Travelers Property Casualty Co. of America v. Charlotte Russe Holding, Inc.
207 Cal. App. 4th 969
Cal. Ct. App.2012Background
- Travelers sought declaratory relief limiting duty to defend under two CGL policies for claims by Versatile in multiple underlying suits against Charlotte Russe parties.
- Underlying Versatile complaints alleged breach of contract, fraudulent and negligent misrepresentation, and interference with contract regarding People’s Liberation premium-brand merchandise.
- Versatile alleged Charlotte Russe’s price promotions and “fire sale” of People’s Liberation goods damaged the brand and its trademark.
- Travelers argued the alleged discounts could not constitute disparagement/trade libel to trigger personal injury or advertising injury coverage.
- The trial court granted Travelers summary judgment, holding no potential coverage existed.
- On appeal, court held ambiguity in the pleadings could trigger coverage and reversed the judgment, deciding there was potential personal injury coverage for disparagement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Versatile’s pleadings could trigger personal injury coverage for disparagement | Travelers | Disparagement requires trade libel; pleadings may imply disparagement | Yes, potential coverage exists. |
| Whether implied disparagement can trigger coverage absent explicit trade libel | Versatile pleadings imply branding damage | Only explicit trade libel triggers coverage | Yes, implied disparagement can trigger coverage. |
| Whether the insurer’s duty to defend depends on pleading elements of trade libel | Duty to defend arises if potential coverage exists | Duty limited to covered claims if pleadings show trade libel | Duty to defend applicable; insurer must defend where potential coverage exists. |
Key Cases Cited
- Atlantic Mutual Ins. Co. v. J. Lamb, Inc., 100 Cal.App.4th 1017 (Cal. Ct. App. 2002) (disparagement coverage extends to implied as well as express statements)
- Montrose Chemical Corp. v. Superior Court, 6 Cal.4th 287 (Cal. 1993) (insurer must defend when potential coverage exists; burden shifts to insurer to prove no coverage)
- La Jolla Beach & Tennis Club, Inc. v. Industrial Indemnity Co., 9 Cal.4th 27 (Cal. 1994) (duty to defend based on potential coverage, not actual indemnity)
- Barnett v. Fireman's Fund Ins. Co., 90 Cal.App.4th 500 (Cal. Ct. App. 2001) (insurer cannot decline defense solely on merits of underlying claim)
- CNA Casualty of California v. Seaboard Surety Co., 176 Cal.App.3d 598 (Cal. Ct. App. 1986) (insurer must defend if possibility of coverage exists)
- Nichols v. Great American Ins. Companies, 169 Cal.App.3d 766 (Cal. Ct. App. 1985) (innuendo may establish disparagement; statements may imply falsehood)