Title: Scout, LLC v. Truck Insurance

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

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IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 45349 
 
 
SCOUT, LLC, an Idaho limited liability 
company, dba Double Tap Pub, 
  
               Plaintiff-Appellant, 
 
v. 
 
TRUCK INSURANCE EXCHANGE, an 
inter-insurance exchange organized under the 
laws of the State of California, 
 
               Defendant-Respondent, 
 
and 
 
FARMERS GROUP, INC., a California 
corporation, 
 
               Defendant. 
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Boise, November 2018 Term 
 
Filed: January 29, 2019 
 
Karel A. Lehrman, Clerk 
 
Appeal from the District Court of the Fourth Judicial District of the State of 
Idaho, Ada County. Hon. Steven Hippler, District Judge. 
 
The decision of the district court is affirmed. 
 
Simmons Townsend, PLLC, Boise, for appellant.  Chynna C. Simmons argued. 
 
Elam & Burke, P.A., Boise, for respondent. Jeffrey A. Thomson argued. 
_____________________ 
BRODY, Justice. 
This case stems from Truck Insurance’s refusal to defend its insured, Scout, LLC, in a 
trademark infringement action brought over Scout’s use of the trademark ROGUE in the 
advertisement of its restaurant, Gone Rogue Pub. Scout claims that its use of ROGUE constituted 
an advertising injury that was covered by the insurance it purchased from Truck Insurance. 
Truck Insurance does not dispute that ordinarily Scout’s advertising injury would be covered and 
it would accordingly have a duty to defend, but contends that in this situation coverage was 
 
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properly declined based on a prior publication exclusion found in the policy. The district court 
granted summary judgment to Truck Insurance after determining that a Facebook post of Scout’s 
Gone Rogue Pub logo before insurance coverage began triggered the prior publication exclusion, 
thereby relieving Truck Insurance of the duty to defend Scout. Scout appeals the district court’s 
decision granting Truck Insurance summary judgment. We affirm the judgment of the district 
court.  
I. 
FACTUAL AND PROCEDURAL BACKGROUND 
On October 1, 2012, Scout, an Idaho limited liability company, purchased Casa Del Sol, 
a downtown restaurant in Boise. The members of Scout decided to renovate the restaurant into a 
pub and brand it as Gone Rogue Pub. On October 10, Scout posted a public picture of the Gone 
Rogue logo on Facebook, accompanied by the words, “Here is our new logo! Signs are going up 
today and tomorrow! Hope everyone likes it! Let us know what you guys think!”  In the same 
month, Scout registered Gone Rogue Pub as an assumed business name with the Idaho Secretary 
of State. No other advertising or logos were displayed until after November 7, 2012.  
On November 7, 2012, Scout requested a commercial business insurance policy through 
Truck Insurance and a policy was issued by Farmers Insurance. Scout then began the process of 
opening Gone Rogue Pub: obtaining an alcohol license, hanging signs, and ordering merchandise 
and glassware emblazoned with the Gone Rogue Pub logo. Gone Rogue Pub officially opened 
sometime around November 21, 2012.  
All was well with Gone Rogue Pub until the Oregon Brewing Company (OBC) noticed 
Gone Rogue’s similarity to its federally registered ROGUE trademarks. In January 2013, OBC 
informed Gone Rogue that it believed Gone Rogue was infringing on five of its registered 
ROGUE trademarks, including use of the mark in connection with: (1) beer and ale; (2) 
restaurant, pub and catering services; (3) beverage glassware; (4) beer; and, (5) clothing. All 
registrations predated Gone Rogue’s use by at least two years. For a year-and-a-half OBC 
attempted to negotiate a deal with Gone Rogue, but to no avail.  
In October 2014, OBC filed suit against Scout, alleging in part that “[i]n October 2012, 
long after OBC’s first use and registration of the mark ROGUE, [Gone Rogue Pub] commenced 
use of the mark ROGUE as the name of their restaurant and bar.” OBC asserted six different 
claims against Scout: (1) trademark counterfeiting under the Lanham Act; (2) trademark 
infringement; (3) unfair competition and false designation of origin under the Lanham Act; (4) 
 
