Maryland Casualty Co. v. Blackstone International Ltd.
114 A.3d 676
Md.2015Background
- RMG Direct (Gray) and Blackstone allegedly formed an oral joint-venture/consulting relationship (2006–2010) in which Gray developed the “Vision Enhance” brand, packaging, marketing materials, testimonials, and a full‑page industry ad. Gray claims he was promised a commission and 50% equity but was not paid.
- RMG sued Blackstone and Black in Baltimore County (Second Amended Complaint) alleging breach of contract, promissory estoppel, unjust enrichment, quantum meruit, intentional misrepresentation, and accounting, based on Blackstone’s use of Gray’s ideas and materials.
- Blackstone tendered defense to its CGL insurers (Maryland Casualty Co. and Northern Insurance Co. of NY) under the Policy’s Personal and Advertising Injury coverage (including “use of another’s advertising idea in your ‘advertisement’”).
- Insurers declined, sued for declaratory judgment; the trial court granted summary judgment for Insurers. The Court of Special Appeals reversed, holding some claims (notably unjust enrichment) potentially alleged an advertising injury and that Insurers had waived exclusion defenses. Insurers sought certiorari.
- The Maryland Court of Appeals reviewed whether the Policy’s advertising‑injury coverage was potentially implicated, focusing on the three elements commonly applied (advertisement, advertising injury offense, and causal connection between advertisement and injury).
Issues
| Issue | Plaintiff's Argument (Blackstone/RMG) | Defendant's Argument (Insurers) | Held |
|---|---|---|---|
| Whether product packaging/related materials can be an "advertisement" under the Policy | Packaging, box copy, website and the industry ad are "notices" published to attract customers and thus fall within the Policy definition | Insurers argued packaging is not the type of advertising covered and Court of Special Appeals misread Policy definitions | Not dispositive: Majority assumed advertising could be implicated but decided case on causation; dissent would find packaging is an advertisement under the Policy |
| Whether the Policy’s advertising‑injury coverage is triggered by RMG’s claims | RMG’s unjust enrichment and related counts allege harm from Blackstone’s use of RMG’s advertising ideas in advertisements, so coverage is potentially implicated | Insurers argued RMG’s claims are contract‑based (breach, promissory estoppel, unjust enrichment) and damages do not flow from advertising itself but from failure to pay — no causation | Held: No duty to defend — the causal connection is lacking: alleged injury arose from breach/failure to pay, not from the advertising act itself |
| Whether a causal connection between the advertising and the injury is required to trigger duty to defend | Blackstone argued the Policy’s definition of "advertising injury" subsumes causal linkage and Court of Special Appeals properly found potential causation for unjust enrichment | Insurers relied on Maryland precedent requiring three elements (including causation) and that mere "arising from" language does not convert contract claims into advertising injuries | Held for Insurers: Maryland requires causation; an attenuated or but‑for relationship is insufficient, and here advertising enhanced the value to RMG rather than caused injury |
| Whether Insurers waived reliance on policy exclusions by not asserting them below | Blackstone/Court of Special Appeals: Insurers waived exclusion defenses, so exclusions could not defeat duty to defend | Insurers: They raised exclusions later and preserved their rights; primary defense was lack of potential coverage | Majority did not reach waiver/exclusion issue (decided on causation); dissent emphasized waiver and preservation and would have affirmed lower court decision finding duty to defend |
Key Cases Cited
- Brohawn v. Transamerica Ins. Co., 276 Md. 396 (recognizing insurer’s duty to defend when there is potentiality of coverage)
- Walk v. Hartford Cas. Ins. Co., 382 Md. 1 (establishing the three‑part advertising‑injury inquiry: advertisement, advertising offense, and causal relationship)
- Bank of the West v. Superior Court, 2 Cal.4th 1254 (watershed decision construing advertising‑injury coverage and limiting scope to harms caused by advertising acts)
- Novell, Inc. v. Federal Ins. Co., 141 F.3d 983 (10th Cir.) (breach‑of‑contract misappropriation claims do not become advertising injuries merely because the alleged product was advertised)
- Fallon McElligott, Inc. v. Seaboard Sur. Co., 607 N.W.2d 801 (Minn. Ct. App. 2000) ("resulting from/arising from" language does not convert contract performance disputes into advertising‑injury coverage)
- Aetna Cas. & Sur. Co. v. Cochran, 337 Md. 98 (clarifying that if complaint establishes potentiality of coverage, insurer may not use extrinsic evidence to deny duty to defend)