific market segments about your goods, products or services for the purpose
of attracting customers or supporters."
(Id. at p. 485.) There a franchisee of TRC, an employment
agency, hosted a breakfast meeting at which its customers and employees were
invited to associate themselves with a new employment agency that would replace
TRC. Overturning the lower court's summary
judgment, the appellate court agreed with the insurer that neither the meeting
nor a subsequent Internet report of the meeting involved the use of TRC's
advertising ideas. (Id. at p. 489.) The meeting
itself was not an advertisement; and even if the press report was, it did not
involve a covered advertising offense.
Even using the words "specific market segments" did not expand
the definition of "advertising" to include personal solicitations. Rombe's broad interpretation of
"specific market segments" "could easily include the one-on-one
solicitations which the court in Hameid
found outside the scope of advertising."
(Id. at p. 492.) It also would lead to findings of coverage
"for almost all commercial disputes between competitors," and it
would promote a case-by-case approach that the Hameid court rejected as encouraging litigation and undermining
standardization of policy language. (Ibid.;
see Hameid, supra, 31 Cal.4th
at p. 29 [emphasizing importance of standard policy terms].)
Here, as South Bay points out, the CGL policy is unusual in
that it expressly defines "advertising" as well as "advertising
injury" and "advertising idea."
South Bay contends that the policy definition of
"advertising" is expansive enough to include personal solicitations
of a competitor's customers. We
disagree. The provision, though
certainly broader than the majority definition adopted in Hameid, nonetheless requires the insured to have been
"attracting the attention of others" with a purpose of "seeking
customers or supporters" or "increasing sales or business." Here Foust, the primary culprit in the
alleged misconduct, had no need to "attract the attention" of the
customers he was soliciting; they were already doing business with him, and he
merely sought to transfer their association from SJC to South Bay. A
conclusion that this activity constituted advertising would be unreasonable and
beyond the likely intent of the contracting parties.
An "advertising injury
offense," aside from inapplicable torts,[4] entails the unauthorized use by the insured
of either an "advertising idea" or "advertising material"
of another. Even if South Bay was engaged in advertising when it
personally solicited SJC's customers and subcontractors, it did not use SJC's
"advertising material"--which is material that is both "subject to copyright law" and used by others
"to attract attention in their advertising." There is nothing in the record to suggest
either that SJC's customer information and project details were subject to
copyright law or that they were being used by SJC in advertising. At the time Foust took these materials to South Bay, SJC was engaged in preparations for five
construction projects with established
clients and subcontractors.
Likewise, we cannot reasonably conclude
that South Bay used SJC's "advertising idea" when
it participated in Foust's recruitment of project owners and subcontractors.
First, no "[u]nauthorized use of any advertising idea" is implicated
when the advertising idea consists in "information used to identify or
record customers or supporters, such as a list of customers or
supporters." SJC alleged that Foust
had brought to South Bay a list of names and telephone numbers for
several hundred subcontractors whom SJC had used over the years, along with a
list of "preferred vendors" and client information. Clearly these names and numbers were not
"advertising ideas" within the meaning of the policy, in light of the
exclusion for "information used to identify or record customers or
supporters, such as a list of customers or supporters."
Furthermore, there are no facts
suggesting that the misappropriated information was used "to attract
attention" in SJC's advertising.
Foust had developed project details with numerous subcontractors who had
already submitted bids on pending SJC projects; some projects were "ready
to go," and at least one other was delayed but was viewed with some
urgency by the project owner. (See
Inc., supra, 155 Cal.App.4th at p 1531.) During the last two
weeks of his employment at SJC, Foust took project information contained in
more than 200 documents related to five prospective jobs on which SJC had
bid. The documents included project
budgets and proposals made to the owners, correspondence between owner and
architect, all subcontractor bids, cost estimates, requests for information by
subcontractors or project managers, and responses to those requests from the
owner or architect. This information,
which Foust uploaded onto South Bay's computer system, gave Foust
"everything he needed to begin work right away on at least three projects
for South Bay."
(Ibid.) On his first day
of work at South Bay, Foust invited subcontractors to a meeting
at which he persuaded all but two to move with him to South Bay. South Bay's project proposals submitted soon
thereafter were "in large part the same" as those produced by SJC the
previous month. (Id. at p.
1533.) South Bay was alleged to have cooperated in Foust's
efforts to transfer client patronage and subcontractor loyalty from SJC to South Bay.
