Paper Recovery of Northern California v. Travelers Casualty & Surety Co.

MEMORANDUM *

The district court correctly concluded that Travelers Casualty and Surety Company of Illinois (“Travelers”) did not have a duty to defend a suit by Havas Interactive against its insured, Paper Recovery of Northern California (“Paper Recovery”). Even assuming that the bare allegation of “advertising” activity in the Havas complaint constitutes an allegation of “widespread promotional activity” 1 that falls within the “advertising injury” provisions of the Travelers’ policy, the district court correctly concluded that the policy’s exclusion for advertising injuries “arising out of breach of contract” applied.

It is undisputed that the agreement between Paper Recovery and Havas did not permit Paper Recovery to simply resell Havas software instead of recycling/destroying it. As early as Paper Recovery’s initial notice to Travelers of the potential claim, Paper Recovery asserted it “was hired to destroy computer software from Havas Interactive” and that Havas had alleged that “instead of destroying the software, [it] allowed the software to be distributed to stores.” Even though exclusionary clauses are interpreted narrowly against the insurer, State Farm Mutual Auto.…