Feldman Law Group, P.C. v. Liberty Mutual Insurance

11-4483-cv
Feldman Law Grp. v. Liberty Mut. Ins. Co.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY
PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New
York, on the 18th day of April, two thousand twelve.
PRESENT: JOHN M. WALKER, JR.,
GERARD E. LYNCH,
RAYMOND J. LOHIER, JR.,
Circuit Judges.
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FELDMAN LAW GROUP, P.C., as assignee of
THE HYMAN COMPANIES, INC., d/b/a LANDAU JEWELERS,
Plaintiff-Appellant,
THE HYMAN COMPANIES, INC., d/b/a LANDAU JEWELERS,
Plaintiff
v. No. 11-4483-cv
LIBERTY MUTUAL INSURANCE COMPANY,
a/k/a LIBERTY MUTUAL GROUP,
Defendant-Appellee.
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FOR APPELLANT: CLIFFORD Y. CHEN (Stephen E. Feldman, Feldman Law
Group, P.C., New York, NY, on the brief), Watkins, Bradley
& Chen LLP, New York, NY.
FOR APPELLEE: MARSHALL T. POTASHNER, Jaffe & Asher LLP, New
York, NY.
Appeal from the United States District Court for the Southern District of New York
(Shira A. Scheindlin, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court is AFFIRMED.
Plaintiff-appellant Feldman Law Group (“FLG”) brought this action as the
assignee of The Hyman Companies (“Hyman”) against its insurer, defendant-appellee
Liberty Mutual Insurance Company (“Liberty”). FLG had represented Hyman in the
defense of a lawsuit brought by non-party Van Cleef & Arpels Logistics, S.A. (“Van
Cleef”), in which Van Cleef alleged that Hyman had violated Van Cleef’s copyright and
trade dress in violation of federal and state law. Liberty rejected Hyman’s request to
provide for Hyman’s defense, denying that the conduct alleged in Van Cleef’s complaint
was covered under Hyman’s policy. FLG then initiated this action against Liberty,
seeking to recover the costs incurred in Hyman’s defense. The district court granted
Liberty’s motion to dismiss FLG’s action for failure to state a claim. For the reasons that
follow, we affirm the judgment of the district court. We assume the parties’ familiarity
with the underlying facts and procedural history of the case.
We review a district court’s decision granting a motion to dismiss de novo,
“accepting all factual claims in the complaint as true, and drawing all reasonable
inferences in the plaintiff’s favor.” Famous Horse Inc. v. 5th Ave. Photo Inc., 624 F.3d
106, 108 (2d Cir. 2010). In order to state a claim under Fed. R. Civ. P. 12(b)(6), “a
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim for
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relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009),
quoting Bell Atl. Corp v. Twombly, 550 U.S. 544, 570 (2007). Under Pennsylvania law –
which the parties agree applies in this case – “an insurer’s duty to defend and indemnify
[must] be determined solely from the language of the complaint against the insured.”
Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 908 A.2d
888, 896 (Pa. 2006). That is, a “question of whether a claim against an insured is
potentially covered is answered by comparing the four corners of the insurance contract
to the four corners of the complaint” in the underlying action. Am. & Foreign Ins. Co. v.
Jerry’s Sport Ctr., Inc., 2 A.3d 526, 541 (Pa. 2010).
Hyman’s policy requires Liberty to defend against any suit seeking damages for
“personal and advertising injury,” but excludes coverage for “‘[p]ersonal and advertising
injury’ arising out of the infringement of copyright, patent, trademark, trade secret or
other intellectual property rights.” As defined in the policy, “advertising injury” includes
“infringing upon another’s copyright, trade dress, or slogan in [an] ‘advertisement’” The
policy defines an “advertisement” as a “paid announcement that is broadcast or published
in the print, broadcast or electronic media to the general public or specific market
segments about your goods, products or services for the purpose of attracting customers
or supporters.” Thus, for the Van Cleef complaint to trigger Liberty’s duty to defend, the
complaint, liberally construed, must allege that Hyman potentially placed a “paid
announcement . . . broadcast or published . . . to the general public,” and that the injuries
potentially resulting from the publication of that announcement did not arise from the
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“infringement of copyright, patent, trademark, trade secret or other intellectual property
rights” by the item advertised.
