National Casualty Co. v. Launch Media, Inc.

MEMORANDUM *

Launch Media, Inc. and Yahoo! Inc., (collectively Launch Media) appeal the district court’s summary judgment in favor of National Casualty Company. The district court granted National declaratory relief, holding that the underlying copyright infringement suit, Arista Records v. Launch Media, constituted one loss; therefore, National had met its duty to defend by tendering defense under policy LS 012344, which covered the period from July 28, 1999 to July 28, 2000, and it had no duty to defend under policy LS 012344A, which covered the period from July 28, 2000 to July 28, 2001. We affirm.

Although the duty to defend in California is broad, Montrose Chem. Corp. v. Superior Court, 6 Cal.4th 287, 299 , 24 Cal.Rptr.2d 467 , 861 P.2d 1153 (1993), we agree with the district court that there is no possibility of coverage under National’s second policy. The underlying lawsuit tendered for coverage is the Arista Records action, which alleges the unlawful systematic transmission of copyrighted songs. Launch Media’s argument hinges on the transmittal of songs for the first time during the LS 0121344A policy period, but this is not a new loss because the alleged copyright…

dissenting:

This appeal does not call on us to resolve definitively the coverage dispute between the parties. The only issue is whether National Casualty’s duty to defend has been triggered. To prevail on that issue under California law, National Casualty must affirmatively establish that no reasonable reader could have understood the insurance contract to provide coverage. Because I do not believe that National Casualty has met that burden on this record, I respectfully dissent.

I

Under California law, the duty of a liability insurer to defend claims asserted against an insured is extremely broad. Montrose Chemical Corp. v. Canadian Universal Ins. Co., Inc., 6 Cal.4th 287, 295 , 24 Cal.Rptr.2d 467 , 861 P.2d 1153 (Cal.1993). An insurer must defend its insured against a suit “which potentially seeks damages within the coverage of the policy.” Gray v. Zurich Insurance Co., 65 Cal.2d 263, 275, 54 Cal.Rptr. 104 , 419 P.2d 168 (Cal.1966). This obligation can be excused only when the third party complaint “can by no conceivable theory raise a single issue which could bring it within the policy coverage.” Montrose Chemical Corp., 6 Cal.4th at 287 , 24 Cal.Rptr .2d 467, 861 P.2d 1153…