# United States Court of Appeals **for the Fifth Circuit**

____________ No. 22-20473

____________ The Princeton Excess and Surplus Lines Insurance Company, Plaintiff—Appellant ,

versus A.H.D. Houston, Incorporated, doing business as Centerfolds; D WG FM, Incorporated, doing business as Splendor; D. Texas Investments, Incorporated, doing business as Treasures; A.H.D. Houston, Incorporated, doing business as Treasures; W.L. York, Incorporated, doing business

as Treasures; Jaime Middleton; Cora Skinner; Jamillette Gaxiola; Jennifer Xzharinova; Jessica Hinton; Lina Posada; Lucy Pi nder; Paola Canas; Sandra Valencia; Tiffany Toth; Cielo Jean Gibson; Maysa Qui; Elizabeth Turner; Emily Se ars; Gemma Lee Farrell; Jaclyn Swedberg, Defendants—Appellees

.

______________________________ Appeal from the United States District Court for the Southern District of Texas USDC No. 4:20-CV-3680

______________________________ ON PETITION FOR REHEARING AND REHEARING EN BANC United States Court of Appeals Fifth Circuit 

### FILED October 6, 2023

Lyle W. Cayce Clerk Case: 22-20473 Document: 00516923654 Page: 1 Date Filed: 10/06/2023No. 22-20473

2 Before Elrod, Ho, and Wilson, Circuit Judges

. Cory T. Wilson, Circuit Judge : Because no member of the panel orjudge in regular active service requested that the court be polled on rehearing en banc, see Fed. R. App. P . 35; 5th Cir. R . 35, the petition for rehearing en banc is DENIED

. The petition for panel rehearing is GRANTED . Our prior panel opinion, 78 F.4th 815 (5th Cir. 2023), is WITHDRAWN , and the following opinion is SUBSTITUTED therefor: This is an insurance coverage dispute arising out of litigation in Texas state court. Two insurance policies are at issue, and the district court concluded that both provided the insure ds coverage. But the district court improperly construed the policies to re ach that conclusion, so we reverse, render in part, and rema nd the remaining issue with instructions for the district court to stay its disposition of that issue pending final resolution of the underlying state court lawsuit.
I.
A. This comparatively pedestrian cont ract dispute stems from a much more salacious lawsuit filed in Texas in 2017. Sixteen professional models (the Models) sued three Texas strip cl ubs known as Treasures, Centerfolds, and Splendor (the Clubs) following the Clubs’ use of the Models’ likeness for advertising campaigns wi thout the Models’ consent. 1 The Clubs’ advertising material was manipulated to give the impression that the Models endorsed the Clubs or worked as strippe rs in the Clubs. The Models “were

_____________________

1 The Models asserted claims for inva sion of privacy (misappropriation), respondeat superior negligence, and theft. The Models later dropped their theft claim. Case: 22-20473 Document: 00516923654 Page: 2 Date Filed: 10/06/2023No. 22-20473

3 depicted in various sexually-cha rged social media and Internet posts . . . encouraging patrons to vi sit [t]he Clubs.” According to the Models, the Clubs participated in the selection, creation, and dissemination of these advertisements. The state trial court granted su mmary judgment for the Models and awarded $1,405,000 in damages. The Clubs appealed the judgment to the Court of Appeals for the First District of Texas. That appeal has not yet been finally adjudicated on the merits.
B. Meanwhile, Princeton Excess and Surplus Lines Insurance Company (PESLIC) filed this declaratory ju dgment action. PESLIC issued two commercial liability insurance policies to the Clubs covering the time period relevant to the Models’ claims: Nu mber 1RA3GL0000179–01, with a policy period of November 9, 2015 to Nov ember 9, 2016 (the 01 Policy); and Number 1RA3GL0000179–02, with a policy period of November 9, 2016 to November 9, 2017 (the 02 Policy). 2 The policies have identi cal coverage provisions but contain slightly different exclusions. Generally, theyinclude three areas of coverage: “Coverage A—Bodily Injury and Pr operty Damage Liability,” “Coverage B—Personal and Advertising Injury Liability,” and “Coverage C—Medical Payments.” At issue under both policie s is Coverage B, which in relevant part states:

_____________________

2 One plaintiff alleged a claim in the unde rlying lawsuit for conduct that occurred during the 01 Policy period, and the others br ought claims for conduc t during the 02 Policy period. Case: 22-20473 Document: 00516923654 Page: 3 Date Filed: 10/06/2023No. 22-20473