None of this information can
reasonably be said to constitute advertising by SJC. All of the project details, together with the
list of contacts, represent established relationships which SJC, through Foust,
had developed with customers and subcontractors. By personally soliciting them to move with
him to South Bay, Foust was not using either SJC's
advertising ideas or its advertising material.
Putting the South Bay logo on SJC's project proposals does not
transform South Bay's activity into advertising. We therefore agree with St. Paul that the conduct giving rise to SJC's
lawsuit cannot reasonably be deemed an "advertising injury offense"
and thus did not present a potential for coverage under that provision of the
CGL policy issued to South Bay.
b. Personal Injury
South Bay maintains that it was entitled to coverage
for a "personal injury offense" because Foust took SJC's confidential
information and delivered it to South Bay, thereby "[m]aking known to any
person or organization covered material that violates a person's right of
privacy." The parties debate the
effect of the reference to "a person's right of privacy." South
Bay concedes that the policy does
not define "person" to refer to organizations; instead, it indirectly
tries to append such a reference to several provisions that expressly include
organizations in defining other
terms. For example, "Personal
injury and advertising injury each person limit" limits indemnity for
personal injury and advertising injury that "is sustained by any one
person or organization."
"Personal injury each person deductible" addresses the
deductible for personal injury "sustained by any one person or
organization." The deductible for
advertising injury similarly refers to the deductible for advertising injury
"sustained by any one person or organization." The term "protected person" also
"means any person or organization," qualifying under the "Who is
Protected" provision of the agreement--that is, the named insured as well
as specified individuals and
organizations.
But the
wording of these selected policy provisions does not support South
Bay's position; if anything, it
weakens it. That certain terms
specifically include organizations
does not imply that organizations are persons
when reference is made only to a person.
On the contrary, the policy carefully identifies organizations when it
intends to refer to them.[5] Nothing in the definition of "personal
injury offense" suggests that a "person's"
right of privacy was intended to encompass an organization's right as
well. If the parties had wanted to
include organizations in the scope of this provision, it would have added
"or organization's" to "a person's" in referring to the
right of privacy, as it did in explaining personal injury limits, deductibles,
and the categories of "protected persons." Indeed, the "right of privacy"
provision itself draws the intended distinction by defining "personal
injury offense" to include "[m]aking known to any person
while denoting the victim of that disclosure as only a person. Thus, even if South
Bay is correct in asserting that
corporations have a right of privacy,[6] that right was not
implicated for purposes of determining the scope of insurance coverage under
the St. Paul CGL policy. (Cf.
Guarantee Association (2005) 132 Cal.App.4th 1058, 1070-1073 [where policy
referred to "person" and "organization" separately and
distinctly, the words must be given their separate and distinct meaning to
avoid creating ambiguity and redundancy]; see also Golden Eagle Insurance Corp. v. Cen-Fed, Ltd. (2007) 148
Cal.App.4th 976, 991 [following the court's prior holding in
South
Bay alternatively argues that if
"person" does not include "organization" in referring to
"person's right of privacy," then it is ambiguous and must be
construed against St. Paul. As noted earlier, however, courts will not strain to create an ambiguity
where none exists. (Waller v. Truck Ins. Exchange, Inc., supra, 11 Cal.4th at
pp. 18-19.) Policy terms are ambiguous
when they are capable of two or more constructions, both of which are reasonable.
As the policy language here is not susceptible of two reasonable
constructions, it is not ambiguous.
c. The Intellectual Property
Exclusion
Although the trial court rejected St. Paul's effort to show no potential coverage for South Bay's conduct as an "advertising injury
offense," it nonetheless found summary judgment appropriate based on the
policy exclusion for claims of intellectual property infringement. Under this provision no coverage is afforded
if the alleged injury results from misappropriation of trade secrets or
violation of other intellectual property rights or laws. In attempting to avoid the application of
this coverage limitation, South Bay
emphasizes that only one of SJC's claims was for trade secrets violation, and
not all of the information taken from SJC was a "work of the
mind." Because some of the material
was client information and records, it "cannot be excluded as intellectual
property under St. Paul's
definition because pure factual data cannot constitute a 'work of the mind.'
"
South
Bay correctly points out that
exclusions must be stated in clear and unmistakable language and are
interpreted narrowly against the insurer.
(TRB Investments, Inc. v.
Fireman's Fund Ins. Co. (2006) 40 Cal.4th 19, 27-28; MacKinnon v. Truck Ins. Exchange, supra, 31 Cal.4th at p.