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cyber-squatting under the Lanham Act; (5) unfair business practices under Idaho law; and, (5) 
common law trademark infringement. Exhibits were attached to the complaint featuring a host of 
screenshots from Scout’s Facebook page showing Gone Rogue’s marks. OBC sought injunctive 
relief, attorney fees and costs, and treble damages.   
On December 3, 2013, Scout informed Truck Insurance of the OBC lawsuit and 
requested coordination for legal representation. Scout’s liability policy included coverage for any 
“‘advertising injury’ . . . caused by an offense committed in the course of advertising your goods, 
products or services; but only if the offense was committed in the ‘coverage territory’ during the 
policy period.” An advertising injury was defined as “[m]isappropriation of advertising ideas or 
style of doing business; or [i]nfringment of copyright, title or slogan.” However, the policy was 
clear that Truck Insurance would “have no duty to defend the insured against any ‘suit’ seeking 
damages for . . . ‘advertising injury’” to which the insurance did not apply.  
Truck Insurance took the position that Scout’s claim was not covered under the liability 
policy because of an exclusionary provision in the policy that denied coverage for any 
“‘advertising injury’ [a]rising out of oral or written publication of material whose first 
publication took place before the beginning of the policy period.” The OBC complaint stated that 
the infringing activity began in October 2012—a month before Scout’s liability coverage 
commenced—–when Scout posted the Gone Rogue Pub logo on its Facebook page.  
Not wanting to scuffle with OBC without assistance from Truck Insurance, Scout settled 
with OBC, agreeing to cease using ROGUE as a mark. Scout then rebranded “Gone Rogue Pub” 
as “Double-Tap Pub.” A suit was thereafter brought by Scout against Truck Insurance alleging 
breach of contract, breach of the covenant of good faith and fair dealing, and bad faith failure to 
defend. After the parties conducted written discovery, Truck Insurance moved for summary 
judgment, arguing that there was no duty to defend, ergo no breach of contract. Scout countered 
with its own motion for summary judgment, contending that the prior publication exclusion was 
inapplicable to the OBC complaint, thus Truck Insurance breached its duty to defend Scout in the 
OBC suit.  
The district court concluded that there was no duty to defend on Truck Insurance’s part. 
A judgment was then entered dismissing Scout’s claims with prejudice. Scout timely appealed 
the judgment. We affirm the judgment of the district court. 
II. 
ISSUES ON APPEAL 
 
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A. Whether the district court properly granted summary judgment dismissing the breach of 
contract claims on its determination that no duty to defend existed because of the 
insurance contract’s prior publication exclusion.  
B. Whether the district court properly granted summary judgment dismissing the breach of 
implied covenant of good faith and fair dealing and bad faith claims on the grounds that 
there was no breach of contract. 
C. Whether Scout is entitled to attorney fees on appeal under Idaho Code section 41-1839. 
III. 
STANDARD OF REVIEW 
When reviewing a grant of a motion for summary judgment, this Court applies the same 
standard used by the district court in ruling on the motion. Farm Bureau Inc. Co. of Idaho v. 
Kinsey, 149 Idaho 415, 418, 234 P.3d 739, 742 (2010).  “Summary judgment is properly granted 
when ‘the pleadings, depositions, and admissions on file, together with the affidavits, if any, 
show that there is no genuine issue as to any material fact and that the moving party is entitled to 
judgment as a matter of law.’” Id.; see Idaho R. Civ. P. 56. This Court liberally construes all 
disputed facts and draws all reasonable inferences from the record in favor of the nonmoving 
party. Nettleton v. Canyon Outdoor Media, LLC, 163 Idaho 70, 72–73, 408 P.3d 68, 70–71 
(2017). “The moving party carries the burden of proving the absence of a genuine issue of 
material fact.” Id. at 73, 408 P.3d at 71. Each party’s motion for summary judgment is evaluated 
on its own merits; the filing of cross-motions for summary judgment does not establish the 
absence of genuine issues of material fact, nor does it transform the trial court that hears the 
motions into the trier of fact. Id. 
IV. 
ANALYSIS 
A. A duty to defend was not triggered because the prior publication exclusion removed 
any liability from Truck Insurance.  
The district court held that the prior publication exclusion in Truck Insurance’s liability 
policy clearly and unambiguously excluded coverage for the allegations found in the OBC 
complaint when read broadly. The parties do not dispute that the allegations in the OBC 
complaint are advertising injuries covered by the business liability policy, but only dispute 
whether the prior publication exclusion allowed Truck Insurance to deny the duty to defend. The 
relevant portions of the insurance policy pertaining to coverage are as follows: 
A. Coverages 
1. Business Liability 
 
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a. We will pay those sums that the insured becomes legally obligated 
to pay as damages because of . . . “advertising injury” to which this 
insurance applies. We have the right and duty to defend the insured 
against any “suit” seeking those damages. However, we will have 
no duty to defend the insured against any “suit” seeking damages 
for. . . “advertising injury” to which this insurance does not apply.  
. . .  
b. This insurance applies: 
(2) To: 
(b) “Advertising injury” caused by an offense committed in 
the course of advertising your goods, products or 
services; but only if the offense was committed in the 
“coverage territory” during the policy period. 
 
