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Sentinel Insurance Co. v. Beach For Dogs Corp.

United States District Court, N.D. Illinois, Eastern Division

December 21, 2017




         On February 22, 2017, Sentinel Insurance Company (“Sentinel”) filed a Complaint against Beach for Dogs Corporation (“BFD”), Beach for Dogs Aurora (“BFD Aurora”), and Steve Holland, individually and d/b/a Beach for Dogs (“Holland”) (collectively, “Beach for Dogs”). The Complaint seeks declaratory judgment on ten claims concerning Sentinel's duty to defend and cover Beach for Dogs in an underlying lawsuit (“Woofbeach suit”). On April 28, 2017, Beach for Dogs answered the Complaint and filed a four-count Counterclaim against Sentinel.

         Now before the Court are the parties' cross-motions for summary judgment. Beach for Dogs seek partial summary judgment on the following two counts from their Counterclaim. Count I: Declaratory Judgment of Sentinel's Duty to Defend and Indemnify Beach for Dogs in the Woofbeach suit; Count II: Judgment that Sentinel was in Breach of Contract. In turn, Sentinel requests summary declaratory judgment in its favor on the following five counts from its Complaint. Count I: No “Bodily Injury” or “Property Damage” Caused by an “Occurrence”; Count II: No “Personal and Advertising Injury”; Count V: BFD Aurora is Not an Insured Under the Sentinel Policy; Count VII: Intellectual Property Exclusion Precludes Coverage; and Count X: Personal and Advertising Exclusion in the Excess Umbrella Coverage Precludes Coverage.


         The following facts taken from the record are undisputed, except where otherwise noted.

         I. Underlying Woofbeach Suit

         On November 3, 2016, Woofbeach, Inc. (“Woofbeach”) filed a complaint against Beach for Dogs in a suit styled Woofbeach, Inc. v. Steve Holland, Individually and d/b/a Beach for Dogs, Beach for Dogs Aurora, Inc., and Beach for Dogs Corporation, Case No. 16-cv-10315 (“Woofbeach suit”), currently pending in the U.S. District Court for the Northern District of Illinois. At the heart of the Woofbeach suit is a dispute about the appearance of two logos, one utilized by Woofbeach and another by Beach for Dogs. Paragraphs 29 and 30 of Woofbeach's first amended complaint[1] allege:

29. Exhibit C, attached hereto, consists of marketing materials in the form of door hanger advertisements respectively distributed by Woofbeach and Beach for Dogs. The door hanger on the left side of Exhibit C includes the Woofbeach Word Mark as well and the Woofbeach Design Mark; the door hanger on the right in Exhibit A includes the Beach for Dogs name and logo and reflects the confusingly similar name and design elements, in addition to the similarities in the layout of the advertisement.
30. Woofbeach began using its door hangers in marketing its services in late 2014 and, on information and belief, Beach for Dogs began using its door hanger sometime in 2016.

         Contrary to the allegation in Woofbeach's first amended complaint, Sentinel states that Beach for Dogs began using their logo sometime in 2015. Beach for Dogs deny that they began using the logo that year.

         Woofbeach also includes allegations of injury that extend beyond the mere utilization of the logo in the door hangers. The most obvious of such allegations are as follows:

20. Holland's ongoing use of the “Beach for Dogs” business name and a logo containing nearly identical graphic elements as the Woofbeach Design Mark is deceptive and creates a likelihood of confusion in the minds of consumers as to a possible affiliation or connection of Beach for Dogs with Woofbeach and thereby trades on the goodwill and infringes the rights of Woofbeach in its service marks.
23. The “Beach for Dogs” name and related logo are confusingly similar to the Woofbeach Word Mark and Woofbeach Design Mark and, on information and belief, Holland's use of the Beach for Dogs name and logo has resulted in instances of actual consumer confusion between the two businesses.
27. The continued use of the name, “Beach for Dogs” and related logo by Holland will continue [to] cause confusion in the minds of the consuming public as to the existence of a relationship between Woofbeach's dog training and grooming business and Holland's business….

         Count I of the Woofbeach suit, which states a trademark infringement claim, also refrains from discussing the door hangers. It instead requests relief for Beach for Dogs' alleged current and continued infringement “upon Woofbeach's Service Marks by the continued operation of [the] business under the name ‘Beach for Dogs'” and “the promotion of its dog training and grooming business through the use of confusingly similar ‘Beach for Dogs' name and logo containing design elements, namely the silhouette of a dog and palm tree….”

         Finally, Woofbeach's first amended complaint states the following four claims. Count I: Trademark Infringement under 15 U.S.C. §1125(a); Count II: violation of 815 ILCS 510/2, the Illinois Uniform Deceptive Trade Practices Act; Count III: violation of 815 ILCS 505/2, the Illinois Consumer Fraud and Deceptive Trade Practices Act; and Count IV: Tortious Interference with Prospective Economic Advantage.

         II. Relationship Between Sentinel and Beach for Dogs as Insurer/Insured

         At some point prior to the filing of this or the underlying Woofbeach suit, Sentinel issued to Beach for Dogs a policy of insurance bearing policy number 83 SBA NX5414 SA (“Policy”), effective from April 10, 2016, to April 10, 2017. The germane portion of the Policy sets forth language excluding Sentinel from having to cover an insured where specific intellectual property concerns manifest in an underlying lawsuit. This Intellectual Property Exclusion (“IP Exclusion”) can trigger depending on the nature of the alleged “Personal and Advertising Injury.” The relevant provision states as follows:

         B. ...

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