Copart, Inc. v. Travelers Ins.

MEMORANDUM *

The district court granted summary judgment in favor of Copart, Inc. on its claim for breach by Travelers Insurance Co. of the duty to defend the Woltz lawsuit, awarded prejudgment interest, and granted summary judgment in favor of Travelers on Copart’s bad faith claim. Both parties appealed. We have jurisdiction and we affirm.

I

Travelers argues that there was no duty to defend the Woltz action because Copart was not sued for copyright infringement committed “in the course of’ its advertising. Although the Woltz complaint did not specifically articulate an advertising claim, the copyright infringement that it did allege could encompass copies of the program interface which Copart left with potential customers as a demonstration of its services. Copart made Travelers aware of this. “[Fjacts disclosing a bare potential for coverage are sufficient to require a defense.” Peerless Lighting Corp. v. American Motorists Ins. Co., 82 Cal.App.4th 995 , 98 Cal.Rptr.2d 753, 759 (Cal.Ct.App.2000); Montrose Chemical Corp. v. Superior Court, 6 Cal.4th 287, 300 , 24 Cal.Rptr.2d 467 , 861 P.2d 1153 (Cal. 1993) (“the insured need only show that the underlying claim may fall within…