. . .  
B. Exclusions 
1. Applicable To Business Liability Coverage 
This insurance does not apply to: 
 
. . .  
p. Personal Or Advertising Injury 
    “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; 
 
. . .  
F. Liability And Medical Expenses Definitions 
1. “Advertising injury” means injury arising out of one or more of the following 
offenses: 
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 of 
privacy; 
 
 
c. Misappropriation of advertising ideas or style of doing business; or 
 
 
d. Infringement of copyright, title or slogan.  
Scout raises multiple contentions regarding the applicability of the prior publication 
exclusion found in Truck Insurance’s business liability policy. First, Scout argues that an insurer 
is not allowed to merely look to the four corners of a complaint to determine coverage, but must 
also look to facts known to it. Second, Scout argues that the prior publication exclusion was not 
applicable because it is an ambiguous provision. And third, Scout contends that even if the prior 
publication exclusion does apply, fresh wrongs alleged in the OBC complaint that do not arise 
out of the supposed pre-coverage advertisement trigger Truck Insurance’s duty to defend. None 
of these three theories is correct.  
 
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i. 
The Four Corners Rule relieved Truck Insurance’s duty to defend.  
This district court determined that when reading the OBC complaint broadly, in 
conjunction with the business liability policy, there was no duty on the part of Truck Insurance to 
defend Scout. The district court limited its review to the allegations found in the OBC complaint. 
However, Scout contends that the duty to defend requires an insurer to also use the facts known 
to it in making a determination rather than relying solely on a third party complaint. However, 
even if we adopted Scout’s interpretation of the Four Corners Rule, the district court also found 
that extrinsic facts, if considered, would still trigger the prior publication exclusion and relieve 
Truck Insurance’s duty to defend. 
“The duty to defend and duty to indemnify are separate, independent duties.” Deluna v. 
State Farm Fire and Cas. Co., 149 Idaho 81, 85, 233 P.3d 12, 16 (2008). The duty of an insurer 
to defend its insured is much broader than its duty to indemnify and “arises upon the filing of a 
complaint whose allegations, in whole or in part, read broadly, reveal a potential for liability that 
would be covered by the insured’s policy.”  Hoyle v. Utica Mut. Ins. Co., 137 Idaho 367, 371–
72, 48 P.3d 1256, 1260–61 (2002). “Where there is doubt as to whether a theory of recovery 
within the policy coverage has been pled in the underlying complaint, the insurer must defend 
regardless of possible defenses arising under the policy or potential defenses arising under 
substantive law governing the claim against the insured.” Construction Mgmt. Sys., Inc. v. 
Assurance Co. of America, 135 Idaho 680, 682–83, 23 P.3d 142, 144–45 (2001). So long as there 
exists a genuine dispute over facts bearing on coverage under the policy or over the application 
of the policy’s language to the facts, the insurer has a duty to defend. Id. at 683, 23 P.3d at 145.  
An insurer that believes it has no duty to defend an insured in a matter may seek 
declaratory relief, or it may “evaluate the claims and determine whether an arguable potential 
exists for a claim covered by the policy.” Kootenai Cnty. v. Western Cas. and Sur. Co., 113 
Idaho 908, 910–11, 750 P.2d 87, 99–100 (1988) (citing State of Idaho v. Bunker Hill Co., 647 
F.Supp. 1064, 1068 (D. Idaho 1986)). If a complaint discloses no possibility of coverage, the 
insurer may properly decline to defend against it. Cnty. of Boise v. Idaho Cntys. Risk Mgmt. 
Program, Underwriters, 151 Idaho 901, 904, 265 P.3d 514, 517 (2011). In making a 
determination of coverage, “an insurer does not have to look beyond the words of the complaint 
to determine if a possibility of coverage exists.” AMCO Ins. Co. v. Tri-Spur Inv. Co., 140 Idaho 
733, 738, 101 P.3d 226, 231 (2004) (citing Hoyle, 137 Idaho at 373–74, 48 P.3d at 1256).  If an 
 