4 1. Insuring Agreement a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “personal and advertising injuries” to which this insurance applies. We will have the ri ght 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 “personal and advertising injury” to whic h this insurance does not apply. Both policies define “Personal and [A]dvertising Injury” as: . . . injury, including consequential “bodily injury”, arising out of one or more of the following offenses: a. False arrest, detention or imprisonment; b. Malicious prosecution; c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor; d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services; e. Oral or written publication, in any manner, of material that violates a person’s right of privacy ; f. The use of another’s advertising idea in your “advertisement”; or g. Infringing upon another’s copyright, trade dress or slogan in your “advertisement.” Case: 22-20473 Document: 00516923654 Page: 4 Date Filed: 10/06/2023No. 22-20473

5 The policies contain somewhat dive rgent exclusions, which largely determine the outcome of this case. The 01 Policy contains a “Field of Entertainment Exclusion,” which reads: This insurance does not apply to any loss, claim, “suit”, cost, expense, or liability for damages, directly or indirectly based on, attributable to, arising out of, involving, resulting from or in any way related to: a. Actual or alleged activity which is claimed to be an intellectual property infringement or violation of any of the following righ ts or laws: copyright, patent, trade dress, trad e secrets, trade name, trademark or service mark; b. Actual or alleged invasion of privacy; c. Actual or alleged libel, slander, or any form or defamation; d. Actual or alleged unauthorized use of titles, slogans, names, formats, ideas, characters, artwork, theme, plots or other material; e. Actual or alleged in fringement of copyright or common law rights in literary, artistic or musical material, or actual or alleged infringement of literary, artistic or musical rights codes; . . . . In the district court, PESLIC argu ed that the Field of Entertainment Exclusion excluded from coverage Personal and Advertising Injury subsections d., e., and g., while leaving in force subsection f., coverage for use of another’s advertising idea. If PESLIC ’s reading is correct, then coverage for the claim implicating the 01 Policy turns on whether the Clubs used the Models’ “advertising idea ,” as the sole survivin g relevant category of coverage. Case: 22-20473 Document: 00516923654 Page: 5 Date Filed: 10/06/2023No. 22-20473

6 The 02 Policy contains an “Exhibitions and Related Marketing Exclusion” that curtails coverage for Personal and Advertising Injury subsections d. through g. The exclusion reads: This insurance does not apply to:

. . . The following parts of “person al and advertising injury”: d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organizations goods, pr oducts, or services; e. Oral or written publication, in any manner, of material that violates a pe rson’s right of privacy; f. The use of another’s advertising idea in your “advertisement”; or g. Infringing upon another’s copyright, trade dress or slogan in your “advertisement”; If such activities arise out of or are part of “exhibitions and related marketing” . . . . “Exhibitions and related marketing” means: (a) The creation, production, publication, performance, exhibition, distribution, or exploitation of motion pictures, television programs, commercials, web or internet productions, theatrical show s, sporting events, music, promotional events, celebrity im age or likeness, literary works and similar productions or work, in any medium including videos, phonographic recordings, tapes, compact discs, DVDs, memory cards, electronic software or media books, magazines, social media, webcasts and websites. (b) The conduct of individu als in shows, theatrical productions, concerts, sporting events, or any other form of exhibition. Case: 22-20473 Document: 00516923654 Page: 6 Date Filed: 10/06/2023No. 22-20473

7 (c) Merchandising, advertisin g or publicity programs or material for the operations and material described in (a) or (b) above. The parties dispute whether this exclus ion renders illusory the Personal and Advertising Injury coverage provided in the 02 Policy. If the exclusion renders the coverage illusory, then the exclusion lacks force, and the Clubs have coverage applicable to the Models’ claims, as the distri ct court held. If not, then the exclusion should be enforced to foreclose coverage for the Clubs.
C. In its declaratory action, PESLIC named both the Models and the Clubs as defendants. PESLIC alleged th at “the policies d[o] not obligate it to defend or indemnify the Clubs.” The parties filed three competing summary judgment motions in the district court. After the state trial court granted judgment for the Models, the pa rties provided supplemental briefing on the duty to indemnify in support of their respective dispositive motions. The district court granted the Models ’ and the Clubs’ motions for summary judgment and denied PESLIC’s. As to the 01 Policy, the districtcourt found that “the Models’ pleadings in the underlying lawsuit sufficiently allege[d] that that the Clubs used [the] Models’ images (i .e., their ‘advertising id eas’) and placed them in their own ‘advertisements.’” Conseque ntly, the district court held that PESLIC had a duty to defend and ind emnify the Clubs under the 01 Policy. As to the 02 Policy, the partie s disputed whether that policy’s Exhibitions and Related Marketing Excl usion rendered illusory the Personal and Advertising Injury coverage. The di strict court agreed with the Models and the Clubs that it did and “declin e[d] to give effect to PESLIC’s ‘Exhibition and Related Marketing’ excl usion.” The court thus held that Case: 22-20473 Document: 00516923654 Page: 7 Date Filed: 10/06/2023No. 22-20473

