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Hanover Insurance Co. v. Castle Hill Studios, LLC

United States District Court, W.D. Virginia, Charlottesville Division

July 8, 2019

Hanover Insurance Co., Plaintiff,
v.
Castle Hill Studios, LLC, ET AL., Defendants.

          MEMORANDUM OPINION

          NORMAN K. MOON SENIOR UNITED STATES DISTRICT JUDGE

         This matter is before the Court upon Plaintiff Hanover Insurance Company's (“Hanover”) motion for partial summary judgment, (dkt. 40), and Defendants Castle Hill Studios LLC, Castle Hill Holding LLC, and Ironworks Development LLC's (“Castle Hill”) cross-motion for partial summary judgment. (Dkt. 53). Hanover filed an action for declaratory judgment pursuant to 28 U.S.C. § 2201, seeking declarations that it has no duty to defend or indemnify Castle Hill in an underlying trademark infringement suit pending in the Northern District of Oklahoma (“underlying action”).[1] The parties agreed to stay all issues pending resolution of the underlying action except one: whether Hanover must indemnify Castle Hill under three primary businessowners policies or whether exclusions for “personal and advertising injuries” apply.

         Hanover moves for partial summary judgment, arguing it is entitled to a declaratory judgment that the businessowners policies exclude “personal and advertising injury, ” and that Castle Hill is therefore not entitled to coverage in the underlying action under these policies. Castle Hill contends that the businessowners policies are ambiguous on this issue because, although one provision purports to exclude advertising injury coverage, other conflicting exclusions and endorsements appear to provide for such coverage. (Dkt. 53). Castle Hill cross-moves for partial summary judgment, arguing it is entitled to a declaration that Hanover has a duty to indemnify Castle Hill under the businessowners policies. (Id. at 5).

         The Court finds that the businessowners policies unambiguously exclude coverage for personal and advertising injury. Accordingly, the Court will grant Hanover's motion for partial summary judgment and deny Castle Hill's cross-motion for partial summary judgment.

         I. Legal Standard

         “Summary judgment is particularly well-suited for resolution of insurance coverage disputes because the construction of insurance contracts is a legal question.” Mount Vernon Fire Ins. Co. v. Adamson, No. 3:09-cv-817, 2010 WL 3937336, at *1-2, (E.D. Va. Sept. 15, 2010) (citations omitted). Fed.R.Civ.P. 56(a) provides that a court should grant summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” “A dispute is genuine if a reasonable jury could return a verdict for the nonmoving party, ” and “[a] fact is material if it might affect the outcome of the suit under the governing law.” Variety Stores, Inc. v. Wal-Mart Stores, Inc., 888 F.3d 651, 659 (4th Cir. 2018). The nonmoving party must “show that there is a genuine dispute of material fact for trial . . . by offering sufficient proof in the form of admissible evidence.” Id. (quoting Guessous v. Fairview Prop. Invs., LLC, 828 F.3d 208, 216 (4th Cir. 2016)). The district court must “view the evidence in the light most favorable to the nonmoving party” and “refrain from weighing the evidence or making credibility determinations.” Id.

         II. Factual Background & Legal Principles

         A. Factual Background[2]

         Video Game Technologies, Inc. and Castle Hill are “competitors in the Native American bingo-based gaming market.” (Dkts. 41 at 1; 41-1 ¶ 2). In August 2017, Video Gaming Technologies sued Castle Hill in the Northern District of Oklahoma for, among other things, trademark and trade dress infringement[3] stemming from “class II bingo-based games” developed by Castle Hill with features closely resembling games produced by Video Game Technologies. (Dkt. 41-1). Castle Hill tendered the underlying action to Hanover for defense and indemnity, and “Hanover admits it accepted the duty to defend under certain of the Umbrella policies” discussed below “under a full reservation of rights.” (Dkt. 56 at 6).

         From 2014 to 2017, Hanover insured Castle Hill via primary businessowners policies with collective coverage limits of $3, 000, 000 and, starting in 2015, via umbrella policies with collective coverage limits of $3, 000, 000. (Dkts. 41-3; 41-4; 41-5; 41-6).

         Section II of the businessowners coverage form provides, in pertinent part, that Hanover will defend the insured “against any ‘suit' . . . damages” for “‘bodily injury,' ‘property damage,' or ‘personal and advertising injury' to which this insurance applies, ” and indemnify the insured for any damages in such suits. The policy provides that it applies to “‘personal and advertising injury' caused by an offense arising out of your business, but only if the offense was committed in the ‘coverage territory' during the policy period.” The policy defines “personal and advertising injury” as “injury, including consequential ‘bodily injury', arising out of . . . “[t]he use of another's advertising idea in our ‘advertisement'; or . . . “[i]nfringing upon another's copyright, trade dress or slogan in your ‘advertisement.'” (See, e.g., dkt. 41-3 at 69, 84-85).

         Section II of the businessowners coverage form is amended by the “advertising injury exclusion, ” which reads, in pertinent part: “The following is added to Section II - Liability and supersedes any provision to the contrary: The insurance provided under Paragraph A. Coverages does not apply to ‘personal and advertising injury.'” (Dkt. 41-7). The businessowners policies were also contemporaneously amended by other exclusions and endorsements, some of which mention personal and advertising injury. The parties now dispute whether these other provisions render the policies ambiguous with respect to coverage for personal and advertising injury.

         B. Virginia Contract Interpretation Principles

         Under Virginia law, [4] courts are to construe insurance policies according to standard principles of contract interpretation. “Virginia strictly adheres to the ‘plain meaning' rule: ‘where an agreement is complete on its face and is plain and unambiguous in its terms, the court is not at liberty to search for its meaning beyond the instrument itself . . . because the writing is the repository of final agreement between the parties.” Firemen's Ins. Co. of Washington, D.C. v. Kline & Son Cement ...


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