Time Warner Entertainment, Co. v. Continental Casualty Co.

MEMORANDUM *

Continental Casualty Co. (“Continental”) appeals from the district court’s grant of summary judgment to Time Warner Entertainment Co. (“Time Warner”) on its duty to defend claim. Because the relevant facts are known to the parties they are not repeated here.

I

At the outset, we note that the scope of the duty to defend is broad under California law. “An insurer ... bears a duty to defend its insured whenever it ascertains facts which give rise to the potential of liability under the policy.” Gray v. Zurich Ins. Co., 65 Cal.2d 263, 276-77 , 54 Cal.Rptr. 104 , 419 P.2d 168 (1966); see also Horace Mann Ins. Co. v. Barbara B., 4 Cal.4th 1076, 1081 , 17 Cal.Rptr.2d 210 , 846 P.2d 792 (1993) (“It is by now a familiar principle that a liability insurer owes a broad duty to defend its insured against claims that create a potential for indemnity.”); CNA Cas. of Cal. v. Seaboard Surety Co., 176 Cal.App.3d 598, 605 , 222 Cal.Rptr. 276 (1986) (“An insurer’s duty to defend must be analyzed and determined on the basis of any potential liability arising from facts available ... to it at the time of the tender of defense.”) (emphasis in original).

Indeed, “[i]n resolving the…

dissenting.

In my view, the insurance policy cannot reasonably be read to provide coverage for the claims made by Francis Ford Coppola and his co-plaintiffs in Coppola v. Warner Bros., Inc., because those claims did not “aris[e] out of’ any act “committed in the utterance or dissemination of Matter” under the meaning of paragraph I.A of the policy. There is simply no potential for liability here. Thus, no matter how broad the duty to defend may be under California law, there is no such duty here. I therefore respectfully dissent.

The policy obligates Continental to defend Time Warner against, and indemnify Time Warner for, liability resulting from only two types of claims. Those types of claims relate to two specific aspects of Time Warner’s business. Paragraph I.A, on which Time Warner bases its claim, covers the first type: claims arising from unlawful acts that Time Warner may commit in disseminating artistic or informational material to a mass audience. The contract explicitly limits coverage under I.A to claims based on unlawful acts “committed in the utterance or dissemination of Matter by the Insured [i.e., Time Warner] in the Business of the Insured.” In section IV,…