Peterson Tractor Co. v. Travelers Indemnity Co.

MEMORANDUM *

Both Peterson Tractor Company (“Peterson”) and Travelers Indemnity Company of Illinois (“Travelers”) appeal the judgment of the district court. We affirm in part and reverse in part.

I

The district court correctly held that Travelers had a duty to defend Peterson against an action brought against it by Kelly Tractor Company (“Kelly”). Kelly’s claims against Peterson clearly stated an advertising injury triggering Travelers’ duty to defend under California law. Kelly alleged that Peterson used the trademarks of Industria Meccanica Trivelle, to which Kelly had an exclusive license in the western hemisphere, without authorization. This claim stated an advertising injury, either as a misappropriation of Kelly’s advertising ideas, Lebas Fashion Imports of USA Inc. v. ITT Hartford Ins. Group, 50 Cal.App.4th 548, 59 Cal.Rptr.2d 36 (1996), as amended 50 Cal.App. 4th 1949A, or as an infringement of title, Maxconn Inc. v. Truck Ins. Exchange, 74 Cal.App.4th 1267 , 88 Cal.Rptr.2d 750, 751 (1999). Because Kelly’s complaint stated an injury potentially covered by Peterson’s insurance contract, Travelers breached its duty to defend when it refused to defend Peterson. Gray v.…