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exclusion in a business liability policy clearly and unambiguously excludes certain injuries, an 
insurer’s duty to defend is not triggered. Construction Mgmt., 135 Idaho at 682, 23 P.3d at 146. 
However, an insurer “acts at its own peril if it chooses not to defend a case and it is later 
determined that the insurance company did, in fact, have such a responsibility.” Hoyle, 137 Idaho 
at 371, 48 P.3d at 1260.  
In this case, the district court held that “the duty to defend is framed solely by the 
allegations of the underlying complaint.” Truck Insurance denied coverage after reviewing the 
four corners of the OBC complaint. Because the OBC complaint alleged that “[i]n October 
2012” Scout began using the ROGUE mark and included exhibits showing such use, any injury 
arising from that use would properly be excluded from coverage. Scout, however, disputes that 
use of ROGUE in connection with a restaurant and bar began in October 2012, but rather began 
only after the coverage period began because it was not yet in business in October. Truck 
Insurance is alleged to have known these facts because of the documents it had in its possession 
regarding business permits Scout provided it. This dispute in the facts of the complaint, Scout 
argues, creates a genuine dispute over the facts bearing on coverage, thereby creating a duty to 
defend. We disagree. 
This Court has consistently held that insurers need only look at the complaint and read it 
broadly in order to determine if coverage exists. See, e.g., Cnty. of Boise, 151 Idaho at 904, 265 
P.3d at 517; Deluna, 149 Idaho at 84, 233 P.3d at 15; AMCO, 140 Idaho at 738, 101 P.3d at 231; 
Kootenai Cnty., 113 Idaho at 911, 750 P.2d at 90. The safeguard of requiring an insurer to defend 
when faced with genuine disputes of facts relating to coverage negates any need to adopt 
additional broad rules for initial determinations of a duty to defend. Simply put, under existing 
Idaho case law, if there is any question as to coverage when broadly reading the four corners of a 
complaint, an insurer must defend. However, if there is no possibility of coverage, an insurer has 
no duty to defend. 
In this case, when reading the OBC complaint broadly, it is clear that there is no coverage 
and thus no duty to defend exists. The OBC complaint alleged that the use of the mark ROGUE 
began in October 2012, a month before Truck Insurance began providing insurance coverage. 
The applicable provision in the insurance policy excludes any advertising injury that arose out of 
any written material first published prior to the beginning of the policy period. Because OBC 
alleged that the mark ROGUE was first published before Truck Insurance’s policy was issued 
 
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and it was supported by an exhibit showing said use, the prior publication exclusion excluded 
coverage and Truck Insurance had no duty to defend. Additionally, even if evidence that Scout 
was not in business at the time of the first publication is considered, Truck Insurance would still 
be relieved of its duty to defend because of the prior publication exception, as will be explained 
below. 
ii. 
The prior publication exclusion is not ambiguous. 
The district court held that the prior publication exclusion was not ambiguous, rejecting 
Scout’s argument that a prior publication must be independently “injurious.” Scout argues that 
the district court erred because the prior publication exclusion is ambiguous as evidenced by an 
absence of settled legal meaning and because it is not clear whether the October Facebook post 
of the ROGUE mark was a “prior publication.” Truck Insurance responds that a split of authority 
does not necessarily create an ambiguity, and the Facebook post was a prior publication under 
the policy because use of the ROGUE mark was a continuing infringement throughout pre- and 
post-insurance coverage.  
“Whether an insurance policy is ambiguous is a question of law over which this Court 
exercises free review.” Armstrong v. Farmers Ins. Co. of Idaho, 147 Idaho 67, 69, 205 P.3d 
1203, 1205 (2009). To determine if an insurance policy is ambiguous, the general rules of 
contract law are applied subject to certain special canons of construction. Id. These rules include 
looking at the plain language of the policy and reading the provisions within the context in which 
they occur in the policy. Purvis v. Progressive Cas. Ins. Co., 142 Idaho 213, 216, 127 P.3d 116, 
119 (2005). Additionally, “[u]nless contrary intent is shown, common, non-technical words are 
given the meaning applied by laymen in daily usage—as opposed to the meaning derived from 
legal usage—in order to effectuate the intent of the parties.” Howard v. Oregon Mut. Ins. Co., 
137 Idaho 214, 218, 46 P.3d 510, 514 (2002). Where policy language is found to be 
unambiguous, the Court is to construe the policy as written, and the Court by construction cannot 
create a liability not assumed by the insurer nor make a new contract for the parties, or one 
different from that plainly intended, nor add words to the contract of insurance to either create or 
avoid liability.” Purvis, 142 Idaho at 216, 127 P.3d at 119.  
In contrast, a provision may be found to be ambiguous when it is reasonably subject to 
conflicting interpretations. Id. The burden is properly on the insurer to use clear and precise 
language if it desires to restrict the scope of its coverage. Moss v. Mid-America Fire and Marine 
 
