UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT AUG 17 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
CRUM & FOSTER SPECIALITY No. 14-35985
INSURANCE COMPANY,
D.C. No. 6:13-cv-01923-MC
Plaintiff-Appellee, District of Oregon,
Eugene
v.
ORDER
WILLOWOOD USA, LLC; BRIAN
HEINZE,
Defendants-Appellants,
v.
ALLIED WORLD ASSURANCE
COMPANY (U.S.); COLONY
INSURANCE COMPANY; REPAR
CORPORATION,
Defendants-Appellees.
WILLOWOOD USA, LLC, an Oregon No. 16-35222
limited liability company,
D.C. No. 6:15-cv-01050-MC
Plaintiff-Appellant,
v.
ALLIED WORLD ASSURANCE
COMPANY, a Delaware corporation;
COLONY INSURANCE COMPANY, a
Virginia corporation; CRUM & FORSTER
SPECIALTY INSURANCE COMPANY, an
Arizona company,
Defendants-Appellees.
Before: BYBEE and HURWITZ, Circuit Judges, and ZOUHARY,* District Judge.
Because the clerk’s office inadvertently failed to file Judge Zouhary’s
dissent, the Memorandum Disposition filed on August 1, 2017, is withdrawn and
refiled as of this date, together with Judge Zouhary’s dissent. The petition for
rehearing or rehearing en banc filed on August 15, 2017, by Plaintiff-Appellee is
deemed withdrawn, without prejudice to the filing of a timely new petition directed
at the memorandum disposition filed today.
*
The Honorable Jack Zouhary, United States District Judge for the
Northern District of Ohio, sitting by designation.
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NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS AUG 17 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CRUM & FORSTER SPECIALTY No. 14-35985
INSURANCE COMPANY,
D.C. No. 6:13-cv-01923-MC
Plaintiff-Appellee,
v. MEMORANDUM*
WILLOWOOD USA, LLC; BRIAN
HEINZE,
Defendants-Appellants,
v.
ALLIED WORLD ASSURANCE
COMPANY (U.S.); COLONY
INSURANCE COMPANY; REPAR
CORPORATION,
Defendants-Appellees.
WILLOWOOD USA, LLC, an Oregon No. 16-35222
limited liability company,
D.C. No. 6:15-cv-01050-MC
Plaintiff-Appellant,
v.
ALLIED WORLD ASSURANCE
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
COMPANY, a Delaware corporation;
COLONY INSURANCE COMPANY, a
Virginia corporation; CRUM & FORSTER
SPECIALTY INSURANCE COMPANY, an
Arizona company,
Defendants-Appellees.
Appeals from the United States District Court
for the District of Oregon
Michael J. McShane, District Judge, Presiding
Argued and Submitted May 12, 2017
Portland, Oregon
Before: BYBEE and HURWITZ, Circuit Judges, and ZOUHARY,** District
Judge.
At issue in this case is whether three insurance companies (collectively the
“Insurers”) had a duty to defend Willowood USA, LLC (“Willowood”) against a suit
by the Repar Corporation (“Repar”) arising from Willowood’s agreement to
distribute Repar’s tebuconazole products (“TEBUCON”) and to indemnify
Willowood for the settlement of that suit. The district court twice granted summary
judgment to the Insurers, finding that because their policies did not cover Repar’s
claims, they had no duty to defend the suit or provide indemnification for the
**
The Honorable Jack Zouhary, United States District Judge for the
Northern District of Ohio, sitting by designation.
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settlement. We have jurisdiction of Willowood’s appeals under 28 U.S.C. § 1291.
We reverse and remand to determine whether the settlement was for a covered claim.
