AMCO Insurance v. Inspired Technologies, Inc.
2011 U.S. App. LEXIS 16409
| 8th Cir. | 2011Background
- ITI carries a Premier Business Owner's policy with a knowledge-of-falsity exclusion.
- 3M sued ITI in 2008 under the Lanham Act and MDTPA over Frog Tape advertising claims.
- ITI tendered defense to AMCO; AMCO initially defended but reserved rights and settlement occurred with ITI paying part of fees.
- AMCO filed a declaratory-judgment action contending the knowledge-of-falsity exclusion barred coverage.
- District court granted summary judgment for AMCO, relying on 3M's interrogatory responses to show knowledge of falsity.
- On appeal, court held Minnesota law requires defense of any arguably covered claim and remands for consideration of all claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend when some claims are potentially covered | ITI: any arguably covered claim triggers defense of entire suit. | AMCO: exclusion can defeat duty if all claims clearly outside coverage. | Not dispositive; issues to be reconsidered; insurer must defend if any claim arguably within coverage. |
| Use of interrogatory responses to deny coverage | ITI: interrogatory answers should not control; complaint controls. | AMCO: interrogatory answers are actual facts that can inform coverage. | Interrogatories may be used as facts, but they do not establish that all claims fall outside coverage; remand. |
| Effect of knowledge-of-falsity exclusion on multiple claims | ITI: exclusion cannot bar defense for non-falsehood claims within complaint. | AMCO: exclusion applies where 3M's allegations show knowledge of falsity. | District court erred by requiring all claims to be outside coverage; at least one claim is arguably covered. |
| Control of authority under Minnesota law | ITI: Minnesota law requires defense of all claims if any are within policy. | AMCO: exclusions can defeat coverage for all claims. | Court reiterates that any arguably covered claim triggers defense of the entire suit. |
| Callas Enterprises relevance | ITI: Calls for consistent application of knowledge-of-falsity exclusion. | AMCO: Callas is distinguishable; bait-and-switch facts absent here. | Not controlling; distinguishable; does not resolve whether coverage exists for at least one claim. |
Key Cases Cited
- Meadowbrook, Inc. v. Tower Ins. Co. of Iowa, 559 N.W.2d 411 (Minn. 1997) (duty to defend where some claims arguably fall within coverage; interpretation guided by policy language)
- Farmers & Merchants State Bank of Pierz v. St. Paul Fire & Marine Ins. Co., 242 N.W.2d 843 (Minn. 1976) (duty to defend extends to any claim arguably within coverage; insurer must defend entire suit if any claim lies within)
- Haarstad v. Graff, 517 N.W.2d 582 (Minn. 1994) (insurer may rely on insurer's own investigations as 'actual facts' to deny defense)
- Callas Enterprises, Inc. v. Travelers Indemnity Co. of America, 193 F.3d 952 (8th Cir. 1999) (knowledge-of-falsity exclusion discussed as alternative basis for denying defense)
- Gen. Cas. Co. of Wisconsin v. Wozniak Travel, Inc., 762 N.W.2d 572 (Minn. 2009) (broad inclusion in policy language; exclusion narrowly construed)