Court Opinion

ID: 810736
Source: CourtListenerOpinion
Date Created: 2012-10-23 19:11:20+00
Date Added: 2024-06-11T18:00:38.938866
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                               No. 12-1487

WILSON WORKS, INC., a West Virginia Corporation,

                Plaintiff - Appellant,

          v.

GREAT AMERICAN INSURANCE GROUP; GREAT AMERICAN E&S INSURANCE
COMPANY; COLUMBIA CASUALTY COMPANY, d/b/a CNA; NATIONAL
UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA; THE
TRAVELERS INDEMNITY COMPANY; TRAVELERS PROPERTY CASUALTY
COMPANY OF AMERICA; TRAVELERS GROUP; THE CHARTER OAK FIRE
INSURANCE COMPANY,

                Defendants - Appellees,

          and

WELLS FARGO INSURANCE SERVICES; AMERICAN INTERNATIONAL
GROUP, INC.; AMERICAN INTERNATIONAL COMPANIES, d/b/a AIG,

                Defendants.

Appeal from the United States District Court for the Northern
District of West Virginia, at Clarksburg. John Preston Bailey,
Chief District Judge. (1:11-cv-00085-JPB-JES)

Submitted:   October 5, 2012                 Decided:   October 23, 2012

Before WILKINSON, DAVIS, and DIAZ, Circuit Judges.

Affirmed by unpublished per curiam opinion.
S. Sean Murphy, LAW OFFICES OF S. SEAN MURPHY, LC, Morgantown,
West Virginia, for Appellant.       John A. Smith, FLAHERTY
SENSABAUGH BONASSO PLLC, Charleston, West Virginia; Stephen J.
Dalesio, SWARTZ CAMPBELL, LLC, Pittsburgh, Pennsylvania, for
Appellees.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:

            Wilson Works, Inc. brought suit against its insurers

seeking a declaratory judgment that they are obligated to defend

it in an action filed against it by Walhonde Tools, Inc.                               The

district    court     granted      the      insurers’        motions     for     summary

judgment, and Wilson Works now appeals.                       We have reviewed the

record and find no reversible error.                 Accordingly, we affirm.

            In     2009,    Walhonde       Tools     filed    suit     against    Wilson

Works, alleging patent infringement, tortious interference with

business relations, and conspiracy to interfere with business

relations, based on Wilson Works’ alleged manufacture, sale, and

marketing of tools that infringe Walhonde Tools’ patent.                          Wilson

Works argues that the infringement was an “accident” — that in

fulfilling custom orders it was deceived by its clients into

manufacturing infringing tools.

            In     2011,    Wilson     Works       filed     suit    against     several

insurers    through        which   it      maintained         commercial       liability

policies, seeking a declaration of their duty to defend.                               The

insurers   moved     for    summary      judgment,      and    the     district    court

granted    their    motions.         The    district       court     first    looked   to

Walhonde Tools’ complaint, and found that it stated claims for

patent     infringement,        tortious         interference          with    business

relations, and conspiracy to interfere with business relations.

The   district     court    then   looked       to   the     various    policies,      and

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found that they did not cover injuries arising from intentional

torts    and    patent       infringement.         While    the    policies    covered

“property damage” caused by an “occurrence,” the district court

found that “occurrences” are “accidents,” necessarily excluding

intentional         torts,    and   that    “property      damage”   is   limited    to

physical injury to or loss of use of tangible property, thereby

excluding      damage        to   intangible     property    like    patents.       The

policies also provided coverage for “advertising injuries,” but

this    explicitly      excluded        intentional   tort-based      injuries,     and

excluded patent infringement-based injuries either explicitly or

implicitly via the notable absence of the word “patent” from the

list of covered offenses.                  Finally, certain policies did not

provide     coverage         because     Walhonde     Tools’      alleged      injuries

occurred outside of the policy periods.                       Wilson Works timely

appealed.

               We    review       the   district    court’s       grant   of    summary

judgment de novo.             Temkin v. Frederick Cnty. Comm’rs, 945 F.2d

716, 718 (4th Cir. 1991).                Summary judgment shall be granted if

the movant shows that there is no genuine issue of material fact

and that it is entitled to judgment as a matter of law.                        Fed. R.

Civ. P. 56(a).         The movant initially bears the burden of showing

the absence of any genuine issue of material fact; then the

burden shifts to the nonmovant to present facts sufficient to

create a triable issue.                 Temkin, 945 F.2d at 718.               A party

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opposing       or   asserting     the    existence       of     a    genuine   issue   of

material fact must support its position by citing to particular

parts     of    materials       in     the     record,     including       depositions,

documents, affidavits, stipulations, admissions, and answers to

interrogatories.         Fed. R. Civ. P. 56(c).

               In    a   diversity       action,        state       law   controls     the

construction of an insurance policy.                    Nationwide Prop. & Cas. v.

Comer, 559 F. Supp. 2d 685, 690 (S.D. W. Va. 2008).                         Here, there

is no dispute that West Virginia law governs construction of the

policy.        Under West Virginia law, an insurer has a duty to

defend    only      if   the   claim    stated     in    the    underlying     complaint

could, without amendment, impose liability for risks that the

insurance policy covers.             W. Va. Fire & Cas. Co. v. Stanley, 602

S.E.2d 483, 490 (W. Va. 2004).                     In determining coverage, the

insurer must look beyond the bare allegations in the underlying

complaint and conduct a reasonable inquiry into the facts to

determine whether the claims might be interpreted as falling

within the scope of coverage.                     State Auto. Mut. Ins. Co. v.

Alpha Eng’g Servs., Inc., 542 S.E.2d 876, 879                       (W. Va. 2000).

               The policies at issue provide coverage for “property

damage” caused by “occurrences,” and for “advertising injury.”

On appeal, Wilson Works asserts that the district court erred in

constraining its coverage determination to the four corners of

Walhonde Tools’ complaint.                   Wilson Works argues that had the

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district     court     followed       West   Virginia       law     and     conducted    a

reasonable      inquiry     into   the    facts,     it     would    have    found    that

there    was    an     occurrence,       that     Wilson     Works’       actions     were

accidental, and that Walhode Tools’ injuries are property damage

covered by the insurance policies.

            However,        the   district       court    applied     the    appropriate

standard and correctly concluded that the insurers have no duty

to defend Wilson Works in the Walhonde Tools action.                          First, the

district     court     properly       looked      beyond    Walhonde        Tools’    bare

allegations and determined that its claims could not reasonably

be interpreted         as   falling    within      the    scope     of    coverage.     The

court’s opinion specifically cites to materials in the record

other than Walhonde Tools’ complaint, and includes the very same

standard that Wilson Works proposes.                 Second, the district court

correctly concluded that the insurance companies have no duty to

defend     Wilson      Works      against        Walhonde     Tools’        claims.    Its

conclusions that patent infringement is not damage to physical

property, intentional torts are not occurrences or accidents,

both types of claims are affirmatively excluded from coverage,

and in some cases Walhonde Tools’ alleged injuries did not occur

within the policy period, are unassailable.                          Accordingly, the

district       court    properly       granted       summary        judgment     in    the

insurers’ favor.

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              Based on the foregoing, we affirm the judgment of the

district    court.     We    dispense    with   oral     argument    because    the

facts   and    legal   contentions      are   adequately    presented      in   the

materials     before   the    court   and     argument    would     not   aid   the

decisional process.

                                                                          AFFIRMED

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