8 PESLIC had a duty to defend the Clubs. The district court also held that PESLIC had a duty to indemnify th e Clubs under the 02 Policy. PESLIC now appeals.
II. We review a summary judgment de novo , applying the same legal standards as the district court. Certain Underwriters at Lloyd’s, London v. Axon Pressure Prod. Inc. , 951 F.3d 248, 255 (5th Cir. 2020). Summary judgment is appropriate when “the mova nt shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56 (a). “In Texas, insurance po licies are interpreted by the same principles as contract construction.” Terry Black’s Barbecue, L.L.C. v. State Auto. Mut. Ins. Co. , 22 F.4th 450, 454 (5th Cir. 2022) (citing State Farm Lloyds v. Page , 315 S.W.3d 525, 527 (Tex. 2010)). “When interpreting insurance contracts, courts seek ‘to ascertain the true intent ions of the parties as expressed in the instrument.’” United Nat. Ins. Co. v. Mundell Terminal Servs., Inc. , 740 F.3d 1022, 1027 (5th Cir. 2014) (quoting Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983)). “The words of the policy ar e given their ordinary and generallyaccepted meaning unless the policy shows the words were meant in a technical or different sense.” Terry Black’s Barbecue , 22 F.4th at 455 (internal quotation marks and citation omitted). We read all parts of the policy together and seek to gi ve effect to each part. Id

. An insurance contract is ambiguous if it is subject to more than one reasonable interpretation. See Nat’l Union Fire Ins. Co. of Pittsburgh v. CBI Indus., Inc. , 907 S.W.2d 517, 520 (Tex. 1995). “When an insu rance policy is ambiguous, and the parties offer conflicti ng reasonable interpretations of the policy, Texas law favors adop ting the interpretation in favor of the insured.” Terry Black’s Barbecue , 22 F.4th at 455 (citing RSUI Indem. Co. v. The Lynd Case: 22-20473 Document: 00516923654 Page: 8 Date Filed: 10/06/2023No. 22-20473

9 Co. , 466 S.W.3d 113, 118 (Tex. 2015)). But we only reach this question if the policy provisions are subject to two or more reasonable interpretations. Id

. “[U]nder Texas’s well-established eight-corners rule, an insurer’s ‘duty to defend is determined by the claims alleged in the petition and coverage provided in the policy.’” State Farm Lloyds v. Richards , 966 F.3d 389, 392 (5th Cir. 2020) (per curiam) (quoting Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co. , 279 S.W.3d 650, 654 (Tex. 2009)). “The insureds have the initial burden to establish that a cl aim is potentially within the scope of coverage.” Id. at 393. The burden then shifts to the insurer to show that it can avoid coverage. Id. An insurer’s duty to defend and indemnify are separate duties. Liberty Mut. Fire Ins. Co. v. Copart of Connecticut, Inc. , 75 F.4th 522, 535 (5th Cir. 2023) (internal quotations and citati on omitted). The duty to indemnify generally cannot be determined until the completion of litigation because it depends on the facts proven. Id. ; D.R. Horton-Texas, Ltd. v. Markel Int’l Ins. Co. , 300 S.W.3d 740, 744 (Tex. 2009). A lack of duty to indemnify cannot be inferred from a lack of duty to defend, unless the reasons that negate the duty to defend negate any possibility the insu rer will ever have a duty to indemnify. Liberty Mut. , 75 F.4th at 535–36.
III. We first consider the 01 Policy. As discussed above, it includes coverage for Personal and Advertising Injury. But it also includes a Field of Entertainment Exclusion, which narrows the scope of that coverage. We discuss the exclusion first, and then co nsider the coverage that remains in view of it.
A. The parties dispute the impact of the Field of Entertainment Exclusion in the 01 Policy. Their di sagreement centers on what coverage survives the exclusion an d whether the exclusion re nders illusory the policy’s Case: 22-20473 Document: 00516923654 Page: 9 Date Filed: 10/06/2023No. 22-20473

