Colony Insurance Company v. Corrosion Control , 187 F. App'x 918 ( 2006 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
JUNE 29, 2006
No. 05-13618 THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 04-00073-CV-3-CDL
COLONY INSURANCE COMPANY,
Plaintiff-Appellant,
versus
CORROSION CONTROL, INC.,
CRAIG K. MEIER,
DEBORAH L. MEIER,
CORRPRO COMPANIES, INC.,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Middle District of Georgia
_________________________
(June 29, 2006)
Before EDMONDSON, Chief Judge, KRAVITCH, Circuit Judge, and
MIDDLEBROOKS *, District Judge.
*
Honorable Donald M. Middlebrooks, United States District Judge for the Southern
District of Florida, sitting by designation.
KRAVITCH, Circuit Judge:
The sole question in this appeal from the district court’s grant of summary
judgment in a declaratory judgment action is whether Colony Insurance Company
owes a duty to defend its insureds, Craig and Deborah Meier and Corrosion
Control, Inc., in the underlying action brought by Corrpro Companies, Inc. We
affirm the district court’s holding that Colony has a duty to defend.
I. Background
Corrpro Companies, Inc. (“Corrpro”) sells products and services to prevent
and control corrosion and deterioration of underground storage tanks and piping.
Craig and Deborah Meier worked as District Manager and Office Manager,
respectively, in Corrpro’s Conyers, Georgia office until their termination on
August 4, 1999. On August 23, 1999, the Meiers formed Corrosion Control, Inc.,
and began the process of starting their own business offering corrosion control
services. Colony Insurance Company (“Colony”) issued Corrosion Control a
policy of commercial general liability insurance, which became effective on
September 22, 1999 and was canceled on October 22, 2002.
On January 22, 2003, Corrpro commenced an action against appellees Craig
K. Meier, Deborah L. Meier, and Corrosion Control, Inc. (the “Meier parties”) in
the United States District Court for the Northern District of Georgia, alleging
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several violations of state and federal law.2 Colony agreed to represent the Meier
parties subject to a reservation of rights. On July 21, 2004, Colony filed a
declaratory judgment action in the Middle District of Georgia pursuant to 28
U.S.C. § 2201 et seq., against the Meier parties and Corrpro, asking the court to
declare that Colony does not have an obligation to defend or indemnify the Meier
parties in the underlying action.3 Colony alleged that the Meier parties were not
covered for the claims asserted by Corrpro in the underlying action because of the
policy’s “first publication” exclusion.
The Colony policy provides coverage for liability based on advertising
injury under certain circumstances. The Colony policy states:
(1) “Advertising injury” means injury arising out of one
or more of the following offenses:
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Corrpro asserted claims for infringement and dilution of registered trademarks and trade
name, misappropriation of trade secrets, unfair competition, false advertising, disparagement of
goods, injury to business reputation, tortious interference with business relations and contracts,
fraud, conversion, theft, breach of contract, breach of and conspiracy to breach fiduciary duties,
breach of and conspiracy to breach duties of loyalty, quantum meruit, quantum valebant, unjust
enrichment, and claims arising under, inter alia, the Lanham Act, 15 U.S.C. § 1051 et seq., the
Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq., the Georgia
Trade Secrets Act of 1990, O.C.G.A. § 10-1-760 et seq., the Georgia Fraudulent Encroachment
Statute, O.C.G.A. § 23-2-55, and the common law. In March 2004, the case was transferred to
the United States District Court for the Middle District of Georgia.
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The district court ordered a stay in the underlying action pending the outcome of the
declaratory judgment action. Following the court’s grant of summary judgment in favor of the
Meier parties and Corrpro, the court denied Colony’s motion to stay the underlying action
pending appeal. On March 31, 2006, the district court granted Corrpro’s and the Meier parties’
joint motion to stay proceedings in the underlying action pending appeal.
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a. Oral or written publication of material that
slanders or libels a person or organization or
disparages a person’s or organization’s goods,
products or services;
b. Oral or written publication of material that
violates a person’s right to privacy;
c. Misappropriation of advertising ideas or style of
doing business; or
d. Infringement of copyright, title or slogan.
The Colony policy also contains the following “first publication” exclusion:
This insurance does not apply to:
“Personal injury” or “advertising injury”:
...
