UMG Recordings, Inc. v. American Home Assurance Co.

MEMORANDUM **

UMG Recordings, Inc. appeals the district court’s grant of summary judgment in favor of American Home Insurance Company (American). The district court concluded that American did not have a duty to defend Island Def Jam Music Group, a division of UMG, from a suit filed against Def Jam by TVT Records, Inc. and TVT Music, Inc. TVT’s suit against Def Jam arose from a contract dispute between Def Jam and TVT concerning the right to pro *554 duce and market recorded music performances by a rap group known as Cash Money Click (CMC). TVT alleged, inter alia, claims for copyright infringement and breach of contract arising out of Def Jam and its president Lyor Cohen’s alleged intentional interference with TVT’s release of the CMC Album by inducing two of the artists in CMC to withhold the master recording of the CMC Album from TVT. The district court held that under American’s commercial general liability insurance policies, TVT’s complaint did not trigger American’s duty to defend TVT’s suit against Def Jam because it did not allege “property damage” or “personal and advertising injury.” UMG challenges that ruling, contending that TVT alleged both “property damage” and…

concurring in part and dissenting in part:

I concur in the majority’s disposition except with respect to the claim of disparagement (a form of “personal injury” under the policy), as to which I would reverse and remand for further proceedings.

The complaint alleges that Defendants sought to “destroy the relationship between TVT and the Artists by ... mis-characterizing to the Artists TVT’s efforts to protect TVT’s rights to put out the *557 CMC Album.” TVT claims that it suffered loss of customers (artists who would sign with it), diminution of business, lost revenue, and lost profits as a result. False statements that may influence a third party not to use the plaintiffs services, to the financial detriment of the plaintiff, trigger the duty to defend a claim of disparagement of services. See Atl. Mut. Ins. Co. v. J. Lamb, Inc., 100 Cal.App.4th 1017 , 123 Cal.Rptr.2d 256, 269-72 (2002) (discussing disparagement allegations and the tort of “trade libel” and holding that the insurer had a duty to defend because the facts alleged a claim covered by the insurance contract’s “personal injury” clause, which is identical to the clause here). In context, the allegation that TVT will…