454 F. App'x 596
9th Cir.2011Background
- Ventana appeals district court ruling granting summary judgment that St. Paul owed a defense in an underlying patent-infringement action (Digene) and a separate attorney-fees award.
- This is a diversity case; Arizona law governs, confirming that the duty to defend is broader than the duty to indemnify.
- Digene filed a first-amended complaint dictating the coverage analysis for St. Paul’s duty to defend.
- The December 2001–December 2002 policy included an Intellectual Property exclusion: any claim that also alleges patent infringement was excluded from coverage.
- Ventana argued Digene’s claims could be covered by a prior 2000–2001 policy, and that Digene asserted potential disparagement claims, but the court found no support for those claims in the pleadings.
- The district court awarded attorney fees under Ariz. Rev. Stat. § 12-341.01, and the court’s analysis under Associated Indemn. Corp. v. Warner was not shown to be clearly erroneous; the decision was affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did St. Paul have a duty to defend Digene’s patent action under the 2002 policy? | Ventana | St. Paul had no duty due to the IP exclusion | Yes; the district court correctly held no duty due to exclusion? |
| Could Digene’s claims fall within the 2000–2001 policy? | Ventana | No record support for 2001 disparaging claims | No basis; not potentially covered under 2000–2001 policy |
| Was there an implied disparagement or slogan-use claim that could trigger coverage despite the IP exclusion? | Ventana | Not alleged; excluded | Not persuasive; pleadings show no such claims |
| Was the attorney-fee award proper under Arizona law? | Ventana | Proper factors weighed; no abuse | affirmed; no abuse of discretion |
Key Cases Cited
- Progressive Cas. Ins. Co. v. Owens, 519 F.3d 1035 (9th Cir. 2008) (diversity framework; duty to defend broader than indemnity)
- Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938) (federal substantive law governs in diversity actions)
- INA Ins. Co. of N. Am. v. Valley Forge Ins. Co., 722 P.2d 975 (Ariz. Ct. App. 1986) (duty to defend is broader than indemnity; sequencing of duties)
- United Servs. Auto. Ass’n v. Morris, 741 P.2d 246 (Ariz. 1987) (duty to defend attaches to any potentially covered claim)
- Kepner v. Western Fire Ins. Co., 509 P.2d 222 (Ariz. 1973) (insurer may limit liability with reasonable exclusions)
- U.S. Fid. & Guar. Corp. v. Advance Roofing & Supply Co., Inc., 788 P.2d 1227 (Ariz. Ct. App. 1989) (insurer not obligated to investigate outside-pleadings where not duty to defend)
- Associated Indem. Corp. v. Warner, 694 P.2d 1181 (Ariz. 1985) (proper analysis of attorney-fee awards under ARS §12-341.01)