T hi s di s pos i t i on i s notappr opr i a t e f orpubl i c a t i on and i s notpr e c e de nt * e xc e pta s pr ovi de d byN i nth C i r . R . 36- 3. 1 NOT F OR P UB L I CAT I ON UN I TE D STATE S C OU RT OF APPE ALS FOR T HE NI NTH CI RC UI T T O M K E L L E Y S T U D I O S , I N C ., P la in tif

f - A p p e lla n t, v. STA TE FA RM G EN ERA L I N SU RA N CE C OMP AN Y, D ef

endant- A pp el l ee . N o. 10- 55931 D. C. No . 2 : 0 9 - c v - 0 4 0 1 8 - RS W LV BK ME MOR AN DU M *

A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f o rth e C e n tr a l D is tr ic t o f C a lif o rn ia R ona l d S . W . L e w , S e ni orD i s tr i c tJ udge , P r e s i di ng A r gue d a nd S ubm i tt e d D e c e m be r8, 2011

P a s a d e n a , C a lif

o rn ia B efo re: N O O N A N , G O U L D , an dIK U T A , C i rcu i tJu d g es. B e c aus e the N ovac om pl a i nta l l e ge d tha tc onduc tc ons t i tut i ng “ a dve rt i s i ng i n j u ry” w as “ co m m i tt ed i n th e co u rse o f ad v ert i si n g [T o m K el l ey S tu d i o s’ s] g o o d s, 

# FI LED DE C 21 2011 M OLLY C. DW Y ER, CLERK U . S. C O U R T OF APPE ALS2

pr oduc t s ors e rvi c e s , ” the c om pl a i nts t a t e d c l a i m s pot e nt i a l l yc ove r e d byT om K e l l e yS tudi os ’ s ( K e l l e y ) pol i c y . C ons e que nt l y , S t a t e F a rm ha d adutyt o de f e nd K e lle ya g a in s t N o v a ’s s u it. See Mo n tro se Ch em . C o rp . v. Su p eri o r C o u rt , 861 P .2 d 1 1 5 3 , 1 1 5 7 ( C a l. 1 9 9 3 ) . T he N ov a c om pl ai ntal l eged tra dem ark and tra de dres s i nfri ng em ent , w hi ch unde rC a l i f

orni al a w c ons t i tut e the a dve rt i s i ng i nj uryof “ m i s appr opr i a t i on of a d v e rtis in g id e a s o rs ty le o f d o in g b u s in e s s ” u n d e rK e lle y ’s p o lic y . Se e D ogloo, I n c . v . N. I

n s . Co . o f N. Y. , 9 0 7 F . S u p p . 1 3 8 3 , 1 3 9 0 ( C .D . C a l. 1 9 9 5 ) ; L e bas Fas hi on I

m ps . of U SA , I nc . v . ITT

H ar t f ord I ns . G r p. , 5 9 C a l. Rp tr . 2 d3 6 , 4 6 ( C a l. C t . A pp. 1996) . F urthe r , the a dve rt i s i ng i nj ur i e s a l l e ge d i n the N ovac om pl a i nt w e r e “ c om m i tt e d i n the c our s e of a dve rt i s i ng [ K e l l e y ’ s ] goods , pr oduc t s or s e rvi c e s . ” A dl e rF e l s ’ s ( A dl e r ) a dve rt i s e m e nt s , s uc h a s i t s w e bs i t e f e a tur i ng the alleg ed ly in fr in g in g w in e lab el, co n stitu ted a c o u rs e o f a d v er ti sin g fo r K elley’s goods , pr oduc t s ors e rvi c e s be c aus e the a dve rt i s e m e nt s hi ghl i ght e d the uni que c ol l e c t i bl e va l ue of

K e l l e y ’ s phot os on A dl e r ’ s w i ne bott l e s . N othi ng i n the r e le v a n t p r o v is io n o rK e lle y ’s p o lic ya s aw h o le r e q u ir e dth a t th e a lle g e d ly i nj uri ou s “ course of advert i si ng ” be und ert aken by K el l eyi t se l f. S t at e F arm ar gu es thatthi s r equi re m enti s i nh er enti n the po l i cybecause K el l eydo es no thave an o b jectiv ely r ea so n ab le ex p ec tati o n th at th e p o li cy w o u ldco v era th ird p ar ty’s3

c o u r s e o f a d v e rtis in g K e lle y ’s p r o d u c ts . W e r e je c t th is a r g u m e n t b e c au s e S ta te F a rm h a s a d d u c e d n o e v id e n c e to s u p p o rt it. A t m o s t, th e p o lic yla n g u a g e o n th is p o in t is a m b ig u o u s b e c au s e it is “s u s c e p tib le to tw o o rm o r e r e a s o n ab le c o n s tru c tio n s .” P alm e rv . T r uc k I ns . E x c h. , 9 8 8 P .2 d5 6 8 , 5 7 3 ( C a l. 1 9 9 9 ) . W h ile S t a t e F a rm ’ s a r gum e nttha tthe pr ovi s i on c ove r s onl yK e l l e y ’ s “ c our s e of a d v e rtis in g ” is ar e a s o n ab le c o n s tru c tio n o f th e p o lic y , c o u rts m u s t r e s o lv e th is contra ctual “ un ce rt ai nt [y ] i n favor of the i nsured. ” G r ayv . Zur i c h I ns . C o. , 419 P .2 d 1 6 8 , 1 7 4

– 7 5 ( C a l. 1 9 6 6 ) . F i na l l y , K e l l e yha s s how n the r e qui s i t e c aus a l c onne c t i on be tw e e n the “co u rs e o f a d v er ti sin g ” its p ro d u cts a n dth e a ll eg ed ad v er ti sin g in ju ry : A d ler’s w i ne a dve rt i s e m e nt s hi ghl i ght i ng K e l l e y ’ s phot os c aus e d N ova ’ s tr a de m a rk a nd tr a d e d r e s s in

ju r ie s . Se e H

y undaiMotorA m . v . N

at ’ l U ni on Fi r e I

ns . C o. of P i t t s bur gh, P a. , 60 0 F . 3d 10 92 , 11 03 (9th C i r. 20 10 ). W e a f f irm th e d is tr ic t c o u rt’s ru lin g th a t S ta te F a rm d idn o t b r e a c h its i m pl i e d c ove na ntof

good f a i th a nd f

a i rde a l i ng. S t a t e F a rm ’ s i nt e rpr e t a t i on of the p o lic yw a s r e a s o n ab le , s e e Kar e n Kane I nc . v . R e l i anc e I

ns . C o. , 202 F . 3d 1180, 1190 ( 9th C i r . 2000) , a nd the e vi de nc e s how s i t“ r e l i e d on the a dvi c e of c om pe t e nt c o u n s e l” to a rr iv e a t its in te rp r e ta tio n , State Farm Mut. A uto. I ns . C o. v . Supe r i or C o u rt , 27 9 C al . Rptr. 11 6, 11 7 (C al . C t . A pp . 19 91 ).4

T h e p a rtie s s h a ll b e a rth e iro w n c o s ts o n ap p e a l. R E V E R S E D i n p art an d A F F IR M E D i n p art.