Lebas Fashion Imports of USA, Inc. v. ITT Hartford Insurance Group

Lebas Fashion Imports of USA, Inc. (Lebas), appeals from a summary judgment granted in favor of ITT Hartford Insurance Group (Hartford) on Lebas’s first amended complaint for breach of an insurance contract and breach of the implied covenant of good faith. After Lebas had been sued in federal court for trademark infringement, Hartford, which had issued a commercial general liability (CGL) policy to Lebas, denied coverage and refused to provide Lebas with a defense on the ground that the policy did not provide coverage for a claim based on trademark infringement. Lebas thereafter defended and settled the federal suit and then commenced this action.

We agree with Lebas that the “advertising injury” coverage provided under Hartford’s CGL policy does extend to a claim for trademark infringement. This is so because the applicable advertising injury offense set out in Hartford’s policy is ambiguous and, in the context of the entire policy and all of the relevant circumstances, Lebas had an objectively reasonable expectation of coverage. This requires us to resolve that ambiguity in Lebas’s favor. As a result, based on the allegations of the underlying federal action, a…