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Inc. Co., 103 Idaho 298, 300, 647 P.2d 754, 756 (1982). If a policy term or provision is 
ambiguous, this Court construes it liberally in favor of recovery, with all ambiguities being 
resolved against the insurer. AMCO, 140 Idaho at 739, 101 P.3d at 232. Ambiguities are resolved 
against the insurer because “insurance policies are contracts of adhesion, not subject to 
negotiation between the parties.” Moss, 103 Idaho at 300, 647 P.2d at 756.  
Scout argues that the prior publication exclusion’s use of the term “arising out of” is 
ambiguous because some courts have interpreted this term to mean that a prior publication must 
cause an injury when initially published and/or cause the same or substantially similar injury as 
any later injuries. Truck Insurance disagrees and proposes that the prior publication exclusion 
only requires that similar material be published before coverage and does not need to be 
independently actionable or injurious.  
The contractual provision excluding coverage for advertising injuries “[a]rising out of 
oral or written publication of material whose first publication took place before the beginning of 
the policy period,” is unambiguous. “Arise” is defined as to “come into being; originate,” or to 
“occur as a result of.” Arise, MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY (11th ed. 2003). 
Use of the phrase “arising out of” generally “does not require a direct proximate causal 
connection but instead merely requires some causal relation or connection.” 7 COUCH ON INS. § 
101:52 (3rd ed. 2018). Plainly read, the exclusion clearly indicates that if an injury arises after 
coverage is purchased, it will not be covered if the material was published prior to coverage. The 
“arising out of” language necessitates a causal connection with the later advertising injury, but so 
long as that connection exists the prior publication exclusion excludes coverage. Thus, there is 
no prima facie ambiguity in the policy’s provision.  
Yet, Scout argues that the material first published needs to not only be causally 
connected, but that it must also be actionable in its own right to trigger the exclusion. The 
Seventh Circuit’s interpretation of the prior publication exclusion in Capitol Indemnity 
Corporation v. Elston Self Service Wholesale Groceries, Inc., is cited as authority for this 
proposition. 559 F.3d 616 (7th Cir. 2009) (applying Illinois law). In Capitol Indemnity, a 
distributor of wholesale merchandise sold genuine Newport cigarettes, among other things. Id. at 
617. After purchasing a business liability policy, the distributor began selling counterfeit 
cigarettes in legitimate Newport cigarette packaging. Id. The distributor’s insurer declined to 
provide coverage for a trademark infringement claim brought by the owners of Newport, because 
 
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the insurer determined that the previous use of the Newport label triggered the prior publication 
exclusion. Id. at 619–20. The appellate court disagreed that the prior publication exclusion was 
triggered in this instance, holding that the prior use was not wrongful and therefore was not a 
‘material’ publication: 
We understand the term “material” in the exclusion to refer to “injurious” 
material. By its terms, the prior publication exclusion abrogates the insurer’s duty 
to defend only where it can prove that the insured’s prior publication of the same 
actionable, injurious material alleged in the underlying complaint occurred prior 
to the beginning of its policy. This interpretation is logical because the exclusion 
exists to prevent an insured from purchasing an insurance policy to cover liability 
for illegal acts which it had undertaken prior to purchasing the policy. Put another 
way, the purpose of the exclusion is to prevent an individual who has caused an 
injury from buying insurance so that he can continue his injurious behavior. 
 
We do not see any ambiguity in the meaning of the exclusion; it seems 
clear that the exclusion only abrogates the duty to defend where the insured’s first 
publication of actionable material occurred prior to the beginning of its policy.  
 
Id. at 620. Thus, Scout urges this Court adopt the view that the prior publication exclusion is 
triggered only when prior published material is independently actionable or injurious. See also 
Street Surfing, LLC v. Great Am. E & S Ins. Co., 776 F.3d 603, 610 (9th Cir. 2014) (applying 
California law) (“In the context of advertising injury coverage, an allegedly wrongful 
advertisement published before the coverage period triggers application of the prior publication 
doctrine.”). 
 
