National Union Fire Insurance Company of Pittsburgh PA v. Expedia Inc

CourtDistrict Court, W.D. Washington
DecidedSeptember 8, 2020
Docket2:19-cv-00896
StatusUnknown

This text of National Union Fire Insurance Company of Pittsburgh PA v. Expedia Inc (National Union Fire Insurance Company of Pittsburgh PA v. Expedia Inc) is published on Counsel Stack Legal Research, covering District Court, W.D. Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
National Union Fire Insurance Company of Pittsburgh PA v. Expedia Inc, (W.D. Wash. 2020).

Opinion

1 2 3 4 5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 NATIONAL UNION FIRE INSURANCE 8 COMPANY OF PITTSBURGH, PA, Cause No. C19-0896RSL 9 Plaintiff, ORDER DENYING NATIONAL 10 v. UNION’S MOTION FOR PARTIAL JUDGMENT ON THE PLEADINGS 11 EXPEDIA, INC., 12 Defendant. 13 14 15 This matter comes before the Court on “Plaintiff National Union’s Motion for Partial 16 Judgment on the Pleadings.” Dkt. # 12. National Union provided Special Risk insurance to 17 defendant Expedia which included “Special Professional Liability” and “Media Content” 18 19 coverage. In 2016, a class action lawsuit was filed in the Northern District of California against 20 Expedia by four hotel operator. Expedia is accused of a bait and switch marketing scheme 21 whereby it advertises deals at hotels with which it had no contractual relationship and, when a 22 customer attempts to make a reservation at one of those hotels, Expedia gives the impression that 23 there are no rooms available on the requested dates and drives the traffic to its contracting 24 25 partners. Expedia tendered the defense of the lawsuit to National Union, which agreed to defend 26 27 ORDER DENYING NATIONAL UNION’S MOTION FOR PARTIAL JUDGMENT 1 under a full reservation of rights. National Union filed this action to obtain a declaration 2 regarding its defense and indemnity obligations. National Union argues that claims or losses 3 arising from allegations of false advertising or trademark infringement are excluded from the 4 applicable coverage provisions. 5 The Court, having reviewed the memoranda, declarations, and exhibits submitted by the 6 7 parties, finds as follows: 8 A. Coverage Provisions 9 1. Media Content (“MC”) Coverage 10 The MC coverage contains National Union’s promise to pay the insured if it is held liable 11 for, among other things, “any act, error or omission, negligent supervision of employee, 12 misstatement or misleading statement” in any form of media content which results in, among 13 14 other things, an infringement of trademark or trade dress. Dkt. # 1-2 at 46 and 48. The coverage 15 expressly applies to claims of unfair competition in connection with such infringement. The 16 coverage does not, however, apply to claims “alleging, arising out of, based upon or attributable 17 to (1) false advertising or misrepresentation in advertising of an Insured’s products or services . . 18 . or (3) any infringement of trademark or trade dress by any goods, products or services, 19 20 including any goods or products displayed or contained” in any form of media content. Dkt. # 1- 21 2 at 51 (Exclusion (p)). 22 2. Specialty Professional Liability (“SPL”) Coverage 23 Under the SPL coverage provision, National Union promised to pay the insured if it is 24 held liable for “any negligent act, error or omission, misstatement or misleading statement in an 25 Insured’s performance of Professional Services for others . . . .” Dkt. # 1-2 at 20 and 22. Under 26 27 ORDER DENYING NATIONAL UNION’S MOTION FOR PARTIAL JUDGMENT 1 Exclusion (b), as amended by Endorsement # 4, the coverage does not apply to any loss 2 connected to a claim “alleging, arising out of , based upon or attributable to any 3 misappropriation of trade secret or infringement of patent, copyright, trademark, trade dress or 4 any other intellectual property right . . . .” Dkt. # 1-2 at 62. Subparagraph (p) excludes coverage 5 for claims “alleging, arising out of, based upon or attributable to false advertising or 6 7 misrepresentations in advertising.” Dkt. # 1-2 at 24. 