Opinion ID: 1734436
Heading Depth: 1
Heading Rank: 9

Heading: Advertising Endorsement

Text: Next, Markel Ford contends that in any event, Auto-Owners was obligated to defend and indemnify Markel Ford under the language of the Advertising Offense Liability endorsement, reading: [Auto-Owners] will pay on behalf of [Markel Ford] all sums which [Markel Ford] shall become legally obligated to pay as damages because of injury which occurs in the course of [Markel Ford's] advertising activities and arises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition or infringement of copyright, title or slogan committed during the policy period. Markel Ford argues that the Iowa lawsuit was brought on account of its advertising and that as such, it was a suit involving unfair competition, thus bringing it within the policy's coverage. According to the pertinent language, to come within the policy the Iowa lawsuit must have been related to Markel Ford's advertising activities and have arisen out of one of the acts enumerated in the endorsement, i.e., unfair competition. In response to an interrogatory, Markel Ford stated that the statutes which the State of Iowa alleged Markel Ford violated are designed for the protection of unfair competition of advertisers. There is no doubt that the lawsuit was brought in regard to Markel Ford's advertising activities. The issue therefore is whether the suit arose out of unfair competition. It is true that with regard to advertising, the definition of unfair competition has been somewhat expanded in the third Restatement of Unfair Competition to encompass the tenet that [o]ne who, in connection with the marketing of goods or services, makes a representation relating to the actor's own goods, services, or commercial activities that is likely to deceive or mislead prospective purchasers to the likely commercial detriment of another ... is subject to liability to the other.... Restatement (Third) of Unfair Competition § 2 at 21 (1995). However, the common-law definition of unfair competition involves palming off one's goods as the goods of another. 1 Rudolf Callmann, The Law of Unfair Competition, Trademarks and Monopolies §§ 2.01 and 2.02 (4th ed. 1995). Most courts which have considered the matter in the context of errors and omissions language such as is at issue here have adhered to the common-law definition. See, Granite State Ins. Co. v. Aamco Transmissions, Inc., 57 F.3d 316 (3d Cir.1995); Nationwide Mut. Ins. Co. v. Dynasty Solar, Inc., 753 F.Supp. 853 (N.D.Cal.1990); Globe Indem. Co. v. First American State Bank, 720 F.Supp. 853 (W.D.Wash.1989); Bank of the West v. Superior Court, 2 Cal.4th 1254, 833 P.2d 545, 10 Cal.Rptr.2d 538 (1992); Ruder & Finn Inc. v. Seaboard Sur. Co., 52 N.Y.2d 663, 422 N.E.2d 518, 439 N.Y.S.2d 858 (1981); Seaboard v. Williams' NW Chrysler, 81 Wash.2d 740, 504 P.2d 1139 (1973); A-Mark Fin. v. CIGNA Prop. & Cas.-INA, 34 Cal.App.4th 1179, 40 Cal. Rptr.2d 808 (1995); McLaughlin v. National Union Fire Ins., 23 Cal.App.4th 1132, 29 Cal.Rptr.2d 559 (1994); Graham Resources v. Lexington Ins., 625 So.2d 716 (La.App. 1993); Chatton v. National Union Fire Ins. Co., 10 Cal.App.4th 846, 13 Cal.Rptr.2d 318 (1992); Practice Management v. Old Dominion Ins., 601 So.2d 587 (Fla.App.1992); Aetna Casualty v. M & S Industries, 64 Wash.App. 916, 827 P.2d 321 (1992); Boggs v. Whitaker, Lipp & Helea, 56 Wash.App. 583, 784 P.2d 1273 (1990). Indeed, many courts have stated that the term unfair competition does not refer to conduct prohibited by unfair business practices statutes, i.e., the Iowa consumer protection statutes that Markel Ford was alleged to have violated. See, e.g., Bank of the West, supra ; Graham Resources, supra ; Boggs, supra . We agree. Neither is the phrase unfair competition ambiguous in this context. As the federal district court stated in Nationwide Mut. Ins. Co., 753 F.Supp. at 857: Reading it in context, the court detects no ambiguity in the meaning of the term unfair competition as used in [the insurer's] policies. This term appears ... alongside a host of readily identified common law torts including libel, slander, defamation and piracy. As observed in State v. Kipf, 234 Neb. 227, 234, 450 N.W.2d 397, 404 (1990), like people, words are known by the company they keep ... and thus take meaning from the words with which they are associated. The suit brought by Iowa therefore was not one for unfair competition as the term is used in the insurance contract.