Rather than the “actionable or injurious” theory, Truck Insurance urges this court to adopt 
the “landmark” approach to the prior publication doctrine. Under the landmark view, “[t]he 
relevant question for the exclusion . . . is not when the claim first became actionable, but when 
the material giving rise to the claims was first published.” Matagorda Ventures, Inc. v. Travelers 
Lloyds Ins. Co., 203 F.Supp.2d 704 (S.D. Tex. 2000) (applying Texas law). The Matagorda 
court was faced with the applicability of a similar prior publication exclusion for a wristwatch 
website that was allegedly infringing on a watchmaker’s copyright. Id. at 715–16. In holding that 
the prior publication exclusion excluded coverage, the court stated that “[o]ne purpose of the 
exclusion is to prevent all insured from obtaining coverage for risks already known to the insured 
. . . ‘An insured cannot insure against something that has already begun and which is known to 
have begun.’” Id. at 716.  Thus, under the landmark view, “the ‘first publication’ date is a 
landmark: if the injurious advertisement was ‘first published’ before the policy began, then 
 
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coverage for the ‘advertising injury’ is excluded.” Applied Bolting Tech. Prod., Inc. v. U.S. Fid. 
& Guar. Co., 942 F.Supp. 1029 (E.D. PA 1996).  
 
We agree with the district court that the landmark view ought to be utilized in this case. 
The independently actionable theory used in Capitol Indemnity is confined to the unique facts in 
that case. There, the court understood the term “material” to mean “injurious material” so that 
the insurer could not use the pre-coverage sale of genuine Newport cigarettes as a basis for an 
exclusion of post-coverage sales of counterfeit cigarettes in the same genuine packaging. Capital 
Indemnity, 559 F.3d at 620. The Capitol Indemnity court recognized the lack of a causal 
connection between the pre- and post-coverage activities of the wholesale cigarette distributer. 
However, no such facts exist in the present case that requires use of the unique independently 
actionable theory. Therefore, the landmark view will be employed. 
 
In this case, Scout published a Gone Rogue logo on its Facebook page a month before 
purchasing business liability coverage. The screenshot, found in the exhibits of the OBC 
complaint, features the Facebook page “Gone Rogue Pub.” However, Scout claims that the page 
was entitled Casa del Sol until it was changed to Gone Rogue Pub after purchasing liability 
insurance. The logo in the October-posting only features the words GONE ROGUE, and does 
not contain the additional word PUB as all Scout’s other logos feature after purchasing 
insurance. The posting is accompanied by Scout stating that it is “our new logo,” and a user 
comment states, “all you need is your very own ‘Gone Rogue’ house brew.”  
 
The October-posting of the logo was similar in every way to the later logos but for the 
PUB addition. It was apparent that the logo was for a new restaurant because Casa del Sol, the 
prior place of business, was a restaurant in downtown Boise, and because Gone Rogue was 
featured in an online article as a pub. Additionally, at least one commenter on the Facebook page 
understood the posting to be for a bar, as evidenced by his suggestion of Gone Rogue creating its 
own house brew. The owner of the trademark, OBC, even considered the October posting 
injurious when it alleged that the infringement of its registered trademark ROGUE began in 
October 2012. The October posting was the landmark for Scout’s continuing acts that ultimately 
resulted in an infringement suit. Because of this landmark, Truck Insurance had no duty to 
defend Scout because any advertising injury that occurred after the October publication was 
excluded from coverage due to the prior publication exclusion.  
iii. 
The post-coverage advertisements were not fresh wrongs. 
 