8 B. Construction of Insurance Policies 9 In Washington, insurance policies are construed as contracts. An insurance policy 10 is construed as a whole, with the policy being given a fair, reasonable, and sensible construction as would be given to the contract by the average person purchasing 11 insurance. If the language is clear and unambiguous, the court must enforce it as 12 written and may not modify it or create ambiguity where none exists. If the clause 13 is ambiguous, however, extrinsic evidence of intent of the parties may be relied 14 upon to resolve the ambiguity. Any ambiguities remaining after examining applicable extrinsic evidence are resolved against the drafter-insurer and in favor 15 of the insured. A clause is ambiguous when, on its face, it is fairly susceptible to 16 two different interpretations, both of which are reasonable. 17 Panorama Village Condominium v. Allstate Ins. Co., 144 Wn.2d 130, 137 (2001) (quoting 18 Weyerhaeuser Co. v. Commercial Union Ins. Co., 142 Wn.2d 654, 665-66 (2000)) (internal 19 quotation marks omitted). 20 21 In this case, Expedia, as the insured, has the burden of showing that the claims asserted in 22 the underlying litigation trigger one or more insuring provisions of the agreement. Moeller v. 23 Farmers Ins. Co. of Wash., 173 Wn.2d 264, 271-72 (2011). National Union does not dispute that 24 the SPL and MC coverages apply. The burden then shifts to the insurer to show that an exclusion 25 bars coverage. Mut. of Enumclaw Ins. Co. v. T&G Constr., Inc., 165 Wn.2d 255, 268 (2008). 26 27 ORDER DENYING NATIONAL UNION’S MOTION FOR PARTIAL JUDGMENT 1 When the issue is whether the insurer has a duty to defend, rather than a duty to 2 indemnify, the mere potential for liability triggers the duty. Thus, if the complaint against the 3 insured alleges facts which could, if proven, impose liability that falls within the coverage 4 provision, the duty to defend arises. Expedia, Inc. v. Steadfast Ins. Co., 180 Wn.2d 793, 802-03 5 (2014). Facts outside the four corners of the complaint may trigger the duty to defend in two 6 7 situations: 8 First, if it is not clear from the face of the complaint that the policy provides 9 coverage, but coverage could exist, the insurer must investigate and give the insured the benefit of the doubt that the insurer has a duty to defend. [Truck Ins. 10 Exch. v. VanPort Homes, Inc., 147 Wn.2d 751, 761 (2002)]. . . . Second, if the 11 allegations in the complaint “‘“conflict with facts known to or readily 12 ascertainable by the insurer,”’” or if “‘“the allegations ... are ambiguous or inadequate,”’” facts outside the complaint may be considered. Truck Ins., 147 13 Wn.2d at 761 (quoting Atl. Mut. Ins. Co. v. Roffe, Inc., 73 Wn. App. 858, 862 14 (1994) (quoting E–Z Loader Boat Trailers, Inc. v. Travelers Indem. Co., 106 15 Wn.2d 901, 908 (1986))). The insurer may not rely on facts extrinsic to the complaint to deny the duty to defend—it may do so only to trigger the duty. Id. 16 17 Woo v. Fireman’s Fund Ins. Co., 161 Wn.2d 43, 53-54 (2007) (emphasis in original). “Only if 18 the alleged claim is clearly not covered by the policy is the insurer relieved of its duty to 19 defend.” Truck Ins., 147 Wn.2d at 760. Any ambiguities in the complaint must be liberally 20 construed in favor of triggering the insurer’s duty to defend. Woo, 161 Wn.2d at 53. 21 22 C. The Underlying Lawsuit 23 In 2016, four hotel operators filed a class action lawsuit against Expedia and its related 24 companies, alleging that when customers search for their hotels on Google or one of Expedia’s 25 websites, Expedia displays the hotels as if it the customer were able to make a reservation 26 27 ORDER DENYING NATIONAL UNION’S MOTION FOR PARTIAL JUDGMENT 1 through its websites. The hotel operators allege, however, that they are not affiliated with 2 Expedia and that Expedia has no ability to book rooms at their hotels. Plaintiffs further allege 3 that, after using their hotels as bait to lure customers to its websites, Expedia used a number of 4 tricks to entice consumers to book “at Expedia’s nearby member hotels with whom it is 5 authorized to sell rooms and who pay Expedia a fee for every room booked through its website.” 6 7 Dkt. # 1-1 at ¶ 2. 8 Plaintiffs allege that the bait and switch scheme is “brazen and comprehensive,” 9 involving a number of discrete steps or stages. Dkt. # 1-1 at ¶ 3.

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National Union Fire Insurance Company of Pittsburgh PA v. Expedia Inc, Counsel Stack Legal Research, https://law.counselstack.com/opinion/national-union-fire-insurance-company-of-pittsburgh-pa-v-expedia-inc-wawd-2020.