Court Opinion

ID: 2678571
Source: CourtListenerOpinion
Date Created: 2014-06-16 21:00:30.709252+00
Date Added: 2024-06-11T13:10:09.159173
License: Public Domain

NOT FOR PUBLICATION

                      UNITED STATES COURT OF APPEALS                          FILED
                             FOR THE NINTH CIRCUIT                             JUN 16 2014

                                                                          MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS

GK SKAGGS, INC. And GREGORY                      No. 12-56501
SKAGGS, an individual,
                                                 D.C. No. 8:12-cv-00169-JVS-JPR
                Plaintiffs-counter-defendants
- Appellants,
                                                 MEMORANDUM*
  v.

HARTFORD CASUALTY INSURANCE
COMPANY, a Connecticut corporation,

                Defendant-counter-claimant -
Appellee.

                     Appeal from the United States District Court
                        for the Central District of California
                      James V. Selna, District Judge, Presiding

                         Argued and Submitted June 6, 2014
                               Pasadena, California

Before: GOULD and N.R. SMITH, Circuit Judges, and KORMAN, Senior District
Judge.**

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
       **
             The Honorable Edward R. Korman, Senior District Judge for the U.S.
District Court for the Eastern District of New York, sitting by designation.
      GK Skaggs, Incorporated and Gregory Skaggs (collectively “GKS”) sued

Hartford Casualty Insurance Company (“Hartford”), seeking a declaratory

judgment that Hartford had a duty to defend GKS in an action filed against GKS,

Cerveceria Centro Americana (“CCA”), and Central Beer Import & Export

(“Central Beer”) by non-party Leonel & Noel Corporation (“L&N”). GKS and

Hartford filed cross-motions for summary judgment. The district court denied

GKS’s motion and granted Hartford’s. Reviewing de novo, see Travelers Cas. &

Sur. Co. of Am. v. Brenneke, 551 F.3d 1132, 1137 (9th Cir. 2009) (summary

judgment); McHugh v. United Serv. Auto. Ass’n, 164 F.3d 451, 454 (9th Cir. 1999)

(insurance policy interpretation), we affirm.

      1. The policy language itself forecloses GKS’s argument that statements in

GKS’s termination letter formed the basis for potential disparagement liability.

There were no “damages because of . . . injury . . . arising out of” GKS’s

disparagement, because GKS sent L&N the termination letter after CCA and

Central Beer had terminated their contracts with L&N. See Medill v. Westport Ins.

Corp., 49 Cal. Rptr. 3d 570, 578-79 (Cal. Ct. App. 2006) (noting that policy

language “arising out of” requires a “minimal causal connection or incidental

relationship”).

                                          2
      2. The Second Amended Complaint (“SAC”) alleged (1) a tortious

interference claim, (2) that GKS was a “middleman” in the chain of beer

distribution, and (3) that GKS “chastised [the downstream distributor] for its

decline in sales.” GKS argues that these allegations imply that GKS made

disparaging statements about L&N to CCA and Central Beer, other than those

contained in GKS’s termination letter. However, there is no precedent holding that

such speculative inferences would “‘fairly apprise’ the insurer that the suit is upon

a covered claim.” Shanahan v. State Farm Gen. Ins. Co., 122 Cal. Rptr. 3d 572,

577 (Cal. Ct. App. 2011) (quoting Michaelian v. State Comp. Ins. Fund, 58 Cal.

Rptr. 2d 133, 141 (Cal. Ct. App. 1996). Moreover, any inference of falsity is

negated by L&N’s allegations that GKS worked together with CCA and Central

Beer to force L&N out of the market.

      3. Potential disparagement liability also does not arise from L&N’s Lanham

Act claim. This claim may theoretically cover conduct constituting disparagement.

Compare 15 U.S.C. § 1125(a), with Total Call Int’l, Inc. v. Peerless Ins. Co., 104
Cal. Rptr. 3d 319, 326 (Cal. Ct. App. 2010). However, L&N’s Lanham Act claim

does not expressly or impliedly allege disparagement. L&N alleged that “GKS’[s]

marketing and sales of beers brewed by CCA in Wisconsin falsely implies an

authority to sell those brands in Wisconsin, when in fact, [L&N] had the exclusive

                                          3
distribution rights in that state.” GKS’s allegation of potential disparagement

liability is not at all similar to GKS’s cited cases.1 L&N did not allege GKS said

anything about GKS’s rights, much less that GKS claimed to have the exclusive

right to distribute CCA beer in Wisconsin. See Burgett, Inc. v. Am. Zurich Ins. Co.,

830 F. Supp. 2d 953, 963 (E.D. Cal. 2011) (insured party falsely represented it was

the only holder of a particular trademark, implying that the third-party plaintiff did

not have rights to that trademark); E.piphany, Inc. v. St. Paul Fire & Marine Ins.

Co., 590 F. Supp. 2d 1244, 1249 (N.D. Cal. 2008) (insured party falsely stated that

it offered the only software of a particular kind, inflating its product reviews to the

detriment of competitors). Further, L&N alleged a false implication with respect to

GKS’s rights, not necessarily L&N’s products. See Travelers Prop. Cas. Co. of

Am. v. Charlotte Russe Holding, Inc., 144 Cal. Rptr. 3d 12, 20-21 (Cal. Ct. App.

2012) (false implication regarding third-party plaintiff’s products); Michael Taylor

Designs, Inc. v. Travelers Prop. Cas. Co. of Am., 761 F. Supp. 2d 904, 910-11

(N.D. Cal. 2011) (same).

      GKS’s claim that marketing in L&N’s exclusive territory would disparage

L&N “as a liar” also fails. “Personal injury” under the policy at issue includes

      1
       Cases not applying California law and unpublished cases are unhelpful
here and are therefore not considered.

                                           4
injury arising from disparagement to “an organization’s goods, products, or

services,” not disparagement to the organization itself.

      4. Moreover, even assuming that the SAC’s allegations give rise to potential

disparagement liability, the breach of contract exclusion would bar coverage. Any

disparaging statements GKS purportedly made allegedly culminated in CCA,

Central Beer, and/or GKS breaching their contracts with L&N. “[E]xamin[ing] the

conduct underlying [L&N’s] lawsuit, instead of the legal theories attached to the

conduct,” the injury here arose out of a breach of contract. See Medill, 49 Cal.

Rptr. 3d at 579 (internal quotation marks omitted).

      AFFIRMED.

                                          5