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Scout argues that even if the October posting is considered a prior publication under the 
policy, Truck Insurance nevertheless had a duty to defend Scout in the OBC action because 
certain allegations in the complaint—namely cybersquatting under the Lanham Act and 
trademark infringement for glassware, clothing, beer and ale—constitute distinct, fresh wrongs 
that are covered by the policy and not excluded under the prior publication exclusion. The 
district court determined that Scout’s post-insurance uses of the ROGUE mark were not fresh 
wrongs that triggered Truck Insurance’s duty to defend because use of the mark originated with 
the October posting and was continuous therefrom.  
Various courts have held that post-coverage advertisements that are sufficiently distinct 
from pre-coverage advertisements constitute “fresh wrongs” that trigger an insurer’s duty to 
defend, regardless of other advertisements excluded under a prior publication exclusion. An 
example of an application of the fresh wrong approach is found in Street Surfing, LLC, v. Great 
American E & S Ins. Co.. 776 F.3d 603 (9th Cir. 2014) (applying California law). The company 
Street Surfing began selling skateboards using its company name in violation of the owner’s 
registered trademark “Streetsurfer.” Id. at 605–06. After obtaining a business liability policy, 
Street Surfing began also selling skateboard accessories with its company name. Id. After the 
inevitable trademark infringement action was brought, Street Surfer’s insurer refused to defend 
the suit because of a prior publication exclusion found in its policy. Id. at 606–07. Street Surfer 
sued its insurer, arguing that even if the initial infringement actions were excluded under the 
prior publication exclusion, the trademark infringement allegations arising from the sale of 
skateboard accessories were fresh wrongs that triggered the insurer’s duty to defend. Id. at 612. 
The court held that the difference in products was not material in determining a fresh wrong (i.e., 
skateboards v. skateboard accessories), “because the alleged wrong arose out of each term’s 
similarity” to the advertising idea. Id. at 614. Therefore, to assess substantial similarity, courts 
should not consider all differences between pre- and post-coverage publications, but should 
instead focus on the relationship between the alleged wrongful acts manifested by the 
publications. Id. at 613–14. 
Another fitting example of “fresh wrongs” is found in a Third Circuit opinion centering 
on trademark infringement. Hanover Ins. Co. v. Urban Outfitters, Inc., 806 F.3d 761 (3rd Cir. 
2014) (applying Pennsylvania law). In Hanover, the court had to decide if an insurer had a duty 
to defend under a policy with a similar prior publication exclusion in a suit brought by Navajo 
 
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Nation against a clothing outfitter for trademark infringement. Id. at 763–66. Looking strictly at 
the four corners of the complaint, the court decided that the alleged post-coverage infringement 
did not allege any fresh wrongs—–fresh wrongs being defined as allegations in a complaint that 
allege a substantive difference between allegedly infringing advertisements, published before 
and during the relevant policy period. Id. at 768–69. The Hanover court listed several factors to 
assist in determining fresh wrongs: (1) “whether the plaintiff charged the insured with separate 
torts or an agglomeration;” (2) “whether the complaint describes a significant lull between pre- 
and post-coverage advertising initiatives;” and, (3) “whether the advertisements share a common 
theme relating to the alleged violation.” Id. at 768. Because the Navajo complaint alleged 
continuing torts sharing a common and thematically consistent theme occurring both before and 
during coverage dates that were accompanied with qualifiers denoting continuity, the prior 
publication exclusion applied, relieving the insurer from its duty to defend. Id. at 769–70.  
A counter-example where fresh wrongs were found, thereby creating a duty to defend, 
centered upon the appropriation of a marketing idea involving a Chihuahua “with a spicy 
Mexican personality and an insatiable craving” for tacos. Taco Bell Corp. v. Continental Cas. 
Co., 388 F.3d 1069, 1072 (7th Cir. 2004). Taco Bell allegedly misappropriated the Chihuahua 
idea from a marketer, who thereafter brought suit alleging both copyright infringement and 
Michigan common law misappropriation. Id. at 1073. Taco Bell’s insurer refused to defend—
pointing to its prior publication exclusion—because Taco Bell had run commercials both prior to 
and after coverage featuring the taco-loving Chihuahua. Id. The Seventh Circuit determined that 
the insurer had a duty to defend because the allegations in the complaint included the 
misappropriation of subordinate ideas as separate torts that occurred only after coverage began, 
even though some of the separate claims involved copyright infringement that continuously 
occurred before and after the insurer’s coverage period. Id. at 1073–74. The court explained that 
the Chihuahua idea cannot be so broadly construed as to trigger the prior publication exclusion 
for all the claims found in the complaint: 
At some point a difference between the republished version of an unlawful 
work and the original version would be so slight as to be immaterial. But that 
observation cannot save the insurer when the republication contains new matter 
that the plaintiff in the liability suit against the insured alleges as fresh 
wrongs. [The marketer’s] complaint claims that Taco Bell stole the “basic idea” 
before October 7, 1997, and used it in its earliest commercials, which predated 
 
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[the insurer’s] coverage, but that it stole additional, subordinate but still 
protected, ideas as well and incorporated them into the later commercials. . . 
 