10 Personal and Advertising Injury covera ge. Texas courts disfavor construing insurance contracts such that co verage is rendered illusory. See ATOFINA Petrochemicals, Inc. v. Cont’l Cas. Co. , 185 S.W.3d 440, 444 (Tex. 2005) (adopting the insured’s construction of an exclusion because the insurer’s interpretation “would render cove rage under [an] endorsement largely illusory”); see also Northfield Ins. Co. v. Herrera , 751 F. App’x 512, 518 (5th Cir. 2018) (per curiam). However, “when an insurance policy will provide coverage for other claims, Texas co urts are unlikely to deem the policy illusory.” Herrera , 751 F. App’x at 518. “An insurance policy is not illusory merely because it does not provide co verage for a claim the policyholder thought it would cover

. ” Balfour Beatty Const., L.L. C. v. Liberty Mut. Fire Ins. Co. , 968 F.3d 504, 515 (5th Cir. 2020) (citing Constitution State Ins. Co. v. Iso-Tex Inc. , 61 F.3d 405, 410 n.4 (5th Ci r. 1995) (“Texas law does not recognize coverage because of [the ] ‘reasonable expectation’ of the insured.”)). By its terms, the Field of Entertainment Exclusion eliminates coverage for most of the “advertising injuries” included in the 01 Policy’s Coverage B—Personal and Advertising Injury Liability. But it expressly excepts injuries encompassed by subs ection f., for the use of another’s “advertising idea.” PESLIC contends that the exclusion should thus be enforced, reasoning that it is not illusory because it leaves significant coverage in place for Personal and Adve rtising Injury—just none that applies in this case. 3 We agree that the exclusion does not render coverage illusory and therefore is binding on the parties.

_____________________

3 PESLIC urges this court not to follow th e nearly identical case from the Southern District of Florida, Princeton Express v. DM Ventures USA LLC, 209 F. Supp. 3d 1252 (S.D. Fla. 2016), in which a Florida district cour t refused to enforce the exclusion because it rendered coverage illusory for advertising injuries under Fl orida law. We agree with Case: 22-20473 Document: 00516923654 Page: 10 Date Filed: 10/06/2023No. 22-20473

11 The Models’ principal contention s regarding the 01 Policy only buttress this conclusion. They ag ree that, whatever the scope of the exclusion, subsection f. remains in for ce—indeed, they assert subsection f. covers their claims, as the district co urt held. They further contend that subsection e., covering vi olations of a person’s “rig ht of privacy,” remains viable and applies in this ca se. Only if these avenues fail do they alternatively contend that the exclusion renders cove rage illusory and should be set aside. 4 But we need not get there, given that , as the parties agree, some measure of coverage survives for Personal and Advertising Injury. See Herrera , 751 F. App’x at 518; see also Balfour Beatty Const. , 968 F.3d at 515. As for subsection e. and the “right of privacy,” the Models’ argument that coverage survives the exclusion is unavailing. They submit that subsection e. covers inju ry to the “right of privacy,” while the exclusion eliminates coverage for a purportedly different injury, an “invasion of privacy.” But in their state court action, the Models pled—and prevailed on—a claim for “Invasion of Privacy—Misappropriation,” mirroring the terminology of the injury excluded from coverage by the Field of Entertainment Exclusion. So the word ing of their own claim belies the idea that their injury was distinct from th e type of injury implicated by the 01 Policy’s Field of Entertainment Exclusion.

_____________________ PESLIC on this point and do not find DM Ventures to be apt. That case applies Florida law, while this one turns on Texas law.

4 For their part, the Clubs do not engage on these issues. Instead, they contend that, because the district court did not anal yze the Field of Entertainment Exclusion or subsection e., this court need not do so. Ho wever, because we disagree with the district court’s conclusion that the Clubs appropriated the Models’ “advertising idea,” such that coverage obtained under subsection f., it is ne cessary to consider the interplay between the exclusion and these categories of coverage. Case: 22-20473 Document: 00516923654 Page: 11 Date Filed: 10/06/2023No. 22-20473

12 Beyond the semantics, the Models pr ovide no case supporting the idea that an “invasion of privacy” and a vi olation of the “right of privacy” are distinct torts in Texas law. Texas courts have historically recognized “four distinct torts encompassed under the category of invasion of the right of privacy.” Wood v. Hustler Mag., Inc. , 736 F.2d 1084, 1088 (5th Cir. 1984). Those are appropriation, intrusion, public disclosure, and false light. Justice v. Belo Broad. Corp. , 472 F. Supp. 145, 146–47 (N.D. Tex. 1979). 5 None of these torts suggest that an “invasion of privacy” is distinct from a violation of the “right of privacy.” To the contra ry, they comprise the same tort in Texas, and the exclusion applies to prec lude coverage under subsection e. of the 01 Policy’s Personal and Advertising Injury coverage. To sum up, the Field of Entertainment Exclusion is enforceable, as the 01 Policy nonetheless “will provid e coverage for other claims[.]” Herrera , 751 F. App’x at 518. Coverage under the polic y is thus not illusory. Subsection e. of the polic y’s Personal and Advertisin g Injury cove rage does not survive the exclusion, but the part ies agree that coverage remains for injuries encompassed by subs ection f. The lingering question is whether that subsection applies to the clai ms at issue in this case.
B. Subsection f. covers injuries caused by “the use of another’s advertising idea in [the Clubs’] ‘advertisement.’” PESLIC avers that the district court erred when it found thatthe Clubs’ unlawful use of the Models’ images constituted use of their “adver tising idea,” bringing the Models’ underlying claims within the ambit of subsection f. PESLIC contends that

