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 Pinder; Paola Canas; Sandra 

Valencia; Tiffany Toth; Cielo Jean Gibson; Maysa Qui; 

Elizabeth Turner; Emily Sears; 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 

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Before Elrod, Ho, and Wilson, Circuit Judges.

Cory T. Wilson, Circuit Judge:

 Because no member of the panel or judge 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opinion, 78 F.4th 815 (5th Cir. 2023), is WITHDRAWN, and the following 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 insureds coverage. But the district court 

improperly construed the policies to reach that conclusion, so we reverse, 

render in part, and remand 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 contract dispute stems from a much 

more salacious lawsuit filed in Texas in 2017. Sixteen professional models 

(the Models) sued three Texas strip clubs known as Treasures, Centerfolds, 

and Splendor (the Clubs) following the Clubs’ use of the Models’ likeness 

for advertising campaigns without the Models’ consent.1

 The Clubs’ 

advertising material was manipulated to give the impression that the Models 

endorsed the Clubs or worked as strippers in the Clubs. The Models “were 

_____________________ 

1

 The Models asserted claims for invasion of privacy (misappropriation), 

respondeat superior negligence, and theft. The Models later dropped their theft claim. 

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depicted in various sexually-charged social media and Internet 

posts . . . encouraging patrons to visit [t]he Clubs.” According to the 

Models, the Clubs participated in the selection, creation, and dissemination 

of these advertisements. 

 The state trial court granted summary 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 judgment action. PESLIC issued two 

commercial liability insurance policies to the Clubs covering the time period 

relevant to the Models’ claims: Number 1RA3GL0000179–01, with a policy 

period of November 9, 2015 to November 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 identical coverage provisions but contain slightly 

different exclusions. Generally, they include three areas of coverage: 

“Coverage A—Bodily Injury and Property Damage Liability,” “Coverage 

B—Personal and Advertising Injury Liability,” and “Coverage C—Medical 

Payments.” At issue under both policies is Coverage B, which in relevant 

part states: 

_____________________ 

2

 One plaintiff alleged a claim in the underlying lawsuit for conduct that occurred 

during the 01 Policy period, and the others brought claims for conduct during the 02 Policy 

period. 

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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 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 “personal and 

advertising injury” to which 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.” 

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The policies contain somewhat divergent 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 rights or laws: copyright, 

patent, trade dress, trade 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 infringement 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 argued 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 surviving relevant category of 

coverage. 

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 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 “personal 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, 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”; 

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 shows, sporting events, music, 

promotional events, celebrity image 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 individuals in shows, theatrical 

productions, concerts, sporting events, or any other form of 

exhibition. 

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(c) Merchandising, advertising or publicity programs or 

material for the operations and material described in (a) or (b) 

above. 

The parties dispute whether this exclusion 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 district 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 that “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 parties 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 district court found that “the Models’ 

pleadings in the underlying lawsuit sufficiently allege[d] that that the Clubs 

used [the] Models’ images (i.e., their ‘advertising ideas’) and placed them in 

their own ‘advertisements.’” Consequently, the district court held that 

PESLIC had a duty to defend and indemnify the Clubs under the 01 Policy. 

As to the 02 Policy, the parties disputed whether that policy’s 

Exhibitions and Related Marketing Exclusion rendered illusory the Personal 

and Advertising Injury coverage. The district court agreed with the Models 

and the Clubs that it did and “decline[d] to give effect to PESLIC’s 

‘Exhibition and Related Marketing’ exclusion.” The court thus held that 

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PESLIC had a duty to defend the Clubs. The district court also held that 

PESLIC had a duty to indemnify the 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 movant 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 policies 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 intentions 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 are 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 give 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 insurance policy is 

ambiguous, and the parties offer conflicting reasonable interpretations of the 

policy, Texas law favors adopting the interpretation in favor of the insured.” 