The misappropriator, or at least this alleged misappropriator, takes an idea; and 
the boundaries of an idea can be quite uncertain. If [the marketer’s] idea of a 
“Psycho Chihuahua” advertising campaign is defined broadly enough, it 
encompasses all the subordinate ideas embodied in the later commercials. But this 
possibility is irrelevant. We repeat that the duty to defend is determined by what 
is charged in the complaint. [The marketer’s] complaint charges the 
misappropriation of the subordinate ideas as separate torts, and those torts 
occurred during the period covered by [the insurer’s] policy. 
 
Id. at 1073–74 (emphasis added) (internal citations omitted). Fresh wrongs were found in the 
Taco Bell case because of allegations present in the complaint alleging the taking of additional  
material from the marketer and using it in commercials after the insurer’s policy was in effect. 
Thus, allegations found within the four corners of a complaint alleging new injuries independent 
of prior injuries will trigger an insurer’s duty to defend, regardless of other allegations in a 
complaint being excluded under a prior publication exclusion.  
 
In the present case, Scout argues that the only allegation in the OBC complaint that could 
possibly be excluded by the prior publication exclusion is the alleged violation of OBC’s 
ROGUE mark used in connection with restaurant, pub, and catering services. Therefore, argues 
Scout, the other allegations that allege trademark infringement in connection with goods such as 
beer and ale, beverage glassware, beer, and clothing, are fresh wrongs that triggered Truck 
Insurance’s duty to defend. Likewise, Scout claims the allegation of cyber-squatting under the 
Lanham Act due to its creation of the Facebook page www.facebook.com/GoneRoguePub, 
cannot reasonably be interpreted to be connected with the October posting.  
 
Analyzing this case using the three Hanover factors shows that no fresh wrongs are 
alleged in the OBC complaint.  The Hanover factors look to the complaint to ascertain whether 
separate torts are alleged, whether the complaint describes a significant continuity, and whether a 
common theme is present. The first factor looks to the types of claims found in the complaint, 
whereas the second factor looks to the continuity of harm. While separate torts are alleged in the 
OBC complaint, each claim incorporates and re-alleges that “In October 2012, long after OBC’s 
first use and registration of the mark ROGUE, Defendant’s commenced use of the mark ROGUE 
as the name of their restaurant and bar.”  There are no allegations of new content being taken 
from OBC in these complaints as there were in Taco Bell, but it instead alleges a constant 
 
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agglomeration of continuing harm stemming from the use of the ROGUE mark beginning a 
month before Scout’s insurance coverage. Thus, the first and second factors suggest an absence 
of fresh wrongs. 
 
The third factor, whether a common theme is present, demonstrates the absence of fresh 
wrongs. It is true that Scout was not alleged to yet be violating the ROGUE trademark in 
connection with glassware or clothing when it posted its October Facebook logo, but it was the 
use of the ROGUE mark that was alleged to be the common infringement across all products. 
Much like in Street Surfer, where placing a mark on different products post-coverage did not 
produce fresh wrongs, Scout placing the ROGUE mark on other products or on its Facebook 
page does not make the post-coverage wrongs “fresh.” Advertising a logo featuring the word 
ROGUE in connection with a restaurant about to open and thereafter placing an almost identical 
logo featuring the word ROGUE on glassware, clothing, beer and ale, and Facebook creates 
substantially similar wrongs. Thus, the OBC complaint did not allege any fresh wrongs that 
triggered Truck Insurance’s duty to defend.  
B. There was no breach of the warranty of good faith and fair dealing or bad faith 
failure to defend because there was no coverage under the insurance policy.  
The district court held that Truck Insurance did not have a contractual obligation to 
defend Scout in the underlying OBC complaint, and therefore could not have breached the 
warranty of good faith and fair dealing or bad faith failure to defend. We agree. If there is no 
coverage under an insurance contract, there can be no breach of the duty of good faith and fair 
dealing or liability for bad faith failure to defend. 
C. Scout is not awarded attorney’s fees and costs.  
Scout’s request for attorney’s fees and costs under Idaho Code section 41-1839 is denied 
because it did not prevail.  
V. CONCLUSION 
In consideration of the foregoing, the judgment of the district court is affirmed. Costs on 
appeal are awarded to Truck Insurance. 
 
Chief Justice BURDICK, Justices HORTON, BEVAN and STEGNER CONCUR.