Zalma on Insurance
Education • Business
Insurance Claims professional presents articles and videos on insurance, insurance Claims and insurance law for insurance Claims adjusters, insurance professionals and insurance lawyers who wish to improve their skills and knowledge. Presented by an internationally recognized expert and author.
Interested? Want to learn more about the community?
October 13, 2023
Infringement Exclusion Affirmed

No Insurance Policy Covers Every Possible Risk of Loss

Barry Zalma
Oct 13, 2023

Read the full article at https://lnkd.in/gqC8GpA2 and see the full video at https://lnkd.in/gysiumFV and at https://lnkd.in/gD5dK4Tj and at https://zalma.com/blog plus more than 4600 posts.

Defendant Timed Out, LLC appealed a summary judgment declaring plaintiff AIX Specialty Insurance Company had no duty to defend, and thus no duty to indemnify, its insured in an action Timed Out brought against the insured. The trial court concluded a policy exclusion for personal and advertising injuries “arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights” eliminated AIX’s coverage obligations in the underlying lawsuit.

In AIX Specialty Insurance Company v. Timed Out, LLC, B320255, California Court of Appeals, Second District, Third Division (October 5, 2023) the Court of Appeals interpreted the meaning of the exclusion.

BACKGROUND - The Policy

Godtti Entertainment, the AIX insured operated a bar and nightclub where its patrons can “dance,” see “live DJ performances,” and attend “an assortment of events.” In February 2019, AIX issued a commercial general liability (CGL) insurance policy to Godtti. The policy insures against liability for damages stemming from, among other things, certain “personal and advertising injury” offenses.

The policy excluded coverage for “‘Personal and advertising injury’ arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights” (the IP exclusion).

Timed Out’s Lawsuit Against Godtti

Timed Out filed a three-count complaint against Godtti for statutory misappropriation of likeness; common law misappropriation of likeness; and negligent hiring, supervision, and/or retention of employees. According to the complaint’s allegations, between 2017 and 2019, Godtti knowingly used the models’ “image and likeness” in “various marketing, advertising, and promotional material[s]” without the models’ consent and in violation of their statutory and common law right of publicity. Godtti also allegedly failed to train and supervise its employees who “stole the [m]odels’ [i]mages and used the [i]mages without [the models’] permission.”

AIX’s Declaratory Relief Action Against Godtti and Timed Out

AIX filed a declaratory relief action against Godtti and Timed Out seeking a declaration that it had no duty to defend or indemnify.

AIX moved for summary judgment asserting the IP exclusion precluded any potential for coverage for the claims asserted in Timed Out’s complaint. Specifically, AIX argued all claimed injuries arose out of Godtti’s alleged infringement of the models’ right of publicity-an “other intellectual property right[ ]” subject to the IP exclusion.
The Order Granting Summary Judgment

The trial court granted AIX’s summary judgment motion, concluding the IP exclusion precluded coverage for Timed Out’s misappropriation of likeness claims. The court entered judgment in favor of AIX. Timed Out filed a timely notice of appeal.

DISCUSSION

In determining whether a claim creates the potential for coverage under an insurance policy appellate courts are guided by the principle that interpretation of an insurance policy is a question of law. Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation.

The IP Exclusion Precludes Coverage for Timed Out’s Claims Based on Godtti’s Alleged Misappropriation of the Models’ Likenesses

Specifically, the court determined Timed Out’s claimed injuries all stemmed from Godtti’s alleged misappropriation of the models’ likenesses and the IP exclusion unambiguously precluded coverage for those claims.

Godtti’s policy expressly excludes coverage for “‘[p]ersonal and advertising injury’ arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights.” (Italics added by the court)

As the California Supreme Court explained in Hameid v. National Fire Ins. of Hartford (2003) 31 Cal.4th 16, only a “widespread promotional” campaign using the image constitutes “advertising” under a CGL policy like the one AIX issued to Godtti. Timed Out’s complaint alleges only that Godtti misappropriated the models’ likenesses as they appeared in digital images-not that Godtti misappropriated an advertisement or advertising idea using those likenesses or images.

The Court of Appeals agreed with the trial court’s conclusion that Timed Out’s claims arise out of an alleged infringement of the models’ right of publicity and the IP exclusion therefore unambiguously precludes coverage.

The IP Exclusion Does Not Render Coverage for Personal and Advertising Injury Illusory

The Court of Appeals construed the IP exclusion according to its plain terms to give effect to the exclusion and AIX’s obligation to provide coverage for personal and advertising injuries.

Simply put, because the IP exclusion applies only to injuries “arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights,” and claims such as disparagement and false light do not necessarily arise out of intellectual property rights, the exclusion does not render illusory AIX’s promise to cover personal and advertising injuries under the CGL policy issued to Godtti.

The judgment was affirmed. Plaintiff AIX Specialty Insurance Company is entitled to costs.

