ambiguous as a matter of law if it is reasonably susceptible to
more than one interpretation. See, e.g., Madison, 735 A.2d at
106; Lucker, 23 F.3d at 814. Courts should interpret the
policy language "by what [a] reasonable person in the position
of the insured would have understood the words to mean."
Lucker, 23 F.3d at 815.
The first publication exception states: "[t]his insurance does
not apply to `personal injury' or `advertising injury' . . .
arising out of oral or written publication of material whose
first publication took place before the beginning of the policy
period." Id. Defendants argue the plain meaning of this
language is that any advertising injury caused by publication of
material that has been published by the insured prior to the
beginning of the policy period is not covered, even if the prior
publication did not cause an injury. Defendants suggest that
this is the only reasonable interpretation of the language,
since there is no modifier such as "wrongful" in the phrase
Despite defendants claims of clarity, the language of this
first publication exclusion is ambiguous because it is
reasonably susceptible to more than one interpretation. The
alternative reasonable interpretation — requiring the prior
publication to cause the same injury as the later publication —
is suggested both by the context of the language and the way
others have interpreted it. First, read in context, the phrase
"whose first publication" could be understood to refer not only
to the word "material" but also the injurious nature of that
material. Second, a reasonable person in the position of the
insured would understand the exception to mean that an
advertising injury is only excluded when there was a wrongful
publication prior to the policy period, because logically the
point of the exclusion is to prevent an individual who has
caused an injury from buying insurance so that he can continue
his injurious behavior. Cf. Applied Bolting Tech. Prods., Inc.
v. U.S. Fidelity & Guaranty Co., 942 F. Supp. 1029, 1037
(E.D.Pa. 1996) (suggesting that the first publication exclusion
was intended to prevent this situation). Third, since courts
interpreting the prior publication exception have assumed the
prior publication must cause the same sort of injuries as the
latter publication, an insured could reasonably believe that
this interpretation was correct. See Bay Electric Supply Inc.
v. Travelers Lloyds Ins. Co., 61 F. Supp.2d 611, 619-20
(S.D.Tex. 1999) (holding that the prior publication exclusion
did not apply even though one of the plaintiffs sold circuit
breakers prior to policy period because the circuit breakers
trademark was not registered until after the policy period and
the prior sale was not actionable/infringing); Dogloo Inc. v.
Northern Ins. Co. of N.Y., 907 F. Supp. 1383, 1391 (C.D.Ca.
1995) (suggesting prior publication exclusion not triggered
without evidence that the prior publication was injurious); PJ
Noyes v. American Motorists Ins. Co., 855 F. Supp. 492, 497
(N.H. 1994) (prior publication exclusion does not apply based on
non-infringing publications of trademark prior to policy
period). Finally, the reasonableness of the alternative
interpretation is vividly illustrated by USF & G's explanation
of its reservation of rights, which appears to support
plaintiffs construction of the exclusion. Dkt. no. 4, Ex. 10. In
this document, USF & G stated that the prior publication
exclusion would apply if there was an "infringement" prior to
the policy period. Id.
Because the first publication exclusion can be reasonably
susceptible to multiple interpretations, the language is
ambiguous. See, e.g., Madison, 735 A.2d at 106. I must
construe all ambiguities in favor of the insured, see id., and
so I hold
that the first publication exclusion applies only when
publications prior to the policy period cause injuries identical
to the latter publication.*fn2
Based on this construction of the prior publication exclusion,
defendants have not offered any evidence showing that the
exclusion applies. Application of the exclusion can not be based
on the Cvetnic complaint because it contains only allegations
of infringement after the beginning of the policy period. Dkt.
no. 1, Ex. 2, at 8. Defendants argued that they were entitled to
cancel the policy when they found out that Maddox performed
under the name "Marcels" prior to the beginning of the policy
period, but even if I were permitted to consider this fact, it
does not show that plaintiff was responsible for any
infringing publication of the "Marcels" trademark prior to the
policy period.*fn3 Because the
claims remain potentially within the scope of coverage, the
contracting insurer[s] have a duty to defend.
Finally, defendant St. Paul claims that although the policy
might give rise to a duty to defend, it has no such duty because
it "did not issue the policies in question to plaintiff, only
USF & G did." Dkt. no. 15, at 21. But Maddox's policies for the
years 1998 through 2002 have the words: "The St. Paul Business
Foundation Series" in bolded letters at the top of many of the
pages with "St. Paul" in each corner. Dkt. no. 16, Ex. 8-11.
These policies also state that the insured should direct any
questions to his "St. Paul representative." Id. Moreover, the
St. Paul's claim specialist, in her March 21, 2000 letter to
plaintiff, referred to the 1998 policy as a "St. Paul/USF & G"
policy. Dkt. no. 4, Ex. 4.*fn4 Therefore, there is an issue
of material fact as to whether St. Paul is a party to any of the
insurance contracts, and has a corresponding duty to defend.
Accordingly, this 27th day of December 2001, it is hereby
ORDERED that plaintiffs motion for partial summary judgment,
dkt. no. 16, is GRANTED with respect to USF & G and DENIED with
respect to St. Paul, and defendant's motion for partial summary
judgment, dkt. no. 14, is DENIED. It is further ORDERED and
DIRECTED that plaintiffs motion for a temporary restraining
order, dkt. no. 4, is DENIED without prejudice as moot.