Opinion ID: 205546
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Heading: The Policy And The Applicable Exception

Text: “In answering the first Pryseski inquiry, we focus on the terms of the insurance policies themselves to determine the scope and limitations of their coverage.” Aetna Cas. & Sur. Co. 5 v. Cochran, 337 Md. 98, 104, 651 A.2d 859, 862 (1995). We construe the insurance policy according to contract principles. See Litz, 346 Md. at 224-25, 695 A.2d at 569. Thus, we must afford the contract terms their “customary, ordinary, and accepted meaning.” See Lloyd E. Mitchell, Inc. v. Maryland Cas. Co., 324 Md. 44, 56, 595 A.2d 469, 475 (1991). “Maryland does not follow the rule that insurance policies should, as a matter of course, be construed against the insurer.” Dutta v. State Farm Ins. Co., 363 Md. 540, 556, 769 A.2d 948, 957 (2001). 3 “To determine the intention of the parties to the insurance contract, which is the point of the whole analysis, we construe the instrument as a whole.” Pacific Indem. Co. v. Interstate Fire & Cas. Co., 302 Md. 383, 388, 488 A.2d 486, 488 (1985) (citations omitted). Mindful of these principles of construction, we begin by noting that MJP’s insurance policy provided that Hartford Insurance: will pay on behalf of the insured those sums that the insured becomes legally obligated to pay as damages 3 Nonetheless, “[i]f the language is ambiguous, extrinsic evidence may be consulted[,]” Collier v. MD-Individual Practice Ass’n, Inc., 327 Md. 1, 6, 607 A.2d 537, 539 (1992), and “if ambiguity is determined to remain after consideration of extrinsic evidence, ‘it will ordinarily be resolved against the party who drafted the contract,’ where no material evidentiary factual dispute exists.” Clendenin Bros., Inc. v. U.S. Fire Ins. Co., 390 Md. 449, 459-60, 889 A.2d 387, 394 (2006) (quoting Collier, 327 Md. at 6, 607 A.2d at 539). 6 because of . . . “personal and advertising injury” to which this insurance applies. [Hartford Insurance] will have the right and duty to defend the insured against any “suit” seeking those damages. However, [Hartford Insurance] 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. The policy defined “personal and advertising injury” as injury arising out of, inter alia, “[c]opying, in your ‘advertisement’ a person’s or organization’s ‘advertising idea’ or style of ‘advertisement.’” “Advertisement” is defined to include “the widespread public dissemination of information or images that has the purpose of inducing the sale of goods, products or services through . . . [t]he Internet.” “‘Advertising idea’ means any idea for an ‘advertisement[.]’” Thus, the policy obligates Hartford Insurance to defend against some suits alleging advertising injury. But the policy also states, in what the district court called the Intellectual Property Rights Exclusion, that the “insurance does not apply to . . . ‘personal and advertising injury’ . . . [a]rising out of any violation of any intellectual property rights, such as patent, trademark, trade name, trade secret, service mark or other designation of origin or authenticity.” Under Maryland law, “where the insurer properly and unambiguously uses language in its exclusion, the clear and specific terms must be enforced . . . .” Megonnell v. United Servs. Auto. Ass’n, 368 Md. 633, 7 656, 796 A.2d 758, 772 (2002) (quoting Eric Mills Holmes & Mark S. Rhodes, Holmes’s Appleman on Insurance, 2d 276-81 (Eric Mills Holmes ed., vol. 2 § 7.2, West 1996)). In Superformance Int’l, Inc. v. Hartford Cas. Ins. Co., 332 F.3d 215 (4th Cir. 2003), this Court interpreted an exclusion almost identical to that at issue in this case as relieving Hartford Insurance of the duty to defend claims of unfair competition claims based on, inter alia, trademark infringement. Id. at 222-24. 4 Other circuits have also recognized similar exclusions as relieving an insurer of the right to defend claims alleging trademark violations. See, e.g., Native Am. Arts, Inc. v. Hartford Cas. Ins. Co., 435 F.3d 729, 732-35 (7th Cir. 2006) (holding that clause excluding coverage for injury “[a]rising out of any violation of any intellectual property rights” relieved Hartford Insurance of duty to defend suit alleging mislabeling of products and trademark violations); Parameter Driven Software, Inc. v. Mass. 4 In its reply brief, MJP attempts to distinguish Superformance based on the nature of the underlying dispute. However, the nature of the dispute is not why Superformance is relevant to this case. Rather, Superformance provides useful guidance insofar as the Court interpreted the “trademark exclusion” (containing almost identical language to that constituting the “Intellectual Property Rights Exclusion” at issue here) to apply to all claims based on trademark violation. In other words, Superformance provides support for Hartford Insurance’s argument that if the unfair competition claim stems from a trademark violation, it is excluded under the policy. 8 Bay Ins. Co., 25 F.3d 332, 337 (6th Cir. 1994) (holding that because “[a]ll four counts of [the] complaint were based upon [the insured’s] use of the trademark,” policy exclusion for advertising offenses “arising out of . . . infringement of trademark” applied to relieve insurer of duty to defend). Accordingly, we answer the first Pryseski inquiry by concluding that the language of the Intellectual Property Rights Exclusion establishes that Hartford Insurance is relieved of its duty to defend under the policy when a suit brought against the insured contains only allegations arising out of trademark or trade name violations.