Petrochem Marketing Inc. v. Mt. Hawley Insurance

131 F. App'x 100

Opinion

MEMORANDUM

*

Petrochem Marketing, Inc. (“Petrochem”) appeals the district court’s summary judgment in favor of Mt. Hawley Insurance Company (“Mt.Hawley”) on Petrochem’s claim that Mt. Hawley had a duty to defend Petrochem against counterclaims brought by a competitor, Advantage Scaling Systems, Inc. (“Advantage”), in an underlying patent infringement suit. We affirm the judgment of the district court.

Mt. Hawley owed Petrochem a duty to defend if Advantage alleged any facts giving rise to the potential for coverage under the insurance agreement. See Waller v. Truck Ins. Exch., Inc., 11 Cal.4th 1, 44 Cal.Rptr.2d 370, 900 P.2d 619, 627 (1995). Even construing the “personal injury” coverage provisions broadly and the agreement’s “Exclusion—Intellectual Property Hazard” (“Exclusion”) narrowly, Petrochem has not demonstrated that Advantage alleged facts that could potentially have given rise to coverage under this policy. See State Farm Mut. Auto. Ins. Co. v. Partridge, 10 Cal.3d 94, 109 Cal.Rptr. 811, 514 P.2d 123, 128 (1973) (requiring that courts construe insurance coverage provisions broadly and exclusions narrowly).

Advantage did allege facts that could be construed as a libel claim, but only as trade libel, not ordinary libel or defamation. See, e.g., Atlantic Mutual Ins. Co. v. J. Lamb, Inc., 100 Cal.App.4th 1017, 123 Cal.Rptr.2d 256, 269 (2002) (holding that allegations that Lamb misled Continental’s customers and falsely stated that Continental was infringing a patent owned by Lamb and that Lamb would pursue legal action against customers who used the product constituted “product disparagement and trade libel”)-¹ The Exclusion expressly precluded any duty to defend any claim arising out of “any common law or statutory claim ... in any way relating to or arising out of ... disparagement of a person’s or organization’s goods, products or services; unfair competition, [or] trade libel or slander.”

Petrochem also contends that Advantage alleged facts suggesting an abuse of process claim, which would fall under the agreement’s coverage for malicious prosecution. Advantage did not allege, however, that Petrochem “misuse[d] the tools the law affords litigants once they are in a lawsuit,” but rather that Petrochem brought the patent infringement suit with ill intent. Bidna v. Rosen, 19 Cal.App.4th 27, 23 Cal.Rptr.2d 251, 260 (1993) (emphasis in original). “[T]he mere filing or maintenance of a lawsuit—even for an improper purpose—is not a proper basis for an abuse of process claim.” Oren Royal Oaks Venture v. Greenberg, Bernhard, Weiss & Karma, 42 Cal.3d 1157, 232 Cal. Rptr. 567, 728 P.2d 1202,1209 (1987).

The parties agree that this matter turns only on interpretation of the agreement and is appropriately decided as a matter of law. Because Petrochem failed to demonstrate that the facts alleged by Advantage could give rise to even potential coverage under the policy, the district court did not err in granting summary judgment to Mt. Hawley.

The judgment is AFFIRMED.

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3.

1 . Barnett v. Fireman’s Fund Ins. Co., 90 Cal.App.4th 500, 108 Cal.Rptr.2d 657 (2001) is distinguishable. There, disgruntled former employees, not a business competitor, alleged that Barnett used flawed business practices that would lead to the company’s demise. See id. at 660.