_____________________

5 In 1994, the Supreme Court of Texas re ceded somewhat, holding that false light was not a cognizable tort in Texas. Cain v. Hearst Corp. , 878 S.W.2d 577 (Tex. 1994). The Cain court’s holding does not alter our analysis. Case: 22-20473 Document: 00516923654 Page: 12 Date Filed: 10/06/2023No. 22-20473

13 “[t]he misappropriation of a person’s image is not an appropriation of that person’s ‘idea.’” The Models, joined by the Clubs, respond that their images constitute “advertising idea s” by which they commercialize their brands, and they reject any notion that their images are “just fungible stock photos.” Thus, the Clubs’ use of the im ages falls squarely under subsection f., triggering PESLIC’s duties to defe nd and indemnify the Clubs. We are persuaded that PESLIC has the stronger position. “Advertising idea” is not defined in the 01 Policy. And “[t]he Fifth Circuit and Texas[] courts have not spok en directly to the definition of an advertising idea in [commercial general liability] policies . . . .” Laney Chiropractic & Sports Therapy, P. A. v. Nationwide Mut. Ins. Co. , 866 F.3d 254, 259 (5th Cir. 2017) (citation omitted). In Laney , this court contemplated three definitions of “advertising idea” espoused by other courts: (1) “any idea or concept related to the promotion of a product to the public,” Hyman v. Nationwide Mut. Fire Ins. Co. , 304 F.3d 1179, 1188 (11th Cir. 2002); (2) “an idea about the solicitation of business and customers,” Green Mach. Corp. v. Zurich-Am Ins. Grp. , 313 F.3d 837, 839 (3d Cir. 2002); and (3) “a concept about the manner a product is promot ed to the public,” Gemini Ins. Co. v. Andy Boyd Co. , 2006 WL 1195639, at *2 (S .D. Tex. May 3, 2006). See Laney , 866 F.3d at 259–60 (discussing cases). But in deciding the coverage question there, our Laney colleagues did not adopt one of these definitions; instead that panel considered them together and held that no “advertising idea” was implicated where the defendant ha d unlawfully used a patented product and advertised that product on its website. 866 F.3d at 260–61. To support the argument that the Models’ images constitute their “brand” and therefore comprise an “adv ertising idea,” the Clubs offer two out-of-circuit cases. See Holyoke Mut. Ins. Co. in Salem v. Vibram USA , Inc. , 106 N.E.3d 572, 579 (Mass. 2018); Cont’l W. Ins. Co. v. Pimentel & Sons Guitar Makers, Inc. , No. CIV 05-0067, 2005 WL 6332339, at *6 (D.N.M. Case: 22-20473 Document: 00516923654 Page: 13 Date Filed: 10/06/2023No. 22-20473

14 Nov. 16, 2005). The Clubs further point to Mid-Continent Casualty Co. v. Kipp Flores Architects, L.L.C. , 602 F. App’x 985 (5th Cir. 2015). In Vibram , the insured “used the name of a lege ndary barefoot marathon runner” to promote “running shoes that simulate d barefoot running.” 106 N.E.3d at 579. In Pimentel & Sons , the court found that “[a]llegations that an insured traded on a recognizable na me or mark . . . qualif[ied ] as the use of another’s advertising idea.” 2005 WL 6332339, at *6. And in Kipp Flores , an architect firm sued a homebuilder after the homebuilder built more homes than originally agreed using the firm’s designs. 602 F. App’x at 987–88. This court held that the homes themselves served as “adver tisements” for the firm’s house plans, such that there wa s coverage for an advertising injury. Id

