| Q&A of the Week |
Coverage for Repossessed Vehicle
An Ohio subscriber recently asked the following question:
In the Auto Dealers Declarations form, under Item Six, there is a category listed as "Interests Covered—All Interests in Any Auto Not Owned by You or any Creditor while in Your Possession On Consignment for Sale." Could this coverage apply if our insured repossessed a vehicle and had the vehicle on its lot?
ANSWER: It depends on who owns the car. If the insured owns it or the creditor owns it, there is no coverage under this category. What that portion of Item Six applies to is if, for example, I own the car outright and give it to the insured on consignment for sale. The insured and I would have an interest in the car. If a creditor that owned the car gave it to the insured on consignment, that section of the form is not applicable.
So, the answer to the question depends on who owns the repossessed vehicle. Presumably, when a car is repossessed, the person that bought the car has not made the payments and the creditor is taking back the car. The creditor (perhaps the insured; you did not specify) holds the actual title until the car is paid for, but the buyer is held responsible for the ownership of the car. So, you might want to check with an attorney who is familiar with the law in your area on this point. |
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| Litigation Watch |
Slogan Infringement Coverage Dispute
This case came before the court upon the cross motions by the parties for summary judgment. This case is Auto Mobility Sales v. Praetorian Insurance Company, 2015 WL 3970578.
Auto Mobility Sales, the insured, sells and rents handicap-enabled vehicles. Florida Van Rentals, d/b/a Discount Mobility USA and Medical Travel, filed a lawsuit against Auto Mobility alleging claims of unfair competition and trademark infringement for using the terms "discount mobility" and "medical travel" in advertisements.
Auto Mobility was insured under a general liability policy issued by Praetorian. This policy applied to damages because of personal and advertising injury but excluded coverage for infringement of copyright, patent, trademark, or secret. However, an exception to the exclusion allowed coverage for infringement, in the named insured's advertisement, of copyright, trade dress, or slogan. When the insured was sued, it sent the complaint to Praetorian, but the insurer declined coverage, asserting that the policy excludes the trademark infringement claims made by Florida Van Rentals.
Auto Mobility initiated this action seeking a summary judgment that Praetorian is obligated to defend and indemnify Auto Mobility. Praetorian moved for summary judgment, claiming there was no duty to defend or indemnify because the complaint against the insured did not allege slogan infringement. The United States District Court, S.D. Florida, said the central issue here was whether the underlying claims alleged slogan infringement, triggering Praetorian's duty to defend and indemnify.
The court noted that under the terms of the policy, the insurer only has a duty to defend and indemnify the insured against trademark infringement when the infringement is based on an advertisement of copyright, trade dress, or slogan. Since neither party argues that the underlying litigation is based on advertisement of copyright or trade dress, the only determination to be made, said the court, was whether the infringement claim is based on the infringement of a slogan.
The court found that the policy wording was not ambiguous. There was coverage for the infringement of a slogan. Using judicial precedent, the district court said that a slogan must be different from the company name or product. In this instance, the court declared that the terms "discount mobility" and "medical travel" and the name of the insured (Discount Mobility USA and Medical Travel) are the same and so, the disputed words are not slogans. Moreover, the court noted that none of the claims in the underlying lawsuit specifically alleged slogan infringement.
Therefore, the court ruled that since the underlying complaint did not explicitly or implicitly allege slogan infringement, Praetorian did not have a duty to defend or indemnify Auto Mobility. The insurer's motion for summary judgment was granted.
Editor's Note: The U.S. District Court for the Southern District of Florida used guidance from the Second Circuit and a court of the Southern District of Florida to determine that a slogan must be different from the company name. In this instance, the terms used by the insured in its advertisements were the same as its company name, and so, the policy offered no coverage for the infringement claims made against the insured.
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