IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF OREGON 

WILLOWOOD USA, LLC, an Oregon 

limited liability company, 

Plaintiff, 

v. 

ALLIED WORLD ASSURANCE 

COMP ANY, a Delaware corporation, 

COLONY INSURANCE COMPANY, 

a Virginia corporation, and CRUM & 

FORSTER SPECIALTY INSURANCE 

COMP ANY, an Arizona corporation, 

Defendants. 

MCSHANE, Judge: 

Civ. No. 6:15-cv-01050-MC 

OPINION AND ORDER 

For the second time, this cou1t is asked to assess the duties owed by the insurers to an 

insured as applied to the litigation in the case of Repar Corp. v. Willowood USA ("Repar"). 

Initially, in Crum and Forster Spec. Ins. Co v. Willowood USA ("Crum and Forster"), the court 

was asked to dete1mine the insurers' duty to defend Willowood in Repar. Willowood, now 

having settled the Repar litigation for a sum of $453,625, brings this action seeking 

indemnification from the defendant insurers. 

Defendants move for summary judgement, arguing that the claims made in the Repar 

litigation do not implicate coverage under their respective policies with Willowood. In this 

respect, the argument mirrors my previous finding in Crum and Forster that the insurance 

OPINION AND ORDER - 1 
companies had no duty to defend Willowood. Because Willowood has failed to present further 

factual evidence showing that the settlement in Re par was based on facts independent of the 

pleadings that would give rise to coverage, the Joint Motion for Summary Judgement, ECF No. 

19, is GRANTED. 

BACKGROUND 

I. The Repar Litigation 

Because Defendants' motion relies in part on factual allegations in the Repar litigation, I 

look to the allegations brought in the complaints in that action, as discussed in Crum & Forster, 

2014 WL 5473816 at *1-2 (D. Or. Oct. 27, 2014). 

The Repar Corporation is a family-owned distributor of agricultural pesticides with three 

primary stockholders, Bhushan Mandava, his wife Leela Mandava, and their son Madhu 

Mandava. In 2006, Repar obtained a primary registration for technical tebuconazole, an active 

ingredient in certain agricultural pesticides. In 2008, Repar began distributing an agricultural 

pesticide containing tebuconazole under the trade names TEBUCON 45 DF (a dry fonnula 

fungicide) and TEBUCON 3.6F (a liquid fungicide). On August 23, 2011, Repar obtained 

trademark registration No. 4,015,686 for the TEBUCON mark for various types of pesticide 

products. 

Between 2000 and 2004, Willowood's founder, Brian Heinze, founded and operated 

Ag Value. During that time, Heinze worked with Bhushan Mandava to obtain regulatory approval for 

various Ag Value products. Heinze sold Ag Value in November 2004 and entered into a non-compete 

agreement with the buyer, United Phosphorus. 

In late 2007, Heinze contacted the Mandavas and proposed that they fotm a joint 

venture. Pursuant to a five-year non-disclosure agreement dated November 5, 2007, the Mandavas 

exchanged confidential business information such as product formulas, information relating to 

OPINION AND ORDER - 2 
markets and customers, and production details, with Heinze. The non-disclosure agreement 

prohibited Heinze from using any confidential Repar business information for any purpose other 

than the joint venture discussions with the Mandavas. At approximately the same time, Heinze met 

repeatedly with Vijay Mundhra, who operated a business named Willowood, Ltd. in Hong Kong. 

In November 2009, Heinze and Mundhra formed Willowood USA, a corporation in the 

business of distributing agricultural pesticides. Despite partnering with Mundln·a in lieu of Repar, 

Heinze proposed that Willowood and Repar jointly manufacture TEBUCON 3.6F and TEBUCON 

45 DF. Repar agreed, on condition that Willowood purchase the technical tebuconazole for its 

TEBUCON products from Repar. Heinze signed a non-disclosure agreement dated December 9, 

2009. 

In 2011, Willowood stopped purchasing its technical tebuconazole from Repar, but continued 

to use the TEBUCON mark. 

