In The Aluminum Trailer Co. v. Westchester Fire Ins. Co., No. 21-1538 (January 31, 2022), the Seventh Circuit affirmed the lower court’s dismissal of the plaintiff trailer company’s lawsuit brought against its insurer after the plaintiff was sued by a competitor for breach of contract. The District Court determined that the defendant insurer did not have a duty to defend and indemnify the plaintiff in underlying lawsuit in which plaintiff was accused of manufacturing and selling knock-off trailer by using the competitor’s designs.
In October 2014, Aluminum Trailer Company (“ATC”) contracted with BizBox to manufacture trailers using BizBox’s design. ATC had promised not to use BizBox’s design for any other purpose and it manufactured roughly 70 trailers for BizBox customers over the next three years. Meanwhile, ATC purchased a commercial general liability insurance policy from Westchester Fire Insurance Company in 2016. The policy provided coverage against liability incurred because of an “advertising injury.” That defined term included trade dress infringement. BizBox then sued ATC for breach of contract and interference with its business expectancies, alleging that ATC manufactured and sold a knock-off trailer using BizBox’s design and sold the trailer directly to a BizBox customer for a lower price using the ATC name and logo.
The relevant policy issued by defendant provided coverage against liability because of “advertising injury,” which included trade dress infringement claims. The Seventh Circuit held that the District Court. could properly find that defendant was not required to indemnify or defend plaintiff in underlying claim against plaintiff, where underlying lawsuit did not allege infringement of trade dress in plaintiff’s advertising. While plaintiff asserted that instant action could proceed because underlying complaint could be construed to plausibly allege trade dress infringement claim, the Court of Appeals found that there were no facts in underlying lawsuit that could be construed to support assertion that the relevant injury stemmed from plaintiff’s alleged advertisement. The fact that the underlying lawsuit alleged that plaintiff had removed BizBox’s logo and inserted plaintiff’s logo on trailer did not require different result.
Thus, the Seventh Circuit held that the policy did not cover any of the claims BizBox raised in its suit against ATC.
“ATC attempts to read such a claim where none plausibly exists. The district court found ATC’s argument – that its logo affixed to the knock-off trailer is an advertisement as defined under the Policy-unpersuasive because no facts from the BizBox complaint could be construed to support the assertion that the injury stemmed from the alleged advertisement. We agree with the district court,” Circuit Judge Michael Kanne wrote. “Therefore, Westchester’s duty to defend under the ‘personal and advertising injury’ provision of the Policy was never triggered.”