Manzarek v. St. Paul Fire & Marine Insurance Co., 06-55936 (9^th Cir., March 25, 2008)

I usually stay far, far away from insurance coverage disputes. But here’s an interesting insurance case: does St. Paul have a duty to defend the keyboardist from The Doors for using the band’s trademarks on products sold at his concerts?

Manzarek and his touring company face two infringement suits: one from the parents of deceased lead singer Jim Morrison along with the parents of Morrison’s deceased girlfriend, and another from John Densmore, the former drummer of The Doors. Densmore’s suit also claims reputational damage, alleging that by leaving Densmore out of the loop, Manzarek has created the perception that the drummer was not a valued and respected member of The Doors.

Manzarek turned the suit over to his commercial liability carrier, asking St. Paul to defend the lawsuits under his advertising injury coverage. But St. Paul refused, pointing to the policy’s exemption for advertising injuries arising from “Properties or Programs within your Field of Entertainment Business.” So Manzarek sued St. Paul, claiming breach of contract and bad faith denial of coverage. The district court dismissed the suit, agreeing with St. Paul that the suits against Manzarek fell clearly within the Field of Entertainment exception.

On appeal, the Ninth Circuit reverses. St. Paul admitted that its advertising injury policy would apply if Manzarek were putting The Doors logo on something unrelated to the music industry, like salad dressing. Yet the insurer denied coverage without even investigating the nature of the underlying trademark infringements. Indeed, for all St. Paul knew, Manzarek was being sued for selling “The Doors Own” salad dressing at his concerts. Although the panel deems this possibility unlikely, it further reasons that if salad dressing sales are covered by the policy, so are t-shirts or guitars with The Doors logo. And it seems far more likely that Manzarek is selling those items at his concerts. Because the district court dismissed Manzarek’s claims without even looking at the products giving rise to the infringement claims, the dismissal was premature. Finally, the Court concludes that the drummer’s claims of reputational damage likely trigger coverage under St. Paul’s bodily injury provision.

Posted Tue, 25 Mar 2008 10:22:35 and filed under Contract, Decision of the Day. You can leave a response, or trackback from your own site.