Holyoke Mut. Ins. Co. v. Vibram USA, Inc.

480 Mass. 480

106 N.E.3d 572

HOLYOKE MUTUAL INSURANCE COMPANY IN SALEM & another¹

v.VIBRAM USA, INC.

SJC-12401

Supreme Judicial Court of Massachusetts, Suffolk..

Argued February 6, 2018

Decided September 12, 2018

Steven P. Wright, Boston, for the defendant.

Robert L. Ciociola, Lynnfield, for Maryland Casualty Company.

Michael D. Riseberg (David B. Stanhill also present), Boston, for Holyoke Mutual Insurance Company in Salem.

Laura A. Foggan, of the District of Columbia, & Jon C. Cowen, Boston, for Complex Insurance Claims Litigation Association, amicus curiae, submitted a brief.

Present: Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher, & Kafker, JJ.

LOWY, J.

This appeal stems from an insurance coverage dispute between the insured, Vibram USA, Inc. (Vibram),² and two insurers, Holyoke Mutual Insurance Company in Salem and Maryland Casualty Company, which had issued several general commercial liability policies (the policies) to Vibram.³ The heirs of the late, famed marathon runner Abebe Bikila sued Vibram in Federal court for improperly using the name "Bikila" to advertise Vibram's running shoes. Vibram tendered the defense to the insurers, who denied coverage on the ground that a provision in the policies covering improper use of another's advertising idea did not cover the claims raised in this action. The insurers, however, agreed to fund Vibram's defense under a reservation of rights. The insurers then commenced an action in the Superior Court seeking a declaration that they were not obligated to defend Vibram in the underlying action. A Superior Court judge granted the insurers' motion for summary judgment on that ground. Vibram appealed.

We conclude that the allegations in the underlying complaint were sufficient to trigger the insurers' duty to defend under the provision of the policies covering the use of another's advertising idea, and therefore, the insurers have an obligation to defend Vibram in the underlying action. Accordingly, we reverse the allowance of the insurers' motion for summary judgment.⁴

1. Factual background and procedure. a. The policies. Between 2009 and 2011, Vibram, a producer of minimalistic shoes that simulate walking and running barefoot, purchased from the insurers the policies, which, among other things, provide coverage for "personal and advertising injury liability." With certain enumerated exceptions, the policies state that the insurers have a duty to defend Vibram from any suit seeking damages for covered losses, particularly for claims seeking damages against Vibram for "advertising injury."

The particular form of advertising injury at issue in this case is the one described in clause (f) of the policies as "[t]he use of another's advertising idea in your ‘advertisement.’ " The policies define "advertisement" as a "notice that is broadcast or published to the general public or specific market segments about your foods, products or services for the purpose of attracting customers or supporters." The policies do not define the term "advertising idea."b. The underlying action. In 2015, while the policies were in effect, the living heirs of Abebe Bikila (Bikila family), the famed runner who won the 1960 Olympic marathon while running barefoot,⁵ commenced the underlying action against Vibram in the United States District Court for the Western District of Washington. The Bikila family's complaint alleges that Vibram had misused their late relative's name in advertising and promoting Vibram's " ‘FiveFingers’ line of minimalist running shoes ... [that are designed] to mimic biomechanical properties of barefoot running while providing the protection of a conventional shoe." The complaint contends that Vibram's "Bikila model shoes are named after Abebe Bikila and are intended to associate [Vibram's] commercial footwear with Abebe Bikila's legendary barefoot Olympic feats." The complaint alleges, in relevant part, that the Bikila family has "by their commercial uses, sponsorships and promotion of historical and education events, and multimedia events emphasizing the cultural and athletic legacy of Abebe Bikila, ... intentionally associated their family name with Abebe Bikila's barefoot dedication to succeed under any circumstances."

The Bikila family's commercial uses of the name Bikila include: (1) operating a sporting goods store bearing the name "Abebe Bikila"; (2) publishing a book entitled "Triumph and Tragedy: A History of Abebe Bikila and his marathon career"; (3) authorizing the use of "Abebe Bikila" in a Japanese commercial; and (4) authorizing a feature film portraying the last years of Abebe Bikila's life. Further, the Bikila family has operated an Internet Web site "offer[ing] a comprehensive experience of the life and legacy of Abebe Bikila ... contain[ing] pictures, videos, news events, and information on current races such as the Abebe Bikila International Marathon ... held annually in Addis Ababa, which is sponsored by the Bikila Family."

