Illinois Casualty Company v. Kladek, Inc.

CourtDistrict Court, D. Minnesota
DecidedJuly 23, 2025
Docket0:22-cv-03214
StatusUnknown

This text of Illinois Casualty Company v. Kladek, Inc. (Illinois Casualty Company v. Kladek, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Illinois Casualty Company v. Kladek, Inc., (mnd 2025).

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

Illinois Casualty Company, Civil No. 22-3214 (DWF/DJF)

Plaintiff,

v. MEMORANDUM Kladek, Inc. doing business as King of OPINION AND ORDER Diamonds, Andra Cheri Moreland, April Puck, Brittany Wilcox, Brooke Marrin, Denise Trlica, Emily Sears, Ina Schnitzer, Jaime Longoria, Jamie Middleton, Jennifer Archuleta, Jessica Burciaga, Jessica Hinton, Jessica Rockwell, Lina Posada, Lucy Pinder, Maysa Quy, Rhian Sugden, Rosie Wicks, Tara Leigh Patrick, and Ursula Mayes,

Defendants.

INTRODUCTION

This matter involves the question of whether Plaintiff Illinois Casualty Company (“ICC”) owes a duty to defend or indemnify Defendant Kladek, Inc. (“Kladek”), for claims asserted against Kladek in a separate case, Moreland et al. v. Kladek, Inc., Civ. No. 21-1975 (D. Minn.) (the “Underlying Suit”). Before the Court are cross motions for summary judgment filed by ICC (Doc. No. 56) and Kladek (Doc. No. 62). Kladek and Defendant Models (the “Models”)1 oppose ICC’s motion. (Doc. Nos. 64, 68.) ICC

1 The Models are the individually named Defendants in this action: Andra Cheri Moreland, April Puck, Brittany Wilcox, Brooke Marrin, Denise Trlica, Emily Sears, Ina Schnitzer, Jaime Longoria, Jamie Middleton, Jennifer Archuleta, Jessica Burciaga, opposes Kladek’s motion. (Doc. Nos. 69, 70.) Both motions seek declaratory judgment regarding ICC’s duties. For the reasons discussed below, the Court denies ICC’s motion and grants Kladek’s motion.

BACKGROUND In the Underlying Suit, the Models sued Kladek, alleging that Kladek, doing business as King of Diamond’s Gentlemen’s Club (the “Club”), used photos of them in advertisements for the Club on the Club’s Facebook, Instagram, and Twitter accounts without the Models’ consent or authorization. The Models allege the following causes of

action:  Count I: Violations of the Lanham Act, 15 U.S.C. § 1125(a) et seq., by False Endorsement, Unfair Competition, and/or False Advertising;  Count II: Violation of Plaintiffs’ Minnesota Common Law of Publicity Through Appropriation;  Count III: Negligence  Count IV: Violation of Minnesota’s Uniform Deceptive Trade Practices Act, Minn. Stat. § 325D.44 (“MDTPA”); and  Count V: Unjust Enrichment.

(Civ. No. 21-1975, Doc. No. 1.) Kladek is insured by ICC under a Businessowners Policy (the “Policy”). (Doc. No. 59 ¶ 4, Ex. B (“Policy”).) ICC brought this action, seeking a declaration that it does not owe any duty to defend or indemnify Kladek for the claims asserted against it in the Underlying Suit. (Doc. No. 8 (“FAC”) ¶ 1.) Kladek answered the FAC and asserted counterclaims, including a counterclaim seeking a determination and order from this

Jessica Hinton, Jessica Rockwell, Lina Posada, Lucy Pinder, Maysa Quy, Rhian Sugden, Rosie Wicks, Tara Leigh Patrick, and Ursula Mayes. Court that ICC has a duty to defend and indemnify Kladek against the allegations made in the Underlying Suit pursuant to the Policy. (Doc. No. 11.) Two attachments to the Policy are relevant: the Businessowners Liability

Coverage Form (“Businessowners Liability Coverage”) and the Cyber Protection Endorsement (the “Cyber Endorsement”). (FAC ¶ 44.) The Businessowners Liability Coverage applies to a variety of circumstances where an insured “becomes legally obligated to pay” damages due to “bodily injury, property damage, or personal and advertising injury.” (Policy at 86 (citation modified).) The Cyber Endorsement is

additional coverage, separate from the Businessowners Liability Coverage. (Id. at 96, 114.) The Cyber Endorsement states that “[t]he terms, conditions, exclusions, and limits of insurance set forth in this form apply only to the coverage provided by this form. The coverage shown in the schedule of this form is additional insurance . . . .” (Id. at 114.) In addition, the Cyber Endorsement purports to amend the Businessowners Liability

Coverage. (Id. (“This form amends your policy to provide Cyber Protection insurance on a Claims-Made and Reported basis.”).)2 In an order dated July 31, 2023, the Court ordered that an arbitration panel should determine any coverage under the Cyber Endorsement, which was subject to an arbitration agreement. (Doc. No. 44 at 10.) An arbitration panel concluded that ICC

owes Kladek a duty to defend under the Cyber Endorsement (Doc. No. 52), and ICC is providing a defense to Kladek under that provision. The panel did not determine whether

2 The Court cites to the most recent version of the policy excerpts. Kladek is entitled to indemnification under the Cyber Endorsement. Nor did it determine whether Kladek is entitled to defense and indemnity under the Personal and Advertising Coverage provided under the Businessowners Liability Coverage.3 The parties now

dispute whether the Policy’s Businessowners Liability Coverage provides an additional duty to defend in the Underlying Suit.4 The Businessowners Liability Coverage provides, in part, the following: BUSINESS LIABILITY COVERAGE FORM . . .

A. Coverage 1. Business Liability a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury”, “property damage”, or “personal and advertising injury” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend against any “suit” seeking damages for “bodily injury”, “property damage”, or “personal and advertising injury” to which this insurance does not apply.

(Policy at 86.) The Policy also provides the following definitions: “Advertisement” means a notice that is broadcast or published to the general public or specific market segments about your goods, products

3 The arbitration panel concluded that it did not have authority to render any award or opinion related to coverages afforded under other portions of the Policy. (Doc. No. 52.) 4 The issue is important because the Cyber Endorsement provides less coverage than that provided under the Personal and Advertising injury provision of the Businessowners Liability Coverage. or services for the purpose of attracting customers or supporters. For the purposes of this definition:

(1) Notices that are published include material placed on the Internet or on similar electronic means of communication; and

(2) Regarding websites, only that part of a website that is about your goods, products or services for the purpose of attracting customers or supporters is considered an “advertisement”. . . . “Personal and advertising injury” means injury, including consequential “bodily injury”, arising out of one or more of the following offenses: . . . (4) Oral or written publication, in any manner, or material that slanders or libels a person or organization or disparages a person’s or organization’s good, products or services;

(5) The use of another’s advertising idea in your “advertisement”: or

(6) Infringing upon another’s copyright, trade dress or slogan in your “advertisement”.

(Id. at 104, 108.) ICC brings a motion for summary judgment asking the Court to conclude, as a matter of law, that it has no duty under the Businessowner’s Liability Coverage to defend or indemnify Kladek against the claims alleged by the Models in the Underlying Suit. In support, ICC claims that three policy exclusions preclude coverage of all claims—the Law Exclusion, Electronic Chatroom Exclusion, and Multimedia Exclusion. Kladek opposes ICC’s motion and moves separately for summary judgment in favor of its counterclaim seeking a declaration that the claims in the Underlying Suit fall within the personal and advertising injury coverage of the Businessowner’s Liability

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