Repar then filed an action before this Court seeking damages and injunctive relief for breach 

of contract, breach of implied contract, quasi-contract/uajust enrichment, and violations of the 

Lanham Act, 15 U.S.C. §§ 1051-127. 

II. Crum & Forster and the Applicability of the Policies to the Repar Claims 

In Crum & Forster, this Court determined that Repar's first and second amended 

complaints did not invoke a duty to defend for damages covered as "personal and advertising" 

injuries. Willowood argued that these advertising injuries are founded in provisions of the 

policies that cover injury related to "disparagement" ( subprovision d) and "use of another's 

advertising idea in your adve1iisement" (subprovision f). 

In evaluating the policy provision covering disparagement injury, the Court assessed 

Repar's underlying claims of trade libel, defamation, and quasi-contract unjust enrichment. The 

Cami detennined that the allegations in both complaints did not state a claim for disparagement 

OPINION AND ORDER- 3 
and, additionally, that the gravamen of the allegations sounded in trademark and were therefore 

excluded from coverage for "personal and adve1iising" injuries. 

Turning to the policy provisions that cover injury for "use of another's adve1iising idea in 

your advertisement," the Couii determined that some ofRepar's claims plausibly alleged injury 

originating, at least in pati, in Willowood' s use of Repar' s mark ("the TEBUCON mm·k") in 

advertisements. However, in declining to extend a duty to defend, the Comi found that "a causal 

connection is necessary to confine the scope of coverage to the reasonable expectation of the 

pmiies." As I explained: 

[T]he gravamen of the underlying action is premised on 

Willowood's use of the TEBUCON mark. Whether that use 

constitutes a violation of contract or trademark, the relevant 

resulting harm is caused by the misuse of the mark, not by the 

adve1iising itself. 

Crum & Forster, 2014 WL 5473816 at *11. 

The Comi then assessed each plausible claim and determined each lacked the necessary 

causal connection (i.e., each injury could have occurred independent and irrespective of any 

hypothetical adve1iising activities). 

The Co mi also assessed the applicability of the Breach of Contract Exclusion and the 

Intellectual Prope1iy Exclusion within the underlying policy, and held that the Breach of 

Contract Exclusion would also apply to Repar's claim for breach of implied contract, had such a 

claim been covered as a "personal and advertising" injury. The Comi additionally held that the 

Intellectual Property Exclusion applied to Repar's claims for Federal Trademark Infringement, 

Counterfeiting and Unfair Competition, and provided a plain meaning definition of trademark 

that captured Repar's underlying allegations. 

OPINION AND ORDER - 4 
STANDARD OF REVIEW 

This Court must grant summary judgment ifthere is no genuine issue of material fact and 

the moving patty is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). An issue is 

"genuine" if a reasonable jury could return a verdict in favor of the non-moving party. Rivera v. 

Phillip Morris, Inc., 395 F.3d 1142, 1146 (9th Cir. 2005) (citing Anderson v. Liberty Lobby, Inc., 

477 U.S. 242, 248 (1986)). A fact is "material" ifit could affect the outcome of the case. Id. The 

court reviews evidence and draws inferences in the light most favorable to the non-moving patty. 

lvf.iller v. Glenn Miller Prods., Inc., 454 F.3d 975, 988 (9th Cir. 2006) (quoting Hunt v. 

Cromartie, 526 U.S. 541, 552 (1999)). When the moving party has met its burden, the nonmoving patty must present "specific facts showing that there is a genuine issue for trial." 

.Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (quoting Fed. 

R. Civ. P. 56(e)) (emphasis in original). 

DISCUSSION 

As explained above, Willowood files this claim alleging the Insurers breached their duty 

to indemnify after losing the duty to defend action in Crum & Forster and subsequently settling 

the Repar litigation. Willowood's complaint asserts: "The damages sought in the Underlying 

Action were for 'personal and advertising injury' as defined in the [Insurers'] policies .... "Pl. 's 

Comp!., 8, ECF No. 1-1. This is the satne argument that Willowood put forth in Crum & Forster. 

