Atmel Corp. v. St. Paul Fire & Marine Insurance

ORDER GRANTING IN PART AT-MEL’S MOTION FOR PARTIAL SUMMARY JUDGMENT AND DENYING ST. PAUL’S MOTION FOR SUMMARY JUDGMENT

On February 17, 2006, the Court heard oral argument on Atmel’s motion for partial summary judgment and St. Paul’s motion for summary judgment. Having carefully considered the arguments of counsel and the papers submitted, the Court hereby GRANTS IN PART Atmel’s motion and DENIES St. Paul’s motion.

BACKGROUND

Plaintiff Atmel Corporation (“Atmel”) is a company that manufactures computer chips. Atmel obtained general liability and errors and omissions insurance from defendant St. Paul Fire & Marine Insurance Company (“StPaul”) beginning January 1, 2002. This lawsuit arises out of St. Paul’s refusal to defend Atmel in a now-settled lawsuit brought by one of Atmel’s customers, Seagate Corporation. In that lawsuit, which the parties refer to as the “Seagate Action,” Seagate alleged that At-mel sold it defective computer chips and that Seagate had notified Atmel of the problems in the fall of 2001. St. Paul denied a defense in the Seagate Action and, after Atmel filed the instant lawsuit, St. Paul unilaterally rescinded Atmel’s insurance policy on the ground that…