St. Paul Mercury Insurance v. Tessera, Inc.

908 F. Supp. 2d 1054, 2012 WL 6002466, 2012 U.S. Dist. LEXIS 171481
CourtDistrict Court, N.D. California
DecidedNovember 30, 2012
DocketCase No. C-12-01827 RMW
StatusPublished

This text of 908 F. Supp. 2d 1054 (St. Paul Mercury Insurance v. Tessera, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
St. Paul Mercury Insurance v. Tessera, Inc., 908 F. Supp. 2d 1054, 2012 WL 6002466, 2012 U.S. Dist. LEXIS 171481 (N.D. Cal. 2012).

Opinion

ORDER GRANTING ST. PAUL MERCURY INSURANCE COMPANY’S PARTIAL MOTION FOR SUMMARY JUDGMENT AND DENYING TESSERA, INC.’S PARTIAL MOTION FOR SUMMARY JUDGMENT

RONALD M. WHYTE, District Judge.

On April 12, 2012 plaintiff and cross-defendant, St. Paul Mercury Insurance (“St. Paul”), filed the instant action seeking a declaratory judgment that it has no duty to defend Tessera Inc. (“Tessera”), its insured, in an action brought against Tessera by Power Technology, Inc. (“PTi”) jn unite(j states District Court for the Northern District of California, Powertech Technology Inc. v. Tessera, Inc., Case No. 11-06121 (“underlying action”). Dkt. No. 1. St. Paul also seeks reimbursement of the amounts it has paid in defending Tessera pursuant to a reservation of rights. Id. On October 26, 2012, both parties brought motions for partial summary judgment requesting that the court resolve whether St. Paul was obligated to defend Tessera in the underlying action. Dkt. Nos. 29, 30. Hearing on both motions occurred on November 30, 2012. Having considered the papers submitted by the parties and the arguments of counsel, and for the reasons set forth below, the court grants St. Paul’s partial motion to dismiss and denies Tessera’s partial motion to dismiss.

I. BACKGROUND

A. The Contract Between St. Paul and Tessera

Beginning in May of 2007 and spanning until August of 2009, St. Paul issued three insurance policies to Tessera in which it agreed to indemnify Tessera and defend it against certain claims. Compl. at ¶¶ 5-8. The terms of the each insurance policy are identical insofar as relevant to this action. Specifically, the insurance policy (“the Policy”) states:

Personal Injury Liability: We’ll pay amounts any protected person is legally required to pay as damages for covered personal injury that:
• results from your business activities; and
• is caused by a personal injury offense committed while this agreement is in effect.
Personal injury offense means any of the following offenses:
• Malicious prosecution.
• Libel, or slander, in or with covered material.
• Making known to any person or organization covered material that disparages the business, premises products, services, work, or completed work of others.
Covered material means any material in any form of expression, including material made known or with any electronic means of communication, such as the Internet.”

Stip. Re Undisputed Facts (“Stip.”), Ex. A, P000000075. In regards to the duty to defend, the Agreement reads: ‘We’ll have the right and duty to defend any protected person against any claim or suit for injury or damage covered by this agreement. We’ll have such a right and duty even if all of the allegations ... are groundless, false, or fraudulent.” Id. at P000000076. The [1058]*1058Agreement also contains the following exclusion as to its indemnity and defense obligations for “intellectual property”:

Intellectual Property. We won’t cover injury or damage ... that result from any actual or alleged infringement or violation of any of the following rights or laws:
Patent.
Other intellectual property rights or laws.
Nor will we cover any other injury or damage or medical expenses alleged in a claim or suit that also alleges any such infringement or violation.

Id. at P000000090.

B. The Underlying Action

Tessera holds patents to an encapsulation process for packaging semiconductor chips. Tessera licensed those patents to PTI, a chip packager which uses Tessera’s encapsulation process. On December 6, 2011, PTI brought suit against Tessera in the underlying action, alleging that Tess-era violated PTI’s license agreement by initiating a United States International Trade Commission (“ITC”) Section 337 Investigation in December 2007 (“ITC proceeding” or “630 Investigation”). Stip. Ex. F. Though PTI was not a named respondent in the ITC proceeding, Tessera did name a PTI customer in the proceeding, which PTI claimed violated PTI’s license agreement and caused damage to PTI’s business. Id. In the operative complaint in the underlying action (the Fourth Amended Complaint), PTI brought claims of breach of contract, breach of implied covenant of good faith, and fraud. Stip. Ex. I. PTI also requested declaratory judgments that it had the right to terminate the license agreement, that the license agreement is unenforceable, and that Tessera engaged in patent misuse. Id. The matter between Tessera and PTI is ongoing. On February 12, 2012, Tess-era notified St. Paul of the underlying action with PTI and requested that St. Paul, conduct a coverage review. Stip. Ex. J. St. Paul agreed to participate in Tessera’s defense against PTI in the underlying action, but reserved the right to contest its duty to defend and to seek reimbursement. Id.

C. The Present Action

On April 12, 2012, St. Paul filed the present action against Tessera seeking a declaratory judgment that it has no duty to defend Tessera in the underlying action and for reimbursement of the fees it has already paid. Dkt. No. 1. On May 21, 2012, Tessera answered and brought a cross-complaint for declaratory judgment that St. Paul has a duty to defend, breach of contract, and bad faith. Dkt. 11. Both parties filed partial summary judgment motions on October 26, 2012 as to their requests for declaratory judgments regarding St. Paul’s duty to defend. The claim for reimbursement is not before the court on this motion.

II. DISCUSSION

A. Rulings On Evidentiary Matters

St. Paul filed evidentiary objections to the declaration of Michael R. Williams (“Williams Declaration”) and supporting exhibits (submitted by Tessera with both its motion for summary judgment and its opposition to St. Paul’s motion for summary judgment) on the ground of relevance. Dkt. Nos. 34, 40. In his declaration, Williams offers testimony regarding an action entitled St. Paul Mercury Insurance Company v. Tessera Technologies, Inc., et al., Santa Clara Superior Court Case No. 110-cv-172266 (“Santa Clara Action”). While St. Paul is correct that the Santa Clara Action is not a binding authority and has no preclusive effect on this [1059]*1059court’s decision, this court may nevertheless consider the Santa Clara Action as an instructive authority. See Hart v. Massanari, 266 F.3d 1155, 1169-70 (9th Cir. 2001). That litigation involved the interpretation of the same language in the insurance Agreement that is now before this court (but with respect to PTI’s claims against Tessera in a different underlying action regarding a different PTI customer), and is therefore relevant to the present matter. The court overrules St. Paul’s objections to the Williams Declaration and supporting exhibits.

St. Paul also requested judicial notice of certain public documents in the court’s docket in the underlying action. Dkt. Nos.

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Cite This Page — Counsel Stack

Bluebook (online)
908 F. Supp. 2d 1054, 2012 WL 6002466, 2012 U.S. Dist. LEXIS 171481, Counsel Stack Legal Research, https://law.counselstack.com/opinion/st-paul-mercury-insurance-v-tessera-inc-cand-2012.