648.) But even exclusionary language
must be construed in the context of the policy as a whole, and in the
circumstances of that case, and "cannot be found to be ambiguous in the
abstract." (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41
Cal.3d 903, 916, fn. 7.) Here the
challenged exclusion is clear and explicit; it expressly states that in
addition to the listed forms of intellectual property infringement, there is no
coverage for "any other injury or
damage that's alleged in any claim or suit which also alleges any such
infringement or violation."
(Italics added.) (Cf.
Mercury Ins. Co. (S.D.Cal. 2003) 2003 WL 23198852, 5 [where underlying suit
contains patent infringement claim, intellectual property exclusion eliminates
coverage for claims "alleged in suit that also alleges any such
infringement"]; compare Align
Technology, Inc. v. Federal Ins. Co. (N.D. Cal. 2009) 2009 WL 4282098,
11-12 [defamation and unfair competition claims not clearly within reach of
intellectual property exclusion] and KLA-Tencor
Corp. v. Travelers Indem. Co. of Illinois (N.D. Cal. 2003) 2003 WL
21655097, 5-6 [disparaging statements not "directly or indirectly related
to" intellectual property infringement within the meaning of exclusion
language].)
In summary,
we conclude that the CGL policy St. Paul
issued to South Bay
did not offer coverage against the types of claims brought by SJC. Although an insurer's duty to defend is
broader than its duty to indemnify, " 'the insurer need not defend if the
third party complaint can by no
conceivable theory raise a single issue which could bring it within the policy
coverage.' " (
(1993) 6 Cal.4th 287, 300, quoting Gray
v. Zurich Ins. Co. (1966) 65 Cal.2d 263, 275, fn. 15.) Thus, "where the extrinsic facts
eliminate the potential for coverage, the insurer may decline to defend even
when the bare allegations in the complaint suggest potential liability. [Citations.]
This is because the duty to defend, although broad, is not unlimited; it
is measured by the nature and kinds of risks covered by the policy." (Waller
v. Truck Ins. Exchange, Inc., supra, 11 Cal.4th at p. 19;
West (2000) 77 Cal.App.4th 1340, 1350.)
Here St. Paul has
demonstrated, "by reference to undisputed facts, that the claim cannot be
covered." (Ringler Associates Inc. v.
omitted].) Given the underlying facts and the policy language at issue, there
is no theory on which SJC's action could conceivably be covered. We therefore agree with the superior court
that St. Paul was entitled to
summary judgment in South Bay's
action against it.
Disposition
The
judgment is affirmed. Costs on appeal
are awarded to St. Paul.
___________________________
ELIA,
J.
WE CONCUR:
__________________________
RUSHING, P. J.
___________________________
PREMO, J.
Filed
7/1/10
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH
APPELLATE DISTRICT
S.B.C.C., INC.,
Plaintiff and
Appellant,
v.
ST. PAUL FIRE & MARINE
INSURANCE COMPANY,
Defendant and
Appellant.
H034211
(Santa Clara
County
Super. Ct.
No. CV110374)
ORDER
THE
COURT:
The opinion which was filed on June 11, 2010, is certified for publication.
_____________________________
Elia,
J.
_____________________________ ______________________________
Rushing,
P.J. Premo,
J.
The written opinion which was filed on June 11, 2010, has now been certified
for publication pursuant to rule 8.1105 of the California Rules of Court, and
it is therefore ordered that the opinion be published in the official reports.
_____________________________
Rushing,
P.J.
Trial Court: Santa
Clara County
Superior Court
Trial Judge: Hon.
James P. Kleinberg
Hon.
Kevin J. Murphy
Attorneys for Appellant: Willoughby,
Stuart & Bening,
Randall
E. Willoughby and
Ellyn
E. Nesbit
Attorneys for Respondent: Lewis, Brisbois, Bisgaard &
Smith,
Lane
J. Ashley and
Kathleen
E. Hegen
SBCC, Inc. v. St. Paul Fire & Marine Ins. Co.
H034211
Publication Courtesy of San
Diego County Legal Resource Directory.
Analysis and review provided by El Cajon Property line attorney.
San Diego Case Information
provided by www.fearnotlaw.com
[1]
The events giving rise to the SJC action are summarized in our prior opinion in
San Jose Construction, Inc. v. S.B.C.C.,
Inc. (2007) 155 Cal.App.4th 1528.)
[2] St. Paul
moved for summary judgment or, alternatively, summary adjudication; South
Bay moved for summary adjudication
only.