Terry Black’s Barbecue, 22 F.4th at 455 (citing RSUI Indem. Co. v. The Lynd 

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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 claim 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 citation 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 insurer 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 consider 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 disagreement centers on what coverage 

survives the exclusion and whether the exclusion renders illusory the policy’s 

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Personal and Advertising Injury coverage. Texas courts disfavor construing 

insurance contracts such that coverage 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 coverage 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 courts 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 coverage 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 Cir. 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 subsection 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 Advertising 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 the 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 court refused to enforce the exclusion because it 

rendered coverage illusory for advertising injuries under Florida law. We agree with 

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 The Models’ principal contentions regarding the 01 Policy only 

buttress this conclusion. They agree that, whatever the scope of the 

exclusion, subsection f. remains in force—indeed, they assert subsection f. 

covers their claims, as the district court held. They further contend that 

subsection e., covering violations of a person’s “right of privacy,” remains 

viable and applies in this case. Only if these avenues fail do they alternatively 

contend that the exclusion renders coverage 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 injury 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 wording of their own claim belies the idea 

that their injury was distinct from the 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 analyze the Field of Entertainment Exclusion or 

subsection e., this court need not do so. However, 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 necessary to consider the interplay between the 

exclusion and these categories of coverage. 

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Beyond the semantics, the Models provide no case supporting the idea 

that an “invasion of privacy” and a violation 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 contrary, they comprise the same tort in 

Texas, and the exclusion applies to preclude 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 provide coverage for other claims[.]” 

Herrera, 751 F. App’x at 518. Coverage under the policy is thus not illusory. 

Subsection e. of the policy’s Personal and Advertising Injury coverage does 

not survive the exclusion, but the parties agree that coverage remains for 

injuries encompassed by subsection f. The lingering question is whether that 

subsection applies to the claims 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 that the Clubs’ unlawful use of the Models’ 

images constituted use of their “advertising idea,” bringing the Models’ 

underlying claims within the ambit of subsection f. PESLIC contends that 

_____________________ 

5

 In 1994, the Supreme Court of Texas receded 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. 

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“[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 ideas” 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 images falls squarely under subsection 

f., triggering PESLIC’s duties to defend 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 spoken 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 promoted 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 had 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 “advertising 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. 

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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 legendary barefoot marathon runner” to 

promote “running shoes that simulated barefoot running.” 106 N.E.3d at 

579. In Pimentel & Sons, the court found that “[a]llegations that an insured 

traded on a recognizable name 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 “advertisements” for the 

firm’s house plans, such that there was coverage for an advertising injury. Id. 

at 994. 

None of the Clubs’ cases are precedential. But they falter because 

they are also inapposite. For instance, in Vibram, the family of famed 

marathon runner Abebe Bikila had “intentionally created a connection 

between their family name and . . . Bikila’s legacy and desirable qualities for 

purposes of using ‘Bikila,’ and everything it conveyed, to attract customers 

to their running-related commercial ventures.” 106 N.E.3d at 488. In other 

words, Bikila’s family branded his name to promote products associated with 

his accomplishments, and the unauthorized use of the runner’s name thus 

constituted improper use of the family’s advertising idea. Likewise, Pimentel 

& Sons involved improper use of a trademark—a quintessential (and 

protected) “advertising idea.” By contrast, 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 might 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 

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underlying house plans, Kipp Flores did not hold that the builder had 

appropriated the architect’s “advertising idea,” i.e., that the builder had 

built more homes to advertise 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 “advertising 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 Models’ images did not amount to use of 

their “advertising idea” because at essence, 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 different from taking another’s ‘advertising 

idea.’” Laney, 866 F.3d at 261. PESLIC, therefore, has no duty to defend 

the Clubs based on the 01 Policy’s “advertising 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 that 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 argument 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 remand as to this issue with instructions 

for the district court to stay the matter until it can revisit the issue, as 

necessary, with the benefit of final resolution of the state lawsuit. 

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IV. 

