Source: https://scocal.stanford.edu/opinion/hartford-casualty-ins-v-swift-distribution-inc-34322
Timestamp: 2019-04-21 18:35:16+00:00

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Home > Opinions > Hartford Casualty Ins. v. Swift Distribution, Inc.
Citation Hartford Cas. Ins. Co. v. Swift Distribution, Inc., No. S207172, 2014 Cal. LEXIS 3765, 2014 BL 163632 (Cal. June 12, 2014).
Hartford Casualty Ins. v. Swift Distribution, Inc.
insured against a claim alleging disparagement.
judgment of the Court of Appeal.
transport cart called the Multi-Cart, which he had sold commercially since 1997.
advertisements, which did not name the Multi-Cart or any other product.
disparagement in the absence of a specific statement about a competitor‘s goods.
advertising injuries arising out of violations of intellectual property rights.
judgment that it had no duty to defend or indemnify Ultimate in the Dahl action.
Russe was distinguishable on its facts.
decided the issue before us.
core of the standard policy.‖ (Certain Underwriters at Lloyd’s of London v.
comparison between the allegations of the complaint and the terms of the policy.
extinguished until the insurer negates all facts suggesting potential coverage.‖ (Id.
for coverage, while the insurer must establish the absence of any such potential.
context by reference to the common law. In Nichols v. Great American Ins.
Cir. 2002) 311 F.3d 979, 986; Microtec Research, Inc. v. Nationwide Mut. Ins. Co.
(9th Cir. 1994) 40 F.3d 968, 972; Aetna Casualty and Surety Co., Inc. v.
Centennial Ins. Co. (9th Cir. 1988) 838 F.2d 346, 351 (Aetna); Burgett, Inc. v.
1244, 1252 (E.piphany); Lindsey v. Admiral Ins. Co. (N.D.Cal. 1992) 804 F.Supp.
mention or by clear implication.
derogate Blatty‘s novel by suggesting it was not a best seller.
prepaid telephone cards that did not provide the number of minutes advertised.
to requirements rooted in the First Amendment to the United States Constitution.
unfair competition. (See, e.g., 35 U.S.C. § 271; 15 U.S.C. §§ 1114, 1125(a); Bus.
causing that plaintiff special damages.
a competitor‘s product or business by clear implication.
by Hartford show a potential claim for express or implied disparagement?
of the Multi-Cart. We address each theory in turn.
the Multi-Cart, that fact does not derogate or malign the Multi-Cart in any way.
disparagement based on consumer confusion over the product name and design.
determining whether the Dahl action set forth a possible claim of disparagement.
the judgment of the Court of Appeal.
Justice pursuant to article VI, section 6 of the California Constitution.
Name of Opinion Hartford Casualty Insurance Company v. Swift Distribution, Inc.
Amicus Curiae on behalf of Defendants and Appellants.
Curiae on behalf of Defendants and Appellants.
Charlotte Russe Holding, Inc., as Amicus Curiae on behalf of Defendants and Appellants.
Gauntlett & Associates and David A. Gauntlett as Amici Curiae on behalf of Defendants and Appellants.
Steven W. Murray as Amicus Curiae on behalf of Defendants and Appellants.
Feld and Rex S. Heinke for Plaintiff and Respondent.
Company as Amicus Curiae on behalf of Plaintiff and Respondent.
Wiley Rein, Laura A. Foggan, Edward R. Brown; Sinnott, Puebla, Campagne & Curet and Randolph P.
Liability Insurance Company as Amicus Curiae on behalf of Plaintiff and Respondent.
Curiae on behalf of Plaintiff and Respondent.
Petition for review after the Court of Appeal affirmed the summary judgment in a civil action. This case presents the following issue: Did the allegations of the complaint constitute disparagement for purposes of insurance coverage or the duty to defend under the "advertising injury" provision of defendant's insurance policy?
Resp Ans.pdf (1043039 bytes) - Resp.'s Ans.
App resp to ans.pdf (1046648 bytes) - App.'s Response to Ans.