Each insurer provides a duty to indemnify for "personal and advertising injuries" in their 

respective policies with Willowood, as expressed in the following provisions: 

* * * 

2. Insuring Agreement B - Personal and Adve1tising Irtjury 

a. We will pay, in excess of the Deductible shown in the Declarations, 

those sums that the insured becomes legally obligated to pay as "damages" 

because of "personal and adve1tising injury" to which this insurance 

applies .... 

OPINION AND ORDER - 5 
12, ECF No. 24-1 (Colony and Crnm & Forster Policies). 

* * * 

COVERAGE B - PERSONAL AND ADVERTISING INJURY LIABILITY 

1. Insuring Agreement 

a. We will pay those sums that the insured becomes legally obligated to 

pay as damages because of "personal and adve1iising injury" to which the 

insurance applies. We will have the right and duty to defend the insured 

against any "suit" seeking those damages .... 

10, ECF No. 24-3 (Allied Policy). 

I. The Duty to Indemnify 

The duty to indemnify is distinct from the duty to defend, and it requires a separate 

factual analysis. See Bresee Homes, Inc. Farmers Ins. Exchange, 353 Or. 112, 114 (2012); see 

also Ledford v. Gutoski, 319 Or. 397, 403 (1994) ("even when an insurer does not have a duty to 

defend based on the allegations in the initial complaint, the facts proved at trial on which liability 

is established may give rise to a duty to indemnify."); American States Ins. Co. v. Dastar Corp., 

318 F.3d 881 (9th Cir. 2003) ("Liability for indemnity, unlike liability under the duty to defend, 

derives from factual detenninations separate from the allegations in the complaint. As a result, 

[an insurer] could still have a duty to indemnify even if it did not have a duty to defend."). 

A. The Duty to Indemnify Following a Decision on the Duty to Defend 

The Ninth Circuit has upheld a grant of summary judgment against a duty to defend 

claim and an accompanying sua sponte dismissal of a duty to indemnify claim. Harris Thermal 

Transfer Products, Inc. v. James River Ins. Co., 2010 WL 2942611 (D. Or. July 19, 2010) 

(Papak, J.), ajj"d, 457 Fed. Appx. 660 (9th Cir. Nov. 2, 2011). In his duty to defend analysis in 

Harris Thermal, Judge Papak performed an excellent analysis and found three applicable 

coverage exclusions. The Ninth Circuit, in a memorandum opinion, affomed Judge Papak's 

holding, explaining: 

OPINION AND ORDER- 6 
. . . we affirm the district court's sua sponte dismissal of the indemnity 

claim because the underlying action plainly is not covered by the policy in 

light of these two coverage exclusions. As we have been informed that the 

underlying action has settled, there is no further information to be gleaned 

that could give rise to a duty to indemnify under this policy. See Ledford v. 

Gutoski, 319 Or. 397, 877 P.2d 80, 84 (1994) (noting that, where an 

insurer does not have a duty to defend based on the facts alleged in the 

complaint, it may still be possible to demonstrate a duty to indemnify 

based on the facts proven at trial); see also Weber v. Chicago Title Ins. Co. 

of Oregon, 169 Or. App. 24, 7 P.3d 714, 716 (2000) (noting that an 

insurer's duty to defend generally is broader than its duty to indenmify). 

457 Fed. Appx. 660, 662 (9th Cir. Nov. 2, 2011 ); see also Spada v. Unigard Ins. Co., 80 Fed. 

Appx. 27 (9th Cir. 2003), citing STK Enters., Inc. v. Crusader Ins. Co., 171 Or. App. 9 (2000)) 

(affirming award of summary judgment on duty to defend and denial of summary judgment on 

duty to indenmify, and noting that "[s]ome issues of fact remain because the duty to indenmify, 

unlike the duty to defend, arises from facts proved at trial."). 

In Mutual of Enumclaw Ins. Co. v. Jonas, 35 Fed. Appx. 556 (9th Cir. 2002), the Ninth 

Circuit reversed a summary judgment award granted by Judge Hogan in an insured's favor as to 

the duty to defend and the duty to indemnify. The Ninth Circuit concluded that the underlying 

suit did not fall within the contract's coverage, and was otherwise excluded. The Coutt fmther 

explained: "[n]o duty to indemnify exists if no claim in a complaint falls within a policy's 

coverage." Id at 558. I find this holding relevant to this case. I have already ruled in Crum & 

Forster that Willowood did not establish coverage under the po1tions of the underlying policy 

regarding advertising activities, I now analyze the duty to indenmify in the context of such a 

ruling and based on the separate standard for that duty. 

