Ross v. Briggs and Morgan
1994 WL 411710, 520 N.W.2d 432 (1994)
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Rule of Law:
An insurer's duty to defend a lawsuit is broader than its duty to indemnify and is triggered if any part of the claim against the insured is arguably covered by the policy. Courts will look beyond the specific legal claims in a complaint to the underlying facts to determine if coverage is potentially triggered.
Facts:
- Dr. Scott M. Ross was a dermatologist employed by Dr. Manuel Jaffe's practice, Skin Diseases P.A.
- In April 1987, Ross resigned and, without permission, took an 8,000-name client list belonging to Jaffe.
- Ross incorporated his own practice, 'Skin Physicians, P.A.', and obtained a commercial general liability insurance policy from St. Paul Fire and Marine Insurance Company, effective April 15, 1987.
- The policy covered 'advertising injury,' which included the 'unauthorized taking of advertising ideas or style of doing business' and 'infringement of copyright, title or slogan.'
- On April 30, 1987, Ross sent a letter on 'Skin Physicians, P.A.' letterhead to all 8,000 patients on the list he took, announcing the opening of his new office.
- Ross also created advertisements that were stylistically similar to Jaffe's and used the name 'Institute of Cosmetic and Laser Surgery,' which resembled Jaffe's business name, 'Institute of Cosmetic Surgery and Hair Transplants.'
Procedural Posture:
- Dr. Manuel Jaffe sued Dr. Scott M. Ross for breach of contract, tortious interference with business, and other business torts.
- Ross, represented by the law firm Briggs and Morgan, settled the lawsuit with Jaffe.
- Ross subsequently filed a lawsuit in a Minnesota district court (the court of first instance) against Briggs and Morgan for legal malpractice and against St. Paul Fire and Marine Insurance Company.
- The district court granted summary judgment in favor of Briggs and Morgan, concluding that Ross was not damaged by the alleged malpractice because his insurance policy would not have covered Jaffe's claims as a matter of law.
- Ross, as appellant, appealed the district court's grant of summary judgment to the Minnesota Court of Appeals (the intermediate appellate court).
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Issue:
Does an insurer have a duty to defend an insured when the underlying claims for business torts, such as unfair competition, are arguably covered by the policy's definition of 'advertising injury,' even if the complaint does not explicitly label the claims as such?
Opinions:
Majority - Schumacher, J.
Yes. An insurer's duty to defend arises when the claims against the insured are arguably within the scope of the policy's coverage. The court reasoned that the duty to defend is broader than the duty to indemnify. Ross's actions, including sending a mass-mailing letter to solicit business, constituted 'advertising' under the policy's plain meaning. The claims brought by Jaffe for deceptive trade practices and unfair competition, which alleged Ross was 'passing off' his services as Jaffe's, were arguably covered by the policy's 'unauthorized taking of advertising ideas or style of doing business' clause. Similarly, Ross's use of business names similar to Jaffe's arguably constituted an 'infringement of... title or slogan.' Because the claims were arguably covered, the duty to defend was triggered, and the law firm's failure to advise tendering the defense could have damaged Ross.
Analysis:
This decision reinforces the expansive nature of an insurer's duty to defend. It instructs courts and practitioners to look at the factual allegations underlying a complaint, rather than just the formal legal claims, to determine if insurance coverage is potentially triggered. The case signifies that even if coverage is questionable, any arguable connection between the claims and the policy's language is sufficient to create a duty to defend. This places a significant burden on insurers to defend claims unless policy exclusions unambiguously apply, and it encourages insured parties' counsel to tender defense in a wide range of circumstances.
