S. Bertram, Inc. v. Citizens Insurance Company of America
Filing
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ORDER granting 16 Motion for Summary Judgment; denying 17 Motion for Summary Judgment. Signed by District Judge Arthur J. Tarnow. (MLan)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
S. BERTRAM, INC.,
Case No. 14-14241
Plaintiff,
v.
SENIOR U.S. DISTRICT JUDGE
ARTHUR J. TARNOW
CITIZENS INSURANCE COMPANY OF
AMERICA,
U.S. MAGISTRATE JUDGE
MICHAEL J. HLUCHANIUK
Defendant.
/
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [16] AND
DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [17]
Plaintiff alleges that Defendant breached an insurance contract by refusing
to defend Plaintiff in an earlier lawsuit in this Court. The parties have both moved
for summary judgment.
A hearing on the parties’ motions is scheduled for
December 1, 2015. However, the Court now concludes that the motions are
suitable for determination without a hearing in accord with Local Rule 7.1(f)(2).
For the reasons stated below, Defendant’s Motion for Summary Judgment
[Dkt. #16] is GRANTED and Plaintiff’s Motion for Summary Judgment [17] is
DENIED.
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FACTUAL BACKGROUND
Plaintiff formerly used an Eden Quality Products label on its food products.
In 2012, Plaintiff recalled an apple juice product due to high arsenic content. Later
that year, Plaintiff was sued in this Court by Eden Foods, Inc., which had
registered “Eden” as a trademark in relation to food products. Eden Foods brought
claims for trademark infringement, unfair competition, trade name infringement,
and trademark dilution by tarnishment. Eden Foods alleged that Plaintiff’s use of
the Eden Quality Products label had caused consumers to confuse Plaintiff for
Eden Foods and vice versa. It further alleged that this confusion had harmed the
reputation of its mark because consumers mistakenly attributed the recalled apple
juice to Eden Foods.
Plaintiff asked Defendant to defend and indemnify it pursuant to the parties’
commercial general liability insurance contract.
Defendant refused.
Plaintiff
ultimately reached a settlement agreement with Eden Foods, pursuant to which
Plaintiff stopped using the Eden Quality Products label. On November 4, 2014,
Plaintiff brought the instant suit against Defendant for breach of the insurance
contract.
On July 1, 2015, the parties filed Motions for Summary Judgment
[16, 17]. They filed Responses [19, 20] on August 3, 2015, and Replies [21, 22]
on August 17, 2015.
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ANALYSIS
Summary judgment is appropriate “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.” FED. R. CIV. P. 56(c). The moving
party has the burden of establishing that there are no genuine issues of material
fact, which may be accomplished by demonstrating that the nonmoving party lacks
evidence to support an essential element of its case. Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). The Court must construe the evidence and all reasonable
inferences drawn therefrom in the light most favorable to the nonmoving party.
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
A genuine issue for trial exists if “the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986).
The parties dispute whether Plaintiff’s breach of contract claim is governed
by New Jersey or Michigan law. However, the parties agree that the choice of law
has practical effect only with respect to available remedies. They agree that the
choice between New Jersey and Michigan law is not dispositive of the issue of
whether the Eden Foods suit was covered by the contract. The Court concludes
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that Defendant is entitled to summary judgment because the parties’ insurance
contract, interpreted under either New Jersey or Michigan law, did not cover the
suit brought by Eden Foods. The Court therefore declines to resolve the choice of
law issue.
The contract imposed a duty on Defendant to defend Plaintiff from any suit
seeking damages for “personal and advertising injury,” subject to several
exclusions. The contract excluded personal and advertising injury “arising out of
the infringement of … trademark … or other intellectual property rights.” This
exclusion did not apply to infringement of trade dress. The Court concludes that
the Eden Foods suit fell within this exclusion.
Plaintiff argues that the exclusion did not apply because the Eden Foods suit
raised the possibility of liability for trade dress infringement. The Court disagrees.