We now consider the 02 Policy, which applies to most of the Models’ 

claims. Its scope of coverage turns on the policy’s Exhibition and Related 

Marketing Exclusion, which eliminates coverage for Personal and 

Advertising Injury subsections d. through g. (pertaining to advertising 

injuries), to the extent “such activities arise out of or are part of ‘exhibitions 

and related marketing.’” The exclusion leaves in force subsections a. 

through c. (covering personal injuries). The basic question presented is 

whether this exclusion works to render the relevant coverage illusory, such 

that it should not be enforced. The answer largely turns on whether 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. 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 former approach is correct and that 

the district court’s holding was thus in error. PESLIC contends that, though 

the exclusion removes coverage for the underlying lawsuit, it leaves 

significant coverage intact for other Personal 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 

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advertising injury are distinct types of injuries. Thus, the 02 Policy’s 

Personal and Advertising Injury coverage 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 and should thus not be given effect. 

Despite the intuitive appeal of the Models’ and the Clubs’ reasoning, we 

again fall on PESLIC’s side of the ledger. 

First, we are not persuaded by the argument that commercial general 

liability policies have traditionally separated 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’ instructs that an insurer’s duty to defend 

must be determined ‘solely from terms of the policy and the pleadings of the 

third-party claimant. Resort to evidence outside the four corners of these 

two documents is generally prohibited.’” (citation omitted)). 

Second, returning to the text of the 02 Policy, the interpretive issue 

here is not whether there is any factual scenario under the exclusion that 

would yield coverage for an advertising 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 Personal 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 disputes that coverage remains in force 

for subsections a. to c., encompassing enumerated personal injuries. See 

Herrera, 751 F. App’x at 518. If the latter, then the district court may have 

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been correct that the 02 Policy’s coverage for advertising injuries is illusory 

because the Exhibition and Related Marketing 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 Policy as one unit of coverage, with seven 

covered types of injuries listed in subsections 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 Exclusion then largely eliminates coverage 

for subsections d. through g., while leaving subsections a. to c. in force. Such 

drafting legerdemain may be cumbersome or counterintuitive, but it is also 

commonplace in insurance contracts. The 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 (“Texas 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 and accepts the contract terms.” Nat’l Prop. 

Holdings L.P. v. Westergren, 453 S.W.3d 419, 425 (Tex. 2015). Those terms 

disclose that the policy’s Personal and Advertising Injury coverage comprises 

a single category of coverage, and further that the Exhibition and Related 

Marketing Exclusion removes much, but by no means all, of that coverage. 

The 02 Policy is therefore not illusory, and the exclusion must be enforced, 

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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 indemnify 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, PESLIC 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 Policy 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 Policy 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, render in part, and 

remand the remaining issue of indemnity under the 01 Policy with 

instructions for the district court to stay 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. 

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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 insurance policy provides coverage against 

various enumerated risks. But another 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 another—what one provision giveth, the 

other taketh away. 

So a court will have to decide which provision governs, in the event 

that an incident occurs that is covered 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 effect 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 canon . . . 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 & Bryan A. Garner, Reading 

Law: The Interpretation of Legal Texts 189 (2012)). “After 

all, if we cannot make a valid choice between two differing 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 invalidation is admittedly an unappealing 

course.’” Id. (quoting Scalia & Garner at 189–90). 

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Notably, there are principles of Texas law that may supply a way out 

of this morass—and thereby avoid the need to invoke Justice Scalia’s “last 

resort” canon. 

As the panel majority notes, Texas law protects insureds against 

“illusory” coverage. That is, Texas law resists any reading of an insurance 

contract that would render a coverage 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 provides that, if an insurance contract 

“is susceptible of more than one reasonable interpretation,” courts must 

“resolve the uncertainty by adopting the 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 and in favor of the insured.” Id.

To my mind, there’s at least a persuasive argument to be made that 

these two principles of Texas law suggest we must side with the insured, 

rather than the insurer, in this case. 

To be sure, there’s a slight difference between my initial hypothetical 

and this case. In my hypothetical, one 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 various 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 

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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 coverage 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). 

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