The Aluminum Trailer Company d/b/a ATC Trailers v. Westchester Fire Ins. Co., 2022 WL 278614 (7th Cir. 2022)
Aluminum Trailer Company d/b/a ATC Trailers (“ATC”) was sued by Sidi Spaces, LLC d/b/a BizBox (“BizBox”) for breach of contract and tortious interference with its business expectancies. BizBox alleged that ATC manufactured and sold a “knock-off” trailer using BizBox’s design but placed ATC’s name and logo over BizBox’s name and logo on the trailer. At the time, ATC had a commercial general liability insurance policy with Westchester Fire Insurance Company that provided coverage for “personal and advertising injury.”
After the lawsuit was filed, ATC requested a defense and indemnity from Westchester, which denied coverage. ATC then sued Westchester and sought a declaratory judgment that BizBox’s complaint alleged “personal and advertising injury” and thus triggered Westchester’s duty to defend and indemnify ATC. The policy defined “personal and advertising injury” to include injury arising out of “[i]nfringing upon another’s…trade dress…in your ‘advertisement.’” The policy further defined “advertisement” to include “a notice that is broadcast or published to the general public or specific market segments about your goods, products, or services for the purposes of attracting customers or supporters.” ATC contended that BizBox’s complaint alleged a trade dress infringement and that ATC’s placement of its logo on the knock-off trailer was an “advertisement” as defined by the policy. The district court rejected ATC’s argument and granted Westchester’s motion to dismiss.
On appeal, the Seventh Circuit affirmed the district court’s decision and agreed that BizBox’s complaint contained no facts that could plausibly be construed to allege any advertising injury, as needed to trigger coverage under the policy. It further rejected the argument that the allegations of the breach of contract and tortious interference with contract presented a “trade dress” claim to trigger coverage. Thus, Westchester had no duty to defend or indemnify ATC against BizBox’s complaint.
This case shows that even though the duty to defend is broader than the duty to indemnify, it is not limitless. Courts should thoroughly review the underlying complaint to determine whether the allegations against the insured can reasonably be construed to trigger the requirements for coverage.