Trade dress “involves the total image of a product and may include features such
as size, shape, color or color combinations, texture, graphics, or even particular
sales techniques.” Groeneveld Transport Efficiency, Inc. v. Lubecore Intern., Inc.,
730 F.3d 494, 503 (6th Cir. 2013) (quoting Abercrombie & Fitch Stores, Inc. v.
Am. Eagle Outfitters, Inc., 280 F.3d 619, 629 (6th Cir. 2002)). Eden Foods never
alleged visual similarity between its products and Plaintiff’s. Indeed, it mentioned
no visual feature of its products aside from a fern design—and did not allege that
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the fern design resembled any visual feature of Plaintiff’s products. Even in its
discovery responses, Eden Foods alleged no similarity other than use of the printed
word “Eden.”
It is true that printed words are visible and thus, when affixed to a product,
become part of the product’s “look.” The printing of the same word on two
products necessarily establishes some degree of visual similarity. Conceivably,
then, any plaintiff alleging that its trademark was infringed when the mark was
printed on another’s product could recast that claim as a claim for trade dress
infringement. This is not a philosophical dispute, however, but a contractual one.
The language of the parties’ contract manifests an intent to deny coverage to
trademark infringement claims. That intent would be defeated if the trade dress
coverage were interpreted to extend to any trademark claim involving the visible
printing of the allegedly infringing mark. The Court cannot interpret the contract
in a manner that defeats the intent it manifests. See Stone v. Auto-Owners Ins. Co.,
307 Mich. App. 169, 174 (Mich. Ct. App. 2014) (“The primary goal in the
construction or interpretation of any contract is to honor the intent of the parties.”)
(quoting Klapp v. United Ins. Group Agency, Inc., 468 Mich. 459, 473 (Mich.
2003)); Garfinkel v. Morristown Obstetrics & Gynecology Associates, P.A., 168
N.J. 124, 135 (N.J. 2001) (acknowledging that “the intent expressed or apparent in
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the writing” controls contractual interpretation) (quoting Quigley v. KPMG Peat
Marwick, LLP, 330 N.J. Super. 252, 266 (N.J. Super. Ct. App. Div. 2000)).
Plaintiff also argues that no exclusion applied because the Eden Foods suit
raised the possibility of liability for “disparagement.” The parties’ contract defined
“personal and advertising injury” to include injury arising out the publication of
material that “disparages a person’s or organization’s goods, products or services.”
Plaintiff argues that Eden Foods sought damages for such injury because it alleged
that the reputation of its mark was harmed by consumers mistakenly attributing
Plaintiff’s recalled apple juice to Eden Foods. However, Eden Foods did not allege
that publication of the recall notice communicated anything (disparaging or not)
about Eden Foods, either directly or by implication.
Instead, it alleged that
consumer knowledge of the recall harmed Plaintiff’s reputation, and that harm to
Plaintiff’s reputation necessarily harmed its own reputation because, due to the
alleged trademark infringement, consumers thought they were the same entity.
Though Plaintiff sought damages for reputational harm, its allegations raised no
possibility that it would seek damages for the publication of material that
disparaged its goods. The contract’s disparagement provision did not apply.
The Eden Foods suit was a fairly typical trademark infringement claim that
happened to allege reputational harm arising out of the trademark infringement.
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Plaintiff could have negotiated for a contract covering trademark infringement
claims and/or claims for reputational harm of any source. The parties’ actual
contract, however, did not provide for such coverage, and in fact specifically
excluded coverage for trademark infringement claims. No reasonable jury could
conclude that Defendant breached the contract by refusing to defend Plaintiff in the
Eden Foods suit. Accordingly,
IT IS ORDERED that Defendant’s Motion for Summary Judgment [16] is
GRANTED. Plaintiff’s Motion for Summary Judgment [17] is DENIED.
SO ORDERED.
Dated: November 20, 2015
s/Arthur J. Tarnow
Arthur J. Tarnow
Senior United States District Judge
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