The Van Cleef complaint contains no such allegation. The three-count complaint
alleges that Hyman “reproduced, copied and imitated” Van Cleef’s jewelry design,
resulting in damages to Van Cleef. The rest of the complaint concerns itself almost
exclusively with the description of the infringing activity and underlying intellectual
property. At no point does the complaint allege that any advertisement published by
Hyman infringed Van Cleef’s copyright or trade dress; indeed, the complaint does not
allege that Hyman placed any advertisements at all.
FLG relies on scattered references in the Van Cleef complaint that it contends
could be construed as referring to the kind of advertising injuries that the policy covers.
The complaint avers that Hyman “manufactured, sold, offered for sale, and/or distributed
copies of the [protected intellectual property],” and that Hyman infringed Van Cleef’s
intellectual property rights “by reproducing such design without authorization and
distributing copies thereof by sale and other means . . .” (emphasis added). Moreover, in
its prayer for relief, Van Cleef asks that Hyman “be required to deliver up to [Van Cleef]
for destruction, any and all catalogs, circulars and other printed material in their
possession or under their control displaying or promoting the goods that were or are
being advertising [sic], promoted, offered for sale or sold in connection with the
[protected intellectual property], whether alone or in combination with any words or
designs.” (emphasis added).
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FLG urges us to infer that the references to reproduction and distribution “by sale
and other means” could refer to the placement of a “paid announcement” in the public
media. Such references, however, are far too general to support the conclusion that Van
Cleef’s complaint encompassed an injury resulting from any paid advertisement by
Hyman, when the complaint specifically and repeatedly refers only to Hyman’s conduct
in “designing” jewelry “that is confusingly similar” to Van Cleef’s design, and
“reproducing such design without authorization and distributing copies thereof,” thus
infringing its trade dress and copyright. The factual allegations of the complaint thus
specifically invoke Hyman’s design, manufacture and sale of infringing goods, but
nowhere discuss, allege or allude to any advertisement of those goods.
Nor does the complaint’s demand, in the prayer for relief, that Hyman be required
to deliver to Van Cleef for destruction any goods that were being “advertised, promoted,
[or] offered for sale,” as well as “any and all catalogs, circulars and other printed material
in their possession or under their control displaying or promoting the [infringing] goods
that were or are being advertising [sic], promoted, [or] offered for sale” alter that
conclusion. First, neither the substantive allegations nor the demands for relief suggest
that any advertisement itself infringed Van Cleef’s intellectual property rights. It is well
established that “[m]erely advertising a misappropriated product does not cause an
advertising injury”; to inflict a covered advertising injury, the advertisement, and not the
product being advertised, must itself infringe the underlying plaintiff’s rights. Frog,
Switch & Mfg. Co. v. Travelers Ins. Co., 20 F. Supp. 2d 798, 803 (M.D. Pa. 1998)
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(applying Pennsylvania law), aff’d, 193 F.3d 742 (3d Cir. 1999). The destruction of any
printed matter promoting infringing products, however, would be appropriate relief for
the sale of such products. Second, the prayer for relief in any event lacks any reference to
the placement of paid announcements in public media. While “catalogs [and] circulars”
produced by Hyman itself may well be deemed advertising in some contexts, the specific
definition in the Liberty policy is more limited, requiring payment to a third-party for an
announcement placed in a public medium.
Our decision in Century 21, Inc. v. Diamond State Insurance Co., 442 F.3d 79 (2d
Cir. 2006), on which FLG relies, does not compel a different conclusion. There, the
underlying complaint alleged that the insured “marketed, distributed, and sold goods in
connection with a colorable imitation and simulation of the . . . [t]rademarks with the
express intent of causing confusion and mistake . . . .” Id. at 81. The question in Century
21 was whether the allegation of “marketing” triggered a duty to defend under a policy
that covered suits based upon infringing advertising, under a policy that did not define
advertising as narrowly as the policy here, but which we took to encompass a wide range
of “promotional activities.” Id. at 83. In this case, the complaint contained no such
reference to “marketing” or any other term that could lead us to conclude that Van Cleef
complained of anything other than the production of infringing merchandise, rather than
its advertisement.
Thus, “comparing the four corners of the insurance contract to the four corners of
the complaint,” as we must under Pennsylvania law, Jerry’s Sport Ctr., 2 A.3d at 541, we
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cannot conclude that Van Cleef complained of any personal or advertising injury, and
therefore agree with the district court that Liberty had no duty to defend Hyman in Van
Cleef’s action.
We have considered FLG’s other arguments and find them to be without merit.
For the foregoing reasons, the district court’s decision is AFFIRMED.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
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