1. “If the complaint, without amendment, may impose liability for conduct
covered by the policy, the insurer is put on notice of the possibility of liability and it
has a duty to defend.” Ferguson v. Birmingham Fire Ins. Co., 460 P.2d 342, 347
(Or. 1969). The Insurers’ policies each cover injury arising from “use of another’s
advertising idea in your ‘advertisement.’” Oregon courts broadly interpret the term
“arising out of” in this context. Ristine ex rel Ristine v. Hartford Ins. Co. of Midw.,
97 P.3d 1206, 1208 (Or. Ct. App. 2004). Repar’s second amended complaint
specifically alleged injury from Willowood’s use of Repar’s advertising idea—the
TEBUCON name—in Willowood’s advertising. This was sufficient to put the
Insurers on notice of the possibility of covered liability and trigger the obligation to
defend. See Bresee Homes, Inc. v. Farmers Ins. Exch., 293 P.3d 1036, 1039 (Or.
2012). The district court should therefore have granted summary judgment to
Willowood with respect to the obligation to defend and we remand with instructions
to do so.
2. The “facts that form[] the basis for the settlement” determine whether the
insurer must indemnify. Id. at 1044. Willowood proffered a declaration from trial
counsel, a letter from counsel to Willowood’s CEO, and the declaration from the
CEO, all indicating that the Repar settlement was at least in part based on covered
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breach of implied contract claims. This was sufficient to create a triable issue on
whether the settlement was for a covered claim, and we remand for a trial on that
issue. See Ledford v. Gutoski, 877 P.2d 80, 84 (Or. 1994).
REVERSED and REMANDED.
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FILED
AUG 17 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
Crum & Forster Specialty Ins. Co. v. Willowood USA, LLC, et al., No. 14-35985
ZOUHARY, District Judge, dissenting:
As the majority notes, Willowood’s insurance policies cover injuries “arising
out of . . . the use of another’s advertising idea in your ‘advertisement.’” But the
policies also exclude coverage for injuries “arising out of the infringement of
copyright, patent, trademark, trade secret or other intellectual property rights.”
Oregon courts “broadly” interpret the term “arising out of” to mean “flowing from,”
“having its origin in,” or with “a causal connection.” Ristine ex rel. Ristine v.
Hartford Ins. Co. of Midwest, 97 P.3d 1206, 1208 (Or. Ct. App. 2004) (internal
quotation marks omitted).
I agree with the majority that the name TEBUCON may constitute an
advertising idea. But, as the district court observed, TEBUCON is also, first and
foremost, a trademark. See generally Sport Supply Grp., Inc. v. Columbia Cas. Co.,
335 F.3d 453, 462–65 (5th Cir. 2003) (discussing distinction between trademark and
advertising idea). Repar’s claims for advertising injury based on Willowood’s use of
the TEBUCON name all arise out of the misuse of that trademark -- the so-called
“gravamen” of the Second Amended Complaint. As such, these claims are expressly
excluded from coverage. And, unlike the breach of contract exclusion, the intellectual
property exclusion contains no exception for trademarks that are also advertising
ideas. Reviewing the policies and the Second Amended Complaint de novo, see
Rocky Mountain Farmers Union v. Corey, 730 F.3d 1070, 1086 (9th Cir. 2013); N.
Pac. Ins. Co. v. Hamilton, 22 P.3d 739, 741–42 (Or. 2001), I would affirm the district
court order granting summary judgment in favor of the insurance companies on the
duty to defend.
As for the duty to indemnify, this is an even narrower obligation and “arises
only when the insurance policy actually covers the harm.” Am. Med. Response Nw.,
Inc. v. ACE Am. Ins. Co., 31 F. Supp. 3d 1087, 1097 (D. Or. 2014) (citing Nw. Pump
& Equip. Co. v. Am. States Ins. Co., 925 P.2d 1241, 1243 (1996) (en banc)). Because
“[t]he pleadings clearly took the case out of . . . coverage,” Jarvis v. Indem. Ins. Co.
of N. Am., 363 P.2d 740, 744 (Or. 1961); see also Mut. of Enumclaw Ins. Co. v. Jonas,
35 F. App’x 556, 558 (9th Cir. 2002) (“No duty to indemnify exists if no claim in a
complaint falls within a policy’s coverage.”), I would also affirm the district court
order granting summary judgment in favor of the insurance companies on
indemnification.
I found the district court analysis of these issues -- which the majority does not
address -- thorough and well-reasoned, and I believe the district court accurately
applied Oregon law to the facts of this case. For these reasons, I respectfully dissent.
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