Court Opinion

ID: 30351
Source: CourtListenerOpinion
Date Created: 2010-04-25 09:53:21+00
Date Added: 2024-06-11T14:57:15.451855
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                             FOR THE FIFTH CIRCUIT

                           __________________________

                                  No. 02-30783
                                Summary Calendar
                           __________________________

SALCO CONSTRUCTION INC., A Louisiana Corporation,

                                                                              Plaintiff,

v.

ELVIN CHESTER SIMPSON, JR.; ET AL,

                                                                           Defendants,

B. J. COUVILLION,

                                             Defendant-Third Party Plaintiff-Appellant,

and

BRENT J. COUVILLION,

                                                                 Defendant-Appellant,

HANOVER INSURANCE COMPANY

                                                     Third Party Defendant-Appellees.

             ___________________________________________________

                     Appeal from the United States District Court
                        For the Middle District of Louisiana
                                (No. 00-CV-707-D)
             ___________________________________________________
                                 February 27, 2003

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Before HIGGINBOTHAM , SMITH, and CLEMENT, Circuit Judges.

PER CURIAM:*

        Salco Construction Inc. (“Salco”) appeals the district court’s grant of summary judgment in

favor of Hanover American Insurance Company (“Hanover”) and dismissal of Salco’s claims with

prejudice. Salco argues that its bid solicitations to potential subcontractors qualifies as advertising

under state law, that copyright infringement in the bid solicitations is covered by its insurance policy;

and thus that Hanover has a duty to defend Salco in this copyright suit. Because Salco’s bid

solicitations are not advertising of “goods, products or services,” the contract does not place a duty

to defend on the insurer. We affirm.

I.      BACKGROUND

        This insurance coverage dispute arises in the context of the constructi on of a commercial

building. Salco Construction Inc. (“Salco”) alleges Elvin Chester Simpson, Jr., or Simpson Inc.

(collectively “Simpson”) asked Salco to design and construct a building at 1334 Florida Boulevard,

to which Salco agreed. According to Salco’s complaint, Salco delivered copies of building plans

(“the Salco plans”) at various stages of completion, culminating in the delivery of 22 sheets of

drawings on November 19, 1999. Salco registered copyrights for the architectural works embodied

in the plans on February 22 and April 10, 2000, and registered copyrights in the technical drawings

embodied in the plans on September 13, 2000.

        In a deposition, Brent J. Couvillion, of B. J. Couvillion, Inc. (collectively “Couvillion”),

testified Simpson provided the Salco plans to Couvillion in the middle of November, 1999. Simpson

        *
           Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.

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eventually hired Couvillion to design and build the building at 1334 Florida Boulevard.

       Salco filed t his suit, alleging Couvillion built a substantial copy, or derivative work, of the

building depicted in the Salco plans. Couvillion filed a third-party claim against its insurer, Hanover

American Insurance Company (“Hanover”), asserting that Hanover owes Couvillion a duty to defend

and to indemnify Couvillion. Hanover moved for summary judgment, denying it had a duty to defend

Couvillion and denying coverage. Couvillion filed a cross-motion for summary judgment.

       The Hanover policy provides in part:

       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 injury’ or ‘advertising injury’ to
                       which this insurance applies. We will have the right and duty to
                       defend the insured against any ‘suit’ seeking those damages. We may
                       at our discretion investigate any ‘occurrence’ or offense and settle any
                       claim or ‘suit’ that may result . . .

               b.      This insurance applies to:

                       (1)     ‘Person injury’ caused by an offense arising out of your
                               business, excluding advertising, publishing, broadcasting or
                               telecasting done by or for you;

                       (2)     ‘Advertising injury’ caused by an offense committed in the
                               course of advertising your goods, products or services;

                       but only if the offense was committed in the ‘coverage
                       territory’ during the policy period.

Hanover Policy § I(B).

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       Another section of the Hanover policy defines ‘advertising injury’:

       SECTION V - DEFINITIONS

       1.      ‘Advertising injury’ means injury arising out of one or more of the following offenses:

                       a.      Oral or written publication of material that slanders or libels a
                               person or organization or disparages a person’s or
                               organization’s goods, products or services;

                       b.      Oral or written publication of material that violates a person’s
                               right of privacy;

                       c.      Misappropriation of advertising ideas or style of doing
                               business; or

                       d.      Infringement of copyright, title or slogan.

Hanover Policy § V.

       The district court focused on Section I(B)(1)(b)(2), which provides insurance coverage for

an “‘[a]dvertising injury’ caused by an offense committed in the course of advertising your goods,

products, or services . . . .” The district court isolated two issues: (1) whether Couvillion committed

its alleged offense in the course of advertising its goods, products or services; and (2) whether the

offense caused Salco’s alleged injury. The district court granted summary judgment in favor of

Hanover, concluding that Couvillion committed its alleged offense in the course of advertising but

that the alleged offense did not cause Salco’s injury.

II.    STANDARD OF REVIEW

       We review the construction of an unambiguous contract de novo. Clardy Mfg. Co. v. Marine

Midland Bus. Loan, 88 F.3d 347, 352 (5th Cir. 1996). The determination that a contract is

ambiguous is a legal question subject to de novo review. Id. When a contract is ambiguous and its

construction turns on extrinsic evidence, we review the district court’s interpretation only for clear

                                                  4
error. Id.

         This Court reviews a district court’s grant of summary judgment de novo. Askanase v. Fatjo,

130 F.3d 657, 669 (5th Cir. 1997). A motion for summary judgment is properly granted only if there

is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter

of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In deciding whether a fact issue exists,

the reviewing court must view the facts, and inferences to be drawn therefrom, in the light most

favorable to the nonmoving party. Olabisiomotosho v. City of Houston, 185 F.3d 521, 525 (5th Cir.

1999).

III.     DISCUSSION

         The parties disagree over whether the term ‘advertising’ covers bid solicitations between

general contractors and subcontractors. This dispute need not be addressed on appeal because the

Hanover policy applies to only a subset of advertising injuries. Specifically, the policy covers offenses

“committed in the course of advertising your goods, products or services . . . .” Hanover Policy §

I(B)(1)(b)(2).

         Even if Couvillion’s bid solicitations are advertisements, they are not advertisements of

Couvillion’s goods, products or services. Couvillion sought bids from subcontractors in order to

allow it to fulfill its contract with Simpson. As a potential purchaser of the subcontractors’ goods,

products or services, Couvillion’s bid solicitations clearly were not offering to the subcontractors any

goods, products or services from Couvillion.

         It may be true that a general contractor that organizes large projects and divides them into

smaller, outsourced projects, is implicitly providing a service to subcontractors, each of whom

benefits from the narrowed scope of a particular subcontract. But the language of this contract,

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which lumps “goods” and “products” with “services,” indicates the parties contemplated insurance

coverage only for advertising directed to the traditional consumers of a general contractor’s products,

goods and services (real estate developers), and not to the recipients of an incidental benefit of de-

aggregation (subcontractors).

       Because the bid solicitations were not advertisements of Couvillion’s products, goods or

services, this Court need not address whether the injury from which Salco actually seeks recovery

under the copyright statute, lost profits for Couvillion’s creation of a derivative work, is affected by

the duplication and distribution of the Salco plans.

IV.    CONCLUSION

       We affirm the district court’s grant of summary judgment to Hanover.

       AFFIRMED.

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