W3i Mobile, LLC v. Westchester Fire Insurance
2011 U.S. App. LEXIS 2914
| 8th Cir. | 2011Background
- W3i Mobile, LLC sues Westchester Fire Insurance Company for breach of contract and declaratory relief seeking defense and indemnity for two class actions.
- Policy includes Directors, Officers and Company section with a products exclusion covering W3i's goods or products.
- Two underlying class actions (California and Minnesota) allege unauthorized billing of mobile content and related consumer-protection/tort theories.
- District court granted Westchester summary judgment, holding the products exclusion precludes coverage; illusory coverage doctrine rejected.
- This diversity case interprets Minnesota contract law to apply the policy's plain language exclusion; the court affirms.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the products exclusion preclude coverage? | W3i argues claims are billing disputes not central to products. | Westchester contends claims arise from W3i's mobile product and are within exclusion. | Yes; exclusion applies to claims involving W3i's products. |
| How should 'involving' be interpreted in the exclusion? | W3i asserts 'involving' requires a causal link between product and claim. | Westchester maintains broad reading; 'in any way involving' covers all related disputes. | Broad interpretation adopted; 'in any way involving' encompasses the underlying claims. |
| Should the court apply the reasonable expectations doctrine? | W3i argues reasonable expectations would cover the claim due to Clause A.3. | Westchester argues doctrine does not override clear exclusions. | Rejected; doctrine not applied to override unambiguous exclusion. |
| Is Minnesota law controlling the contract interpretation? | W3i may rely on Minnesota insurance contract principles to limit the exclusion. | District court correctly applied Minnesota contract interpretation to the policy language. | Minnesota law governs; exclusion is plain and unambiguous. |
Key Cases Cited
- Hammer v. Investors Life Ins. Co. of N. Am., 511 N.W.2d 6 (Minn. 1994) (interpretation of contract language; ordinary meaning)
- Gorr v. Consolidated Foods Corp., 91 N.W.2d 772 (Minn. 1958) (interpretation of contract terms; ambiguity standard)
- Leonard v. Exec. Risk Indem. (In re SRC Holding Corp), 545 F.3d 661 (8th Cir. 2008) (set/interpretation of ‘involving’ and related terms)
- Jostens, Inc. v. Northfield Ins. Co., 527 N.W.2d 116 (Minn. Ct. App. 1995) (reasonable expectations in insurance coverage)
- Royal Ins. Co. v. Regents, 517 N.W.2d 891 (Minn. 1994) (limitations of reasonable expectations doctrine)
- Atwater Creamery Co., 366 N.W.2d 271 (Minn. 1985) (limitations on reasonable expectations doctrine)
- Waseca Mut. Ins. Co. v. Noska, 331 N.W.2d 917 (Minn. 1983) (independent cause doctrine-not addressing in detail)
- Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995) (interpretation of broad contract language; statutory-style phrasing)
- Canadian Universal Ins. Co. v. Fire Watch, Inc., 258 N.W.2d 570 (Minn. 1977) (basic principles of contract interpretation in insurance)
- Babinski v. Am. Family Ins. Grp., 569 F.3d 349 (8th Cir. 2009) (de novo review of state-law interpretations in diversity actions)