. at 994. None of the Clubs’ cases are preced ential. But they falter because they are also inapposite. For instance, in Vibram , the family of famed marathon runner Abebe Bi kila had “intentionallycreated a connection between their family name and . . . Bikila ’s legacy and desirable qualities for purposes of using ‘Bikila,’ and everythi ng it conveyed, to attract customers to their running-related commercial ventur es.” 106 N.E.3d at 488. In other words, Bikila’s family branded his name to promote products associated with his accomplishments, and the unauthor ized use of the runner’s name thus constituted improper use of the fam ily’s advertising idea. Likewise, Pimentel & Sons involved improper use of a tr ademark—a quintessential (and protected) “advertising idea.” Bycontrast, while the Models’ curated photographs could similarly be used to promote an array of business ventures, the images themselves would not be the “advertising idea”; arranging them as part of a promotion mi ght well be. In other words, image and idea are distinct, unlike the brands at issue in Vibram or Pimentel & Sons

. Kipp Flores does not change the calculus. Though the case turned on the novel notion that constructed homes served to advertise the architect’s Case: 22-20473 Document: 00516923654 Page: 14 Date Filed: 10/06/2023No. 22-20473

15 underlying house plans, Kipp Flores did not hold that the builder had appropriated the architect’s “advertisi ng idea,” i.e., that the builder had built more homes to advertis e the architect’s plans. See 602 F. App’x at 994 (holding that infringing houses qualified as “advertisements” under the disputed insurance policies). Indeed, the concept of “adv ertising idea” was not really at play in Kipp Flores , as the dispute centered on the threshold question of whether the homes were “advertisements.” And the Kipp Flores policy was not similar enough to the 01 Policy to supply useful analogy. Instead, we find Laney to be salient. Following that case’s reasoning, the Clubs’ misappropriation of the Mode ls’ images did not amount to use of their “advertising idea” because at e ssence, the Models’ images are their products, not their advertising ideas. The Clubs took those products and used them without permission. “[ W]ithout more, taking and then advertising another’s product is differentfrom taking another’s ‘advertising idea.’” Laney , 866 F.3d at 261. PESLIC, ther efore, has no duty to defend the Clubs based on the 01 Policy’s “a dvertising idea” coverage, and the district court erred in concluding otherwise. However, the state court’s summary judgment has yet to be finally adjudicated on appeal. Reversal of th at judgment could change the facts to be analyzed in this case for the purpose of determining PESLIC’s duty to indemnify, resulting in a stronger ar gument that the Models’ images were their advertising ideas. Therefore, determination of PESLIC’s duty to indemnify under the 01 Policy should be deferred pending final resolution of the state lawsuit. Accordingly, we rema nd as to this issue with instructions for the district court to stay the matte r until it can revisit the issue, as necessary, with the benefit of final resolution of the state lawsuit. Case: 22-20473 Document: 00516923654 Page: 15 Date Filed: 10/06/2023No. 22-20473

16 IV. We now consider the 02 Policy, wh ich applies to most of the Models’ claims. Its scope of coverage turns on the policy’s Exhibition and Related Marketing Exclusion, which elimin ates coverage for Personal and Advertising Injury subsections d. th rough g. (pertaining to advertising injuries), to the extent “such activities arise out of or are part of ‘exhibitions and related marketing.’” The exclus ion leaves in force subsections a. through c. (covering personal injuries ). The basic question presented is whether this exclusion works to renderthe relevant coverage illusory, such that it should not be enforced. Th e answer largely turns on whether the policy’s Personal and Advertising Injurycoverage should be viewed as one “umbrella” of coverage or carved into subcategories, i.e., bifurcated into personal injury coverage and advertising injury cove rage. The district court took the latter approach and considered the exclusion’s effect on subsections d. through g. in isolation. Doing so, the court found that the exclusion “essentially eliminates all advertising injury coverage in a move that is not condoned by Texas law,” set it aside, and held there was coverage for the Models’ claims under the 02 Policy. PESLIC asserts that instead, the for mer approach is correct and that the district court’s holding was thus in error. PESLIC cont ends that, though the exclusion removes coverage for th e underlying lawsuit, it leaves significant coverage intact for other Pe rsonal and Advertising Injury claims. As a result, the exclusion does not make the 02 Policy’s Personal and Advertising Injury coverage illusory— but it should be enforced to bar coverage in this case. By contrast, the Models and the Clubs say the district court properly set aside the exclusion. They reason that commercial general liability policies historically separated these forms of coverage, as personal injury and Case: 22-20473 Document: 00516923654 Page: 16 Date Filed: 10/06/2023No. 22-20473