(2) Arising out of oral or written publication of material whose
first publication took place before the beginning of the policy
period . . . .
After the district court denied Corrpro’s and the Meier parties’ motions to
dismiss Colony’s declaratory judgment complaint, the parties filed cross-motions
for summary judgment. Without ruling on the issue, the district court noted that it
believed the “first publication” exclusion precluded coverage for all of Corrpro’s
claims against the Meier parties in the underlying action, except for the claim
alleged in paragraph 36. Paragraph 36 alleges:
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Following the Meiers’ terminaton from employment with
[Corrpro], [the Meier] Defendants immediately began
bidding on projects and otherwise immediately
competing with [Corrpro] for projects, using [Corrpro]’s
proprietary pricing structures and methods, and other
proprietary data, which bids could not have been
completed and submitted without [the Meier]
Defendants’ possession and misappropriation of such
proprietary data.
The court granted summary judgment in favor of the Meier parties and
Corrpro because “coverage arguably exists as to the complaints asserted in
paragraph 36 of the underlying complaint,” thereby giving rise to Colony’s duty to
defend the Meier parties in the underlying action. Colony now appeals.
II. Standard of Review
We review the district court’s grant of summary judgment de novo, viewing
the evidence in the light most favorable to the party opposing the motion. Cruz v.
Publix Super Mkts., Inc., 428 F.3d 1379, 1382 (11th Cir. 2005). Summary
judgment is proper “if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that there is no
genuine issue of material fact and that the moving party is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(c). The party moving for summary judgment
has the burden of showing that there is no genuine issue of material fact, and if it
meets that burden, the opposing party “must set forth specific facts showing that
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there is a genuine issue for trial.” Adkins v. Cagle Foods JV, LLC, 411 F.3d 1320,
1323-24 (11th Cir. 2005) (citations omitted).
III. Discussion
Although the parties focus the majority of their briefs on whether the “first
publication” exclusion applies to all four subparts of the advertising injury
definition, we do not need to reach that issue to resolve this case. Instead, we hold
that regardless of whether the exclusion applies to all four subparts, the allegations
in paragraph 36 do not implicate the “first publication” exclusion. Therefore,
under Georgia law, which governs this dispute, Colony is obligated to defend the
Meier parties in the underlying action.
Under Georgia’s law governing the interpretation of insurance contracts, an
insurer’s duty to defend is different from an insurer’s obligation to indemnify.
Penn-Am. Ins. Co. v. Disabled Am. Veterans, Inc., 490 S.E.2d 374, 376-77 (Ga.
Ct. App. 1997). Although an insurer need not indemnify an insured for a liability
that “an insured incurs outside the terms of the insurance contract, an insurer must
provide a defense against any complaint that, if successful, might potentially or
arguably fall within the policy’s coverage.” Elan Pharm. Research Corp. v.
Employers Ins. of Wausau, 144 F.3d 1372, 1375 (11th Cir. 1998) (citing Penn-
Am., 490 S.E.2d at 376). An insurer is justified in refusing to defend an insured
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only if the complaint against the insured does not assert any claim upon which
there would be insurance coverage. City of Atlanta v. St. Paul Fire & Marine Ins.
Co., 498 S.E.2d 782, 784 (Ga. Ct. App. 1998).
The parties agree that paragraph 36 of Corrpro’s complaint in the underlying
action asserts a claim for misappropriation of advertising ideas or style of doing
business, a form of advertising injury covered under the Colony policy. Colony
argues, however, that it does not have to defend the Meier parties for the claim
alleged in paragraph 36 because pre-policy activity serves as the starting point for
the claim, and the policy’s “first publication” exclusion explicitly informs the
insured that Colony will not defend the insured against advertising injuries “arising
out of oral or written publication of material whose first publication took place
before the beginning of the policy period.” Colony contends that the “other
proprietary data” to which Corrpro refers in paragraph 36 is Corrpro’s trade name,
CCI, which Colony alleges the Meier parties began to use before the policy’s
effective date. Colony points to, inter alia, three letters, two of which were
delivered before the effective date of the policy, from Craig Meier to prospective
customers referring to Corrosion Control, Inc., as “CCI” as evidence that the
genesis of the advertising injury occurred before the policy’s effective date.
