MCC Inc v. Shelter Mutual Ins ( 2002 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
____________________
No. 02-60386
Summary Calendar
____________________
MCC INC; H E MCGREW INC; MCGREW CONSTRUCTION COMPANY INC
Plaintiffs-Appellants
v.
SHELTER MUTUAL INSURANCE CO, doing business as Shelter
Insurance Co
Defendant-Appellee
_________________________________________________________________
Appeal from the United States District Court
for the Southern District of Mississippi
No. 3:99-CV-764-WS
_________________________________________________________________
December 23, 2002
Before KING, Chief Judge, and BARKSDALE and STEWART, Circuit
Judges.
PER CURIAM:*
The instant appeal concerns an insurer’s duty to provide a
defense pursuant to a general liability insurance policy. As it
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
is readily apparent that our decision in Delta Computer Corp. v.
Frank, 196 F.3d 589 (5th Cir. 1999), governs this case, we find
that summary judgment was proper and affirm.
I. Factual and Procedural History
On August 18, 1998, Delta Environmental Products brought
suit against H.E. McGrew, Inc. and McGrew Construction Co., Inc.,
claiming in the underlying complaint (“Complaint”) that H.E.
McGrew and McGrew Construction falsely described and
misrepresented one of its products when marketing it to the
public. The Complaint alleged, inter alia, a violation of the
Lanham Act, 15 U.S.C. § 1125(a) (1994), and common-law fraud.
The underlying lawsuit was ultimately dismissed.
On October 28, 1999, Plaintiffs-Appellants MCC, Inc., H.E.
McGrew and McGrew Construction (together “MCC”), all Louisiana
entities, brought this suit against Defendant-Appellee Shelter
Mutual Insurance Co. d/b/a Shelter Insurance Co. (“Shelter
Insurance”), a Mississippi entity, in federal court claiming that
Shelter Insurance had a duty to defend it in the underlying
action. Shelter Insurance subsequently moved for summary
judgment.
The district court granted Shelter Insurance’s motion.
Relying on several cases from both state and federal courts, the
district court found that no duty to defend arose out of the
misrepresentation claims because a reference to advertising was
not made in the Complaint and moreover, no averment otherwise
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implicated the “advertising injury” provisions of the General
Liability Policy (“Policy”). MCC appeals the district court’s
grant of summary judgment.
II. Standard of Review
We review the district court’s grant of summary judgment to
Shelter Insurance de novo, using the same standards as the
district court. Delta Computer, 196 F.3d at 590. If the
pleadings, answers to interrogatories, admissions, and affidavits
on file all indicate no genuine issue of material fact, the
moving party is entitled to judgment as a matter of law. Id.
After the nonmovant has been given an opportunity to raise a
genuine factual issue, if no reasonable juror could find for the
nonmovant, summary judgment should be granted. Id.
III. Discussion
On appeal, MCC argues that the Policy specifically affords
it coverage for defined types of “advertising injury” that are
caused by an “offense committed in the course of advertising
[MCC’s] goods, products, or services.” The Policy also provides
that Shelter Insurance would “pay those sums that the insured
becomes legally obligated to pay as damages because of [the] ...
‘advertising injury’ to which this insurance applies.” In the
Complaint, Delta Environmental Products alleged that MCC (1)
misappropriated ideas or style of doing business and (2)
infringed copyright, title, or slogan in violation of § 1125(a)
of the Lanham Act; these allegations represent, according to MCC,
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the very kind of advertising injuries defined in the Policy. MCC
argues that because the underlying pleading alleged acts of
advertising implicating the Policy-defined “advertising injury,”
Shelter Mutual’s duty to defend under Louisiana law was
triggered.1
In Delta Computer, this court held that under Louisiana law,
an insurance policy covering advertising injuries in the course
of advertising the insured’s products or services did not cover
a complaint alleging that the insured infringed the plaintiff’s
copyrights by using its written work without authorization. Id.
at 591. The Delta Computer court concluded that no “causal
connection” existed between the underlying complaint and the
insured’s advertising activities when the pleadings (1) did not
expressly reference advertising, (2) failed to make any reference
to any injury suffered in the course of the insured’s
advertising, or (3) could not support a fair inference of a
reference to advertising. Without such a causal connection, no
duty to defend arises. Id. (citing Sentry Ins. v. R.J. Weber
Co., Inc., 2 F.3d 554, 557 (5th Cir. 1993)).
Delta Computer compels that we affirm. Since Louisiana
courts determine the duty to defend solely upon the factual
allegations made in the underlying pleadings and the face of the
1
As a preliminary issue, we agree completely with the
district court’s choice of law determination that Louisiana law
applies to the instant dispute.
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policy, e.g., Bryant v. Motwani, 683 So.2d 880, 884 (La. Ct. App.
4th Cir. 1996), the Complaint’s failure to refer to advertising
or any injury suffered in the course of MCC’s advertising, along
with the Policy’s incorporation of the same language as was used
in the Delta Computer insurance policy, makes this case
indistinguishable from Delta Computer.2
We pause only to consider whether the Complaint’s single
reference to the Lanham Act permitted an inference that the
Complaint alleged an “advertising injury.” Contrary to MCC’s
contentions, there is no support for this proposition. The
Lanham Act encompasses more than actions arising out of false
advertising; this court has stated: “The focus of the Lanham Act”
is not only on the “commercial interests [that] have been harmed
by a competitor’s false advertising,” but also in “secur[ing] to
the business community the advantages and reputation and good
will by preventing their diversion from those who have created
them to those who have not.” Proctor & Gamble Co. v. Amway
Corp., 242 F.3d 539, 563 (5th Cir. 2000). The statutory text of
§ 1125(a) reflects this notion, as it includes a provision
prohibiting misleading advertising, 15 U.S.C. § 1125(a)(1)(B), as
2
In Delta Computer, the underlying complaint alleged
misappropriation of copyrighted computer software, id. at 590,
while, in the instant Complaint, Delta Environmental Products
alleged false descriptions and representations of certain aerobic
treatment units. The only relevant fact for the current inquiry
is that neither complaint referenced, either explicitly or
implicitly, advertising.
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well as a distinct provision prohibiting general false or
misleading misrepresentation that is likely to cause confusion,
mistake, or deception. Id. § 1125(a)(1)(A). Mere reference to
the words “Lanham Act,” without more, cannot compel a conclusion
that the Complaint refers to advertising.
The Complaint’s mention of the Lanham Act does not suffice
for coverage, and no reference to advertising — whether express
or implied – was made in the Complaint. Hence, as a matter of
law, the underlying claims in the Complaint were excluded from
coverage under the Policy’s advertising injury provisions and
thus, Shelton Insurance had no duty to defend.
We AFFIRM the district court’s judgment.
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