17 advertising injury are distinct types of injuries. Thus, the 02 Policy’s Personal and Advertising Injury cove rage really provides two separable subcategories of coverage. Because the exclusion curtails the policy’s advertising injury coverage, the Models and the Clubs argue that it renders that subcategory of coverage illusory an d should thus not be given effect. Despite the intuitive appe al of the Models’ and the Clubs’ reasoning, we again fall on PESLIC’s side of the ledger. First, we are not persuaded by th e argument that commercial general liability policies have traditionally separa ted advertising injury coverage from personal injury coverage , such that we should segregate them in the 02 Policy. That argument requires us to look beyond the eight corners of the complaint in the underlying lawsuit and the insurance policy at issue, something we cannot do. E.g. , GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church , 197 S.W.3d 305, 307 (Tex. 2006); see also Herrera , 751 F. App’x at 515 (“Texas’s ‘eight-corners rule’ instru cts that an insurer’s duty to defend must be determined ‘solely from term s of the policy and the pleadings of the third-party claimant. Re sort to evidence outside the four corners of these two documents is generally prohib ited.’” (citation omitted)). Second, returning to the text of the 02 Policy, the interpretive issue here is not whether there is any fact ual scenario under the exclusion that would yield coverage for an advertisin g injury—though there very likely is, as the exclusion only withdraws coverage for subsections d. through g. “[i]f such activities arise out of or are part of ‘exhibitions and related marketing.’” Rather, the question is whether Person al and Advertising Injury should be read as a single category of coverage, or split into two separate categories, as the district court approached it. If the former, then coverage under the 02 Policy is not illusory because no one disp utes that coverage remains in force for subsections a. to c., encompassi ng enumerated personal injuries. See Herrera , 751 F. App’x at 518. If the latte r, then the district court may have Case: 22-20473 Document: 00516923654 Page: 17 Date Filed: 10/06/2023No. 22-20473

18 been correct that the 02 Policy’s covera ge for advertising injuries is illusory because the Exhibition and Related Ma rketing Exclusion negates all such coverage for “exhibitions and related marketing.” But to slice and dice the policy language as the district court did in nullifying the exclusion is contrary to the policy’s text and structure, and therefore to the intent of the parties. Personal and Advertising Injury coverage is delineated in the 02 Polic y as one unit of coverage, with seven covered types of injuries listed in subs ections a. through g. “Advertising Injury” is nowhere defined separately. Considering the plain policy text, the use of “and” to link “Personal and Advertising Injury” indicates that the policy grouped these injuries under the single rubric of “Coverage B— Personal and Advertising Injury Liability.” Just as plainly, the policy’s Exhibition and Related Marketing Exclus ion then largely eliminates coverage for subsections d. through g., while leavin g subsections a. to c. in force. Such drafting legerdemain may be cumbersome or counterintuitive, but it is also commonplace in insurance contracts. Th e one before us today, the 02 Policy, “is not illusory merely because it does not provide coverage for a claim the policyholder[s] thought it would cover

. ” Balfour Beatty Const. , 968 F.3d at 515; accord Iso-Tex , 61 F.3d at 410 n.4 (“Te xas law does not recognize coverage because of [the] ‘reasonable expectation’ of the insured.”). Instead, the text of the 02 Policy is not ambiguous, and Texas law “presumes that the party knows an d accepts the contract terms.” Nat’l Prop. Holdings L.P. v. Westergren , 453 S.W.3d 419, 425 (T ex. 2015). Those terms disclose that the policy’s Personal and Advertising Injury coverage comprises a single category of cove rage, and further that th e Exhibition and Related Marketing Exclusion removes much, but byno means all, of that coverage. The 02 Policy is therefore not illusory, and the exclusion must be enforced, Case: 22-20473 Document: 00516923654 Page: 18 Date Filed: 10/06/2023No. 22-20473

19 constraining us to conclude there is no coverage, and thus no duty to defend, for the Models’ underlying claims under the 02 Policy. 6 A lack of duty to inde mnify can be inferred from a lack of duty to defend when the reasons that negate the duty to defend also negate any possibility the insurer will ever have a duty to indemnify. Liberty Mut. , 75 F.4th at 536. After the exceptions are taken into account, no facts could be developed that transform the Clubs’ use of the Models’ images into conduct covered by the 02 Policy. Therefore, PE SLIC does not have a duty to defend or indemnify the Clubs under the 02 Policy.
V. PESLIC does not have a duty to defend the Clubs under the 01 Policy. Its duty to indemnify under the 01 Polic y depends on final resolution of the state case. As for the 02 Policy, PESLIC does not have a duty to defend or indemnify under it because the 02 Polic y does not provide coverage for the claims alleged by the Models. The district court erred by concluding otherwise. So we reverse the court’s summary judgment, re nder in part, and remand the remaining issue of ind emnity under the 01 Policy with instructions for the district court to st ay disposition of that issue pending final resolution of the underlying state court lawsuit.
REVERSED , RENDERED in part, and REMANDED

.

