Charles H. CAHILL; Aniko Der Cahill, Plaintiffs-Appellants, v. LIBERTY MUTUAL INSURANCE CO., Defendant-Appellee

Charles and Aniko Cahill filed suit against Liberty Mutual Insurance Co. (Liberty), seeking to recover from Liberty the amount of an existing default judgment obtained in the Los Angeles County Superior Court against Associated Farm Management, Inc. (AFM). Upon remand from this court, the district court dismissed the complaint without leave to amend, determining that the Cahills could not bring a direct action against Liberty, and that the “advertising injury” clause of the insurance policy did not cover the damages granted by the default judgment. On appeal, the Cahills argue that the district court should not have dismissed the case. We affirm on the basis that the policy does not cover the Cahills’ claim.

BACKGROUND

For the purposes of this appeal we assume the following facts: Although AFM’s business primarily consisted of the management of agricultural properties owned by others, it also marketed agricultural properties as an adjunct to its primary business. In July of 1983, the Cahills bought certain agricultural property known as Valley View Farms from a third party. AFM participated in the marketing and advertising of that property. The investment prospectus AFM provided…