B. The Duty to Indemnify in Light of an Underlying Settlement 

When an insured enters into a settlement, an insurer's duty to indenmify is based on the 

facts that formed the basis for that settlement. Bresee Homes, Inc. v. Farmers Ins. Exchange, 353 

OPINION AND ORDER- 7 
Or. 112, 126 (2012); Chartis Spec. Ins. Co. v. Am. Contractors Ins. Co., 2014 WL 3943722 (D. 

Or. Aug. 12, 2014) (King, J.) ("we must look to the allegations in the underlying lawsuit and any 

evidence developed in defending or supporting those allegations."). 

Willowood argues that the relevant facts f01ming the basis for the settlement in Repar 

were that Willowood "knew of facts showing that Repar would at trial attempt to establish 

causation between the use of the advertising idea [the TEBUCON mark] and Repar's damages." 

Pl.'s Response, 7, ECF No. 38. This would apparently solidify Repar's breach of implied 

contract claim, according to Willowood' s interpretation of the opinion of this Court. Id. 

Willowood's arguments and position misconstrue this Court's initial holding on the causation 

element of the breach of implied contract claim, improperly conflate the use of the TEBUCON 

trademark-an "advettising idea"-with "advertising activities," and ignore the applicable 

aspects of this Court's analysis in Crum & Forster, at *11. 

This Comt, on October 16, 2015, conve1ted the Insurers' motion to dismiss into a motion 

for summary judgment in order to allow Willowood to proffer any factual evidence suggesting 

that the settlement in Repar was based on facts related to covered damages. In other words, 

Willowood was asked to show that settlement was based not on the uncovered claims found in 

the Re par complaint, but rather upon extrinsic facts that could potentially trigger the Insurers' 

duty to indemnify. In response, Willowood offers declarations from Christopher Kent, 

Willowood's retained legal counsel, ECF No. 40, and Brian Heinze, Willowood's CEO and 

President, ECF No. 39. 

Mr. Kent asserts that Willowood would not have settled Repar but for a "significant risk" 

arising from the breach of implied contract claim which Willowood maintains is covered under 

the Insurers' policies. Kent Deel., if 5, ECF No. 40. This risk, according to Mr. Heinze, was due 

to a perceived likelihood that a jury would find against Willowood based on its use of the 

OPINION AND ORDER - 8 
TEBUCON mark. Heinze Deel.,~ 3, ECF No. 39. Willowood also provides a report prepared by 

an economic expe1i, Ken Fruits, Ph.D., that speaks to Willowood's potential damages exposure. 

Of note, Dr. Fruits believed a jury could find nearly $900,000 in damages resulting from "Lost 

profits from tebuconazole product sales." Expert Rep. of Eric Fruits, ECF No. 40-2. In his 

declaration, Mr. Kent implies that this assessment relates to covered advertising activities, 

although Dr. Fruits' report makes no mention of adve1iisements in reaching his conclusion. 

Compare id at 2, 5, with Kent Deel.,~ 13, ECF No. 40. While the proffered declarations shed 

light on Willowood's litigation strategy in settling Repar, I find that the declarations are 

insufficient to constitute evidence creating a question of fact as to whether the claims in Repar 

were covered under the policies. 

The declarations regarding Willowood's strategy for settlement in the Repar litigation do 

not create coverage under the Policies' provisions for advertising injury and they do not defeat 

the Policies' breach of contract exclusion. I find that Willowood has failed to raise a question of 

material fact as to whether the underlying settlement was for covered damages. 

CONCLUSION 

Based on the foregoing, Defendants' Joint Motion for Summary Judgment, ECF No. 19, 

is GRANTED. A judgment shall be entered in this case. 

IT IS SO ORDERED. 

Dated this ·zL/ day of February, 2016. 

OPINION AND ORDER - 9 

'--~-- Michael McShane 

United States District Judge