Michael Taylor Designs, Inc. v. Travelers Property Casualty Co. of America , 495 F. App'x 830 ( 2012 )

FILED
NOT FOR PUBLICATION NOV 05 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
MICHAEL TAYLOR DESIGNS, INC., No. 11-16052
Plaintiff - Appellee, D.C. No. 3:10-cv-02432-RS
v.
MEMORANDUM*
TRAVELERS PROPERTY CASUALTY
COMPANY OF AMERICA,
Defendant - Appellant.
Appeal from the United States District Court
for the Northern District of California
Richard Seeborg, District Judge, Presiding
Argued and Submitted October 15, 2012
San Francisco, California
Before: B. FLETCHER,** HAWKINS, and MURGUIA, Circuit Judges.
This is a civil dispute governed by California law regarding an insurer’s duty
to defend. The district court entered summary judgment for Michael Taylor
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
** The Honorable Betty Binns Fletcher, Senior Circuit Judge for the
Ninth Circuit Court of Appeals, fully participated in the case and concurred in the
judgment prior to her death.
Designs, Inc. (“Taylor”), holding that Travelers Property Casualty Company of
America (“Travelers”) breached its contractual duty to defend Taylor against
accusations of trade libel, which is a false statement disparaging the quality of
another’s goods. Michael Taylor Designs, Inc. v. Travelers Prop. Cas. Co. of Am.,
761 F. Supp. 2d 904, 912 (N.D. Cal. 2011). We have jurisdiction over Travelers’s
appeal pursuant to 28 U.S.C. § 1291 and review de novo the district court’s entry
of summary judgment for Taylor. Arakaki v. Hawaii, 314 F.3d 1091, 1094 (9th
Cir. 2002). We now affirm.
Ivy Rosequist filed a complaint against Taylor in March 2008 seeking relief
for trade dress infringement. Travelers declined to defend Taylor in the Rosequist
action because Rosequist’s complaint did not specifically state a claim for trade
libel. Rosequist’s successor-in-interest later amended the complaint to expressly
state a cause of action for trade libel in addition to trade dress infringement.
Travelers stepped in to defend Taylor against these amended allegations, and the
Rosequist action eventually settled in early 2010. In June 2010, Taylor filed the
present diversity action against Travelers, alleging Travelers breached its duty to
defend Taylor against Rosequist’s original complaint in March 2008. Taylor
argued Rosequist’s original complaint, in addition to expressly alleging trade dress
infringement, implied an action for trade libel.
2
An insurer must defend its insured if it is even “conceivable,” based on the
factual allegations in a third-party’s complaint, that the third-party could state a
claim covered by the insured’s policy. See Montrose Chem. Corp. of Cal. v. Super.
Ct., 861 P.2d 1153, 1160 (Cal. 1993) (citation omitted); see also Travelers Prop.
Cas. Co. of Am. v. Charlotte Russe Holding, Inc., 144 Cal. Rptr. 3d 12, 21 (Cal. Ct.
App. 2012) (stating an insurer must defend its insured even where a complaint
does not allege facts sufficient to succeed on the merits because merely implicating
a cause of action covered by an insurance policy triggers the duty to defend)
(citations omitted). Here, Rosequist’s original complaint alleged Taylor’s
showroom salesmen made statements to Taylor’s customers that falsely implied
Rosequist’s high-end wicker chairs were of poor quality, and this allegation made
it conceivable that Rosequist could state a claim for trade libel. See, e.g., Charlotte
Russe, 144 Cal. Rptr. 3d at 20-22 (holding a complaint alleging the insured made
statements that could give the false impression that the plaintiff’s goods were of
inferior quality triggered an insurer’s duty to defend its insured against allegations
of trade libel). Moreover, in a close case, “any” doubt as to whether an insurer has
a duty to defend must be resolved in the insured’s favor. Horace Mann Ins. Co. v.
Barbara B., 846 P.2d 792, 796 (Cal. 1993).
AFFIRMED.
3