Declaratory judgment: a court’s judgment setting out the rights of the parties within particular factual circumstances, but not necessarily awarding damages, injunction or other relief.
Defendant Swift Distribution, Inc., doing business as Ultimate Support Systems, held a commercial general liability insurance policy issued by plaintiff Hartford Casualty Insurance Company. Ultimate marketed a product called the Ulti-Cart for use by musicians to transport their equipment. Ultimate was sued by Gary-Michael Dahl, the manufacturer of a similar product called the Multi-Cart. Dahl's suit alleged patent and trademark infringement, false designation of origin, and damage to business reputation and goodwill. When Ultimate delivered the suit to Hartford for defense, Hartford denied any duty to defend or indemnify. The policy issued by Hartford covered suits seeking damages for disparagement of goods, products or services. Hartford's counsel informed Ultimate that since the advertisements in question did not specifically mention Dahl's goods, they could not be considered disparagement within the definition of the policy. Additionally, since the policy's coverage excluded suits over intellectual property violations, Hartford denied any duty to defend or indemnify Ultimate against Dahl's suit.
"Hartford filed for a declaratory judgment that it had no duty to defend or indemnify Ultimate in the Dahl action." The trial court granted summary judgment to Hartford, and the Court of Appeal affirmed. Separately, the Dahl action against Ultimate settled.
Whether a suit over advertisements touting the superlative characteristics of the policyholder's product, but not specifically referring to the competitor's similar product, should trigger a duty to defend or indemnify under a liability insurance policy covering disparagement.
The terms of the policy do not create a duty to defend or indemnify in this suit, because the Dahl action does not state a claim for disparagement. Neither the similarity of the policyholder's product to the plaintiff's product, nor the superlative advertising statements about the policyholder's product, are sufficiently specific and derogatory to be considered disparagement as described in the policy.
The case surveys the law concerning both an insurer’s duty to defend and the tort of disparagement. "The duty to defend is broader than the duty to indemnify." Horace Mann Ins. v. Barbara B., 4 Cal. 4th 1076, 1081 (Cal. 1993), available at http://law.justia.com/cases/california/cal4th/4/1076.html. Since the duty to defend must be determined when a case begins, and before it is definitively known whether liability will fall within the insurance policy's coverage, an insurer is required to defend against any suit where potential exists that the liability will be covered. Gray v. Zurich Ins. Co., 65 Cal. 2d 263, 277-278 (Cal. 1966), available at https://scocal.stanford.edu/opinion/gray-v-zurich-insurance-co-27369.
The court notably disapproved the recent case Travelers Property Casualty Co. v. Charlotte Russe Holding, Inc., 207 Cal. App. 4th 969 (Cal. Ct. App. 2012), available at http://scholar.google.com/scholar_case?case=16176895172449178752&hl=en&a.... This case had held that a claim of disparagement was adequately pled by alleging that the defendant sold the plaintiff's premium goods at discounted prices. The court disapproved this reasoning, because discounted prices could plausibly communicate a variety of business motivations besides derogation of the plaintiff's goods.
After setting out the law, the court applied it to the facts of Hartford's dispute with Ultimate. Ultimate's advertisements depicting the Ulti-Cart showed great similarity to Dahl's Multi-Cart. Although this fact may give rise to liability for patent or trademark infringement, the court held that it did not give rise to liablity for disparagement. The advertisements also touted the superiority of the Ulti-Cart in its market. The court held that the resulting implication of the Multi-Cart's inferiority was not adequately specific to give rise to liability for disparagement. Since neither of the theories advanced by Ultimate showed that the company would be liable for disparagement as covered by their Hartford insurance policy, the court held that Hartford had no duty to defend.
SCOCAL, Hartford Casualty Ins. v. Swift Distribution, Inc. , Hartford Cas. Ins. Co. v. Swift Distribution, Inc., No. S207172, 2014 Cal. LEXIS 3765, 2014 BL 163632 (Cal. June 12, 2014). available at: (https://scocal.stanford.edu/opinion/hartford-casualty-ins-v-swift-distribution-inc-34322) (last visited Sunday April 21, 2019).

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