The complaint enumerates four counts: (1) a violation of the Washington Personality Rights Act; (2) Washington Consumer Protection Act claims; (3) a claim of false designation and Federal unfair competition in violation of the Lanham Act, 15 U.S.C. § 1125(a) ; and (4) a claim that Vibram had been unjustly enriched by its unauthorized use of Abebe Bikila's name.

c. Coverage dispute. As indicated previously, after denying that they had a duty to defend Vibram and agreeing to fund the defense under a reservation of rights, the insurers commenced an action in Superior Court, seeking a declaration that they did not have a duty to defend Vibram in the underlying action because the complaint did not raise claims covered by the policies. Vibram counterclaimed, seeking a declaration that the claims in the underlying action were covered by the policies, and therefore, that the insurers were obligated to defend Vibram. Following cross motions for summary judgment, the motion judge agreed with the insurers. Specifically, the judge concluded that the complaint did not raise a claim that Vibram had used another's advertising idea in Vibram's advertisement. According to the judge, the complaint only raised claims implicating a "personality right" -- an intellectual property right,⁶ and a claim that is excluded from coverage under the policies.⁷ We disagree.

2. Discussion. "Our review of a motion judge's decision on summary judgment is de novo, because we examine the same record and decide the same questions of law." Kiribati Seafood Co., LLC v. Dechert LLP, 478 Mass. 111, 116, 83 N.E.3d 798 (2017). See Mass. R. Civ. P. 56 (c), as amended, 436 Mass. 1404 (2002).

The issue before us is whether the allegations in the complaint raise a claim that is potentially covered under the policies, thus triggering the insurers' duty to defend Vibram. "It is settled that an insurer's duty to defend is independent from, and broader than, its duty to indemnify." Metropolitan Prop. & Cas. Ins. Co. v. Morrison, 460 Mass. 352, 357, 951 N.E.2d 662 (2011), quoting A.W. Chesterton Co. v. Massachusetts Insurers Insolvency Fund, 445 Mass. 502, 527, 838 N.E.2d 1237 (2005).⁸ An insurer's duty to defend the insured is triggered where the allegations in the complaint "are reasonably susceptible of an interpretation that states or roughly sketches a claim covered by the policy terms," Billings v. Commerce Ins. Co., 458 Mass. 194, 200, 936 N.E.2d 408 (2010), notwithstanding the possibility that the underlying claim may ultimately fail, or that the merits of the claim are weak or frivolous. See Metropolitan Prop. & Cas. Ins. Co., supra at 358, 951 N.E.2d 662.

"A liability insurer's duty to defend is determined by comparing the allegations in the third-party complaint against the provisions of the insurance policy." Deutsche Bank Nat'l Ass'n v. First Am. Title Ins. Co., 465 Mass. 741, 744-745, 991 N.E.2d 638 (2013). The underlying complaint "need only show, through general allegations, a possibility that the liability claim falls within the insurance coverage. There is no requirement that the facts alleged in the complaint specifically and unequivocally make out a claim within the coverage." Billings, 458 Mass. at 200-201, 936 N.E.2d 408, quoting Sterilite Corp. v. Continental Cas. Co., 17 Mass. App. Ct. 316, 319, 458 N.E.2d 338 (1983). Accordingly, a duty to defend does not turn on the specific cause of action enunciated by the pleader or require that the complaint mirror the policy's coverage language. See Boston Symphony Orch., Inc. v. Commercial Union Ins. Co., 406 Mass. 7, 12-13, 545 N.E.2d 1156 (1989). Rather, the analysis focuses on "envisaging what kinds of losses may be proved as lying within the range of the allegations of the complaint, and then seeing whether any such loss fits the expectation of protective insurance reasonably generated by the terms of the policy." Billings, supra at 201, 936 N.E.2d 408, quoting Boston Symphony Orch., Inc., supra at 12-13, 545 N.E.2d 1156. "Any uncertainty as to whether the pleadings include or are reasonably susceptible to an interpretation that they include a claim covered by the policy terms is resolved in favor of the insured ...." Deutsche Bank Nat'l Ass'n, 465 Mass. at 745, 991 N.E.2d 638.

Vibram's principal contention is that the Superior Court judge erred in concluding that the complaint did not assert a claim that it had used the Bikila family's advertising idea when it advertised its running shoes. According to Vibram, the advertising idea alleged in the complaint was the Bikila family's intentional association of their family name with Abebe Bikila's legacy and desirable qualities, and their use of the name "Bikila" to advertise the family's running-related commercial ventures. Therefore, because use of an "advertising idea" is within the scope of covered "advertising injur[ies]" covered by the policies, Vibram claims that the insurers had a duty to defend it in the underlying action. We agree.

"As with any contract, in interpreting...