According to Colony, Corrpro alleged in its complaint that at the time Craig Meier
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referred to Corrosion Control as CCI, Corrpro had a valid trademark for the CCI
registered trademark and trade name.
Next, Colony cites several cases from this circuit and district courts within
this circuit for the proposition that the Meier parties’ alleged use of the CCI trade
name is a form of misappropriation of advertising ideas or style of doing business.
See, e.g., Hyman v. Nationwide Mut. Fire Ins. Co., 304 F.3d 1179, 1189 (11th Cir.
2002); John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 980 (11th Cir.
1983); Adolfo House Distrib. Corp. v. Travelers Prop. & Cas. Ins. Co., 165 F.
Supp. 2d 1332, 1339 (S.D. Fla. 2001). Presumably Colony cites these cases to
show that the term “other proprietary data” could reasonably refer to the Meier
parties’ alleged use of the CCI trade name.
Regardless of whether the Meier parties’ alleged use of Corrpro’s CCI trade
name constitutes misappropriation of advertising ideas or style of doing business,
Colony’s argument suffers from a fatal flaw. Contrary to Colony’s argument,
Corrpro’s allegation that the Meier parties used and misappropriated “other
proprietary data” is an insufficient basis in this declaratory judgment action for us
to hold that Colony is relieved of its duty to defend. As this court has observed,
“an insurer must provide a defense against any complaint that, if successful, might
potentially or arguably fall within the policy’s coverage.” Elan Pharm. Research
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Corp., 144 F.3d at 1374. Here, the phrase “other proprietary data” is simply too
vague for us to determine that the Meier parties’ alleged use of the CCI trade name
serves as the genesis of the advertising injury alleged in paragraph 36.
In paragraph 17 of its complaint, Corrpro defines the term “Corrpro
Trademarks” to mean its registered trademark for a stylized version of CCI and its
CCI trade name. Then, in paragraphs 34, 37, 44, 90, 91, 92, 93, 96, and 97,
Corrpro explicitly notes that the use of the “Corrpro Trademarks” and its trade
name and abbreviation serve as a basis for its allegations in those paragraphs.
Paragraph 36, however, is noticeably lacking any specific reference to the “Corrpro
Trademarks” or Corrpro’s trade name or abbreviation. Corrpro’s specific reference
to the “Corrpro Trademarks” and the trade name and abbreviation in nine
paragraphs seriously undermines Colony’s position that the term “other proprietary
data” in paragraph 36 necessarily refers to the Meier parties’ alleged use of the CCI
trade name. To the contrary, the specific references in other paragraphs lead us to
conclude that Corrpro believes it can prove the allegations in paragraph 36 without
establishing that the Meier parties used the CCI trade name. Therefore, we hold
that because the advertising injury alleged in paragraph 36 “might potentially or
arguably fall within the policy’s coverage,” Colony has a duty to defend Corrosion
Control in the underlying action.
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Corrpro’s allegation in paragraph 36 that the Meier parties’ conduct began
“immediately” following the Meiers’ termination does not change our conclusion.
Corrpro terminated the Meiers on August 4, 1999, and the Colony policy became
effective on September 22, 1999. According to Colony’s interpretation of the
word “immediately,” the policy did not become effective immediately after the
Meiers’ termination from Corrpro. Therefore, Colony asserts that we are
compelled to hold that Corrpro’s use of the word “immediately” necessarily means
that the Meier parties began using Corrpro’s “proprietary pricing structure” and
“other proprietary data” before the effective date of the Colony policy, thereby
excluding the allegations in paragraph 36 from coverage because of the “first
publication” exclusion.
Although Colony has presented evidence that the Meier parties began using
the CCI trade name before the effective date of the Colony policy, the record lacks
any specific information about when the Meier parties began using Corrpro’s
“proprietary pricing structure” or “other proprietary data.” Without more specific
information in the record, we are unpersuaded that Corrpro’s allegation that the
advertising injury occurred immediately after the Meiers’ termination necessarily
means that the alleged advertising injury began before the effective date of the
Colony policy and is thereby excluded from the coverage by the “first publication”
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exclusion.
For the foregoing reasons, we AFFIRM the district court’s ruling.
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