_____________________

6 PESLIC also asks us to enforce the Knowing Violation of Rights of Another Exclusion in the 02 Policy. We need not reach that issue in view of our holding as to the other policy provisions at play. Case: 22-20473 Document: 00516923654 Page: 19 Date Filed: 10/06/2023No. 22-20473

20 James C. Ho, Circuit Judge , dissenting: The panel majority makes a reasonable Erie guess as to how Texas law might answer the questions presented in this appeal. But I would certify those questions to the Supreme Court of Texas. Accordingly, I dissent. Suppose one section of an insuranc e policy provides coverage against various enumerated risks. But anot her section of the policy eliminates coverage for those risks. In other words, the policy contains two provisions that appear to be in irreconcilable conflict with one anot her—what one provision giveth, the other taketh away.
So a court will have to decide whic h provision governs, in the event that an incident occurs that is covere d by the first section, but excluded by the other section. Do we apply the coverage provision? Or do we enforce the exclusion? It’s impossible to give effe ct to both provisions. So how is the reader supposed to know which one to apply, and which one to ignore? If there’s truly no way to reconcile the conflict, then “the proper resolution is to apply the unintelligibility ca non . . . and to deny effect to both provisions.” Greenbrier Hosp., L.L.C. v. Azar, 974 F.3d 546, 547–48 (5th Cir. 2020) (quoting Antonin Scalia & Brya n A. Garner, Reading Law: The Interpretation of Legal Texts 189 (2012)). “After all, if we cannot make a valid choice between two di ffering interpretations, we are left with the consequence that a text means nothing in particular at all.” Id. at 548 (quoting Scalia & Garner at 189 ) (cleaned up).
“But make no mistake: This is a last resort.” Id. “‘Courts rarely reach this result,’ because ‘outright in validation is admittedly an unappealing course.’” Id. (quoting Scalia & Garner at 189–90). Case: 22-20473 Document: 00516923654 Page: 20 Date Filed: 10/06/2023No. 22-20473

21 Notably, there are principles of Te xas law that may supply a way out of this morass—and thereby avoid the need to invoke Justic e Scalia’s “last resort” canon. As the panel majority notes, Texa s law protects insureds against “illusory” coverage. That is, Texas la w resists any readin g of an insurance contract that would render a co verage provision meaningless. See , e.g. , ATOFINA Petrochemicals, Inc. v. Cont’l Cas. Co. , 185 S.W.3d 440, 444 (Tex. 2005) (per curiam) (adopting the insured’s construction of an exclusion because the insurer’s interpretation “would render coverage under [an] endorsement largely illusory”). In addition, Texas law generally provid es that, if an insurance contract “is susceptible of more than one reasonable interpretation,” courts must “resolve the uncertainty by adopting th e construction that most favors the insured.” Nat’l Union Fire Ins. Co. v. Hudson Energy Co. , 811 S.W.2d 552, 555 (Tex. 1991). “[E]xceptions or limitations on liability are strictly construed against the insurer an d in favor of the insured.” Id. To my mind, there’s at least a pers uasive argument to be made that these two principles of Texas law sugges t we must side with the insured, rather than the insurer, in this case. To be sure, there’s a slight differe nce between my initial hypothetical and this case. In my hypothetical, on e section of the policy provides coverage against various enumerated risks— and another section of the policy eliminates coverage for those risks. Here, by contrast, one section of the policy provides coverage against va rious enumerated risks—but another section eliminates coverage for most, but not all , of the risks enumerated in the first section. The panel majority seems to say that this slight difference in drafting matters. The panel theorizes that the answer varies depending on “whether Case: 22-20473 Document: 00516923654 Page: 21 Date Filed: 10/06/2023No. 22-20473

22 the policy’s Personal and Advertising Injury coverage should be viewed as one ‘umbrella’ of coverage or carved into subcategories, i.e., bifurcated into personal injury coverage and advertising injury coverage.” Ante , at 15. I’m not so sure. Why would Texas law treat co verage as illusory, but only if the excluded coverage happens to be structured as an “umbrella” provision—and not if it’s drafted as a mere “subcategory” of coverage? It’s not clear to me why these principles of Texas law would turn on a drafting quirk. Rather than decide these questions ourselves, I would certify them to the Supreme Court of Texas. See , e.g. , JCB, Inc. v. The Horsburgh & Scott Co. , 941 F.3d 144, 145 (5th Cir. 2019). Case: 22-20473 Document: 00516923654 Page: 22 Date Filed: 10/06/2023