Insurers Had No Duty to Indemnify Liability Associated With Willful Trade Dress Infringement
Signal Products, Inc. v. Am. Zurich Ins. Co., 2013 U.S. Dist. LEXIS 179933 (C.D. Cal. Dec. 19, 2013)
In Signal, the district court held that commercial general liability carriers had no duty to indemnify their insured in an underlying trademark action, in which, following a bench trial, the insured was found liable for intentionally and willfully copying the claimant’s trade dress.
In this case, the insured filed a declaratory relief action against its carriers and asserted that they breached their duty to defend and indemnify it in the underlying action. The insured then moved for partial summary judgment on the carriers’ duty to defend, while the carriers moved for partial summary judgment on the duty to indemnify. The court denied the insured’s motion and held that there was an issue of fact as to whether the carriers’ delay in paying defense costs was reasonable. Conversely, the district court granted the carriers’ motion regarding their duty to indemnify. In reaching its conclusion, the district court relied on the intentional conduct exclusions in the policies at issue and also on California Insurance Code section 533’s prohibition on indemnifying an insured for damages resulting from its intentional conduct.
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