Wilson Works, Inc. v. Great American Insurance Group ( 2012 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-1487
WILSON WORKS, INC., a West Virginia Corporation,
Plaintiff - Appellant,
v.
GREAT AMERICAN INSURANCE GROUP; GREAT AMERICAN E&S INSURANCE
COMPANY; COLUMBIA CASUALTY COMPANY, d/b/a CNA; NATIONAL
UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA; THE
TRAVELERS INDEMNITY COMPANY; TRAVELERS PROPERTY CASUALTY
COMPANY OF AMERICA; TRAVELERS GROUP; THE CHARTER OAK FIRE
INSURANCE COMPANY,
Defendants - Appellees,
and
WELLS FARGO INSURANCE SERVICES; AMERICAN INTERNATIONAL
GROUP, INC.; AMERICAN INTERNATIONAL COMPANIES, d/b/a AIG,
Defendants.
Appeal from the United States District Court for the Northern
District of West Virginia, at Clarksburg. John Preston Bailey,
Chief District Judge. (1:11-cv-00085-JPB-JES)
Submitted: October 5, 2012 Decided: October 23, 2012
Before WILKINSON, DAVIS, and DIAZ, Circuit Judges.
Affirmed by unpublished per curiam opinion.
S. Sean Murphy, LAW OFFICES OF S. SEAN MURPHY, LC, Morgantown,
West Virginia, for Appellant. John A. Smith, FLAHERTY
SENSABAUGH BONASSO PLLC, Charleston, West Virginia; Stephen J.
Dalesio, SWARTZ CAMPBELL, LLC, Pittsburgh, Pennsylvania, for
Appellees.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
Wilson Works, Inc. brought suit against its insurers
seeking a declaratory judgment that they are obligated to defend
it in an action filed against it by Walhonde Tools, Inc. The
district court granted the insurers’ motions for summary
judgment, and Wilson Works now appeals. We have reviewed the
record and find no reversible error. Accordingly, we affirm.
In 2009, Walhonde Tools filed suit against Wilson
Works, alleging patent infringement, tortious interference with
business relations, and conspiracy to interfere with business
relations, based on Wilson Works’ alleged manufacture, sale, and
marketing of tools that infringe Walhonde Tools’ patent. Wilson
Works argues that the infringement was an “accident” — that in
fulfilling custom orders it was deceived by its clients into
manufacturing infringing tools.
In 2011, Wilson Works filed suit against several
insurers through which it maintained commercial liability
policies, seeking a declaration of their duty to defend. The
insurers moved for summary judgment, and the district court
granted their motions. The district court first looked to
Walhonde Tools’ complaint, and found that it stated claims for
patent infringement, tortious interference with business
relations, and conspiracy to interfere with business relations.
The district court then looked to the various policies, and
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found that they did not cover injuries arising from intentional
torts and patent infringement. While the policies covered
“property damage” caused by an “occurrence,” the district court
found that “occurrences” are “accidents,” necessarily excluding
intentional torts, and that “property damage” is limited to
physical injury to or loss of use of tangible property, thereby
excluding damage to intangible property like patents. The
policies also provided coverage for “advertising injuries,” but
this explicitly excluded intentional tort-based injuries, and
excluded patent infringement-based injuries either explicitly or
implicitly via the notable absence of the word “patent” from the
list of covered offenses. Finally, certain policies did not
provide coverage because Walhonde Tools’ alleged injuries
occurred outside of the policy periods. Wilson Works timely
appealed.
We review the district court’s grant of summary
judgment de novo. Temkin v. Frederick Cnty. Comm’rs, 945 F.2d
716, 718 (4th Cir. 1991). Summary judgment shall be granted if
the movant shows that there is no genuine issue of material fact
and that it is entitled to judgment as a matter of law. Fed. R.
Civ. P. 56(a). The movant initially bears the burden of showing
the absence of any genuine issue of material fact; then the
burden shifts to the nonmovant to present facts sufficient to
create a triable issue. Temkin, 945 F.2d at 718. A party
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opposing or asserting the existence of a genuine issue of
material fact must support its position by citing to particular
parts of materials in the record, including depositions,
documents, affidavits, stipulations, admissions, and answers to
interrogatories. Fed. R. Civ. P. 56(c).
In a diversity action, state law controls the
construction of an insurance policy. Nationwide Prop. & Cas. v.
Comer, 559 F. Supp. 2d 685, 690 (S.D. W. Va. 2008). Here, there
is no dispute that West Virginia law governs construction of the
policy. Under West Virginia law, an insurer has a duty to
defend only if the claim stated in the underlying complaint
could, without amendment, impose liability for risks that the
insurance policy covers. W. Va. Fire & Cas. Co. v. Stanley, 602
S.E.2d 483, 490 (W. Va. 2004). In determining coverage, the
insurer must look beyond the bare allegations in the underlying
complaint and conduct a reasonable inquiry into the facts to
determine whether the claims might be interpreted as falling
within the scope of coverage. State Auto. Mut. Ins. Co. v.
Alpha Eng’g Servs., Inc., 542 S.E.2d 876, 879 (W. Va. 2000).
The policies at issue provide coverage for “property
damage” caused by “occurrences,” and for “advertising injury.”
On appeal, Wilson Works asserts that the district court erred in
constraining its coverage determination to the four corners of
Walhonde Tools’ complaint. Wilson Works argues that had the
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district court followed West Virginia law and conducted a
reasonable inquiry into the facts, it would have found that
there was an occurrence, that Wilson Works’ actions were
accidental, and that Walhode Tools’ injuries are property damage
covered by the insurance policies.
However, the district court applied the appropriate
standard and correctly concluded that the insurers have no duty
to defend Wilson Works in the Walhonde Tools action. First, the
district court properly looked beyond Walhonde Tools’ bare
allegations and determined that its claims could not reasonably
be interpreted as falling within the scope of coverage. The
court’s opinion specifically cites to materials in the record
other than Walhonde Tools’ complaint, and includes the very same
standard that Wilson Works proposes. Second, the district court
correctly concluded that the insurance companies have no duty to
defend Wilson Works against Walhonde Tools’ claims. Its
conclusions that patent infringement is not damage to physical
property, intentional torts are not occurrences or accidents,
both types of claims are affirmatively excluded from coverage,
and in some cases Walhonde Tools’ alleged injuries did not occur
within the policy period, are unassailable. Accordingly, the
district court properly granted summary judgment in the
insurers’ favor.
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Based on the foregoing, we affirm the judgment of the
district court. We dispense with oral argument because the
facts and legal contentions are adequately presented in the
materials before the court and argument would not aid the
decisional process.
AFFIRMED
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