ZALMA OPINION

Appellate courts must interpret insurance contracts as a matter of law. The AIX IP exclusion was clear and unambiguous and fit clearly the wording and intent of the IP exclusion. The Court of Appeals had no choice, based on the facts, precedent and interpretation of clear policy wording but to affirm the trial court.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.

Subscribe to Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808

Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01

Follow me on LinkedIn: http://www.linkedin.com/comm/mynetwork/discovery-see-all...

Daily articles are published at https://zalma.substack.com.

Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library/

Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to substack at https://lnkd.in/gus8Mzkq to https://lnkd.in/gV9QJYH; Go to the Insurance Claims Library – https://lnkd.in/gYq44VM

00:09:26
Interested? Want to learn more about the community?
What else you may like…
Videos
Posts
21 hours ago
Allegations That Establish Breach of a Condition Defeats Suit

Notice of Claim Later than 60 Days After Expiration is Too Late

Post 5089

Injury at Massage Causes Suit Against Therapist

Read the full article at https://lnkd.in/gziRzFV8, see the full video at https://lnkd.in/gF4aYrQ2 and at https://lnkd.in/gqShuGs9, and at https://zalma.com/blog plus more than 5050 posts.

Hiscox Insurance Company (“Hiscox”) moved the USDC to Dismiss a suit for failure to state a claim because the insured reported its claim more than 60 days after expiration of the policy.

In Mluxe Williamsburg, LLC v. Hiscox Insurance Company, Inc., et al., No. 4:25-cv-00002, United States District Court, E.D. Missouri, Eastern Division (May 22, 2025) the trial court’s judgment was affirmed.

FACTUAL BACKGROUND

Plaintiff, the operator of a massage spa franchise, entered into a commercial insurance agreement with Hiscox that provided liability insurance coverage from July 25, 2019, to July 25, 2020. On or about June 03, 2019, a customer alleged that one of Plaintiff’s employees engaged in tortious ...

00:08:31
June 02, 2025
Zalma’s Insurance Fraud Letter – June 1, 2025

ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Posted on June 2, 2025 by Barry Zalma

Post 5087

See the full video at and at

Read the full article and the full issue of ZIFL June 1, 2025 at https://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-06-01-2025.pdf

Zalma’s Insurance Fraud Letter – June 1, 2025

See the full video at https://lnkd.in/gw-Hgww9 and at https://lnkd.in/gF8QAq4d, and at https://zalma.com/blog plus more than 5050 posts.

ZIFL – Volume 29, Issue 11

The Source for the Insurance Fraud Professional

Read the full article and the full issue of ZIFL June 1, 2025 at https://lnkd.in/gTWZUnnF

Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at ...

00:08:42
placeholder
May 30, 2025
Plain Language of Policy Enforced

No Coverage if Home Vacant for More Than 60 Days

Failure to Respond To Counterclaim is an Admission of All Allegations

Post 5085

See the full video at https://lnkd.in/gbWPjHub and at https://lnkd.in/gZ9ztA-P, and at https://zalma.com/blog plus more than 5050 posts.

In Nationwide Mutual Insurance Company v. Rebecca Massey, Civil Action No. 2:25-cv-00124, United States District Court, S.D. West Virginia, Charleston Division (May 22, 2025) Defendant Nationwide Mutual Insurance Company's (“Nationwide”) motion for Default Judgment against Plaintiff Rebecca Massey (“Plaintiff”) for failure to respond to a counterclaim and because the claim was excluded by the policy.

BACKGROUND

On February 26, 2022, Plaintiff's home was destroyed by a fire. At the time of this accident, Plaintiff had a home insurance policy with Nationwide. Plaintiff reported the fire loss to Nationwide, which refused to pay for the damages under the policy because the home had been vacant for more than 60 days.

Plaintiff filed suit ...

00:06:50
May 15, 2025
Zalma's Insurance Fraud Letter - May 15, 2025

ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional

See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.

Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:

Health Care Fraud Trial Results in Murder for Hire of Witness

To Avoid Conviction for Insurance Fraud Defendants Murder Witness

In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...

May 15, 2025
CGL Is Not a Medical Malpractice Policy

Professional Health Care Services Exclusion Effective

Post 5073

See the full video at https://lnkd.in/g-f6Tjm5 and at https://lnkd.in/gx3agRzi, and at https://zalma.com/blog plus more than 5050 posts.

This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.

In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:

Insurance Coverage Dispute:

Travelers issued a Commercial General Liability ...

April 30, 2025
The Devil’s in The Details

A Heads I Win, Tails You Lose Story
Post 5062

Posted on April 30, 2025 by Barry Zalma

"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime."

Immigrant Criminals Attempt to Profit From Insurance Fraud

People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.

The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...

post photo preview
See More
Available on mobile and TV devices
google store google store app store app store
google store google store app tv store app tv store amazon store amazon store roku store roku store
Powered by Locals