(Los Angeles) – For the second time in a week, Akin Gump secured an appellate victory—this time before the U.S. Court of Appeals for the 9th Circuit—in a case addressing the scope of an insurer’s duty to defend its policyholders under commercial general liability insurance policies that cover claims for disparaging a person or organization’s product or services.

GK Skaggs, Inc. v. Hartford Casualty Insurance Company centered on a beer distributor that was involved in the distribution of Guatemalan beer in the Midwest. The plaintiff in the underlying action was another distributor of the same beer in the same part of the country that sued Skaggs and the beer manufacturer alleging wrongful termination of its distribution rights. Skaggs tendered defense of the suit to Hartford, asserting that the suit was for disparagement, but Hartford denied it had a duty to defend.

The 9th Circuit agreed with Hartford, holding that:

  • any disparaging statements about the plaintiff in a letter Skaggs sent terminating its distribution relationship with the plaintiff were not the basis of the lawsuit
  • the plaintiff’s assertion that Skaggs violated the Lanham Act by falsely implying that it had authority to sell the particular beer in Wisconsin when it was the plaintiff that had the exclusive right to sell the beer there did not give rise to a disparagement claim because the plaintiff did not allege that Skaggs said anything about the parties’ respective distribution rights in the state, much less that Skaggs said it had the exclusive distribution rights there
  • even if the allegations in the underlying complaint gave rise to a disparagement claim, Hartford still would not have a duty to defend because any disparagement stemmed from the alleged breach of the parties’ beer distribution contracts and, thus, would fall within the policy’s exclusion for claims arising from a breach of contract.