     Case: 14-60302      Document: 00512902809         Page: 1    Date Filed: 01/14/2015




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                          United States Court of Appeals
                                                                                   Fifth Circuit

                                                                                 FILED
                                      No. 14-60302                        January 14, 2015
                                                                            Lyle W. Cayce
NATIONWIDE MUTUAL INSURANCE COMPANY,                                             Clerk


                                         Plaintiff – Counter Defendant – Appellee

v.

GUM TREE PROPERTY MANAGEMENT, L.L.C.; THE SOUTHERN
GROUP OF MISSISSIPPI, INCORPORATED; WILSON COLEMAN,

                                         Defendants – Counter Claimants – Third
                                         Party Plaintiffs – Appellants

v.

THE NOWELL AGENCY, INCORPORATED; GREG BOST,

                                          Third Party Defendants – Appellees


                   Appeal from the United States District Court
                     for the Northern District of Mississippi
                             USDC No. 1:12-CV-181


Before REAVLEY, SMITH, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
      Nationwide Mutual Insurance Company sought a declaratory judgment
that it had no duty to defend or indemnify insureds in a suit filed in Kentucky


       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                 No. 14-60302
state court.   The district court granted summary judgment in favor of
Nationwide and the third-party defendants. The insureds now appeal. We
AFFIRM.
               FACTUAL AND PROCEDURAL BACKGROUND
      The claim that Nationwide had a duty to defend and indemnify arose
from litigation brought in Kentucky state court by Lexington Relocation
Services, LLC against three parties whom we will call the “Gum Tree
Defendants”: Gum Tree Property Management, LLC; The Southern Group of
Mississippi, Inc.; and Wilson Coleman. The plaintiff Lexington is a corporate
housing company that provides relocation services in several states. These
defendants rent and manage real estate in the Tupelo, Mississippi area.
Coleman is the president of both Gum Tree and The Southern Group.
      In the Kentucky litigation, Lexington claimed that one of its former
employees, Misty McGuire, had violated her obligations to Lexington while
working for these defendants. Lexington had hired McGuire in 2003 as an
account specialist. McGuire signed an employment agreement that prohibited
her from using or disclosing confidential information; working for or assisting
any entity that competed with Lexington within the business jurisdiction for
one year; working within the Lexington area for one year; and directly or
indirectly soliciting any of Lexington’s clients, customers, or employees.
      McGuire resigned from Lexington in July 2010. Lexington alleges that
McGuire almost immediately went to work for the Gum Tree Defendants
performing substantially the same marketing and sales tasks that she had
previously performed, in violation of her employment agreement. Lexington
claims that the Gum Tree Defendants were aware of the restrictions on
McGuire but solicited and received confidential information from McGuire and
used it to solicit Lexington’s current and prospective customers, causing
Lexington to suffer prejudice and incur damages.
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                                  No. 14-60302
      Lexington brought claims for: (1) tortious interference with contractual
relations, (2) tortious interference with actual and prospective business
advantages, (3) civil conspiracy, (4) conversion, (5) breach of fiduciary duty, (6)
breach of duty of loyalty, (7) aiding and abetting a fiduciary breach, (8)
misappropriation of trade secrets, (9) fraud, (10) negligent misrepresentation,
(11) unjust enrichment, (12) unfair competition, and (13) negligence per se.
      After Lexington filed suit, the Gum Tree Defendants demanded that
Nationwide provide a defense and indemnify them from any judgment. The
Gum Tree Defendants had nine different general commercial liability and
umbrella policies provided by Nationwide. Five policies were issued to The
Southern Group and four were issued to Gum Tree.
      Coleman purchased the policies from Greg Bost, an agent with the
Nowell Agency. The Gum Tree Defendants assert that Bost was their exclusive
insurance agent, and that Coleman directly contacted Bost with coverage and
claims questions.    Coleman allegedly never reported a claim directly to
Nationwide, as Bost was his liaison.
      The Gum Tree Defendants assert that sometime in July or August 2011,
shortly after being served with the complaint, Coleman called Bost to tell him
that the Gum Tree Defendants had been or were in the process of being sued.
Bost recalls the conversation but disputes that Coleman informed him that the
Gum Tree Defendants were being sued. According to Bost, Coleman was only
“vaguely complaining about a problem.”
      On March 14, 2012, eight months after being served, Coleman e-mailed
Bost to ask if Nationwide would provide coverage for the lawsuit.             Bost
responded the next day and requested a copy of the complaint. The attorney
for the Gum Tree Defendants e-mailed the complaint to a Nationwide adjuster.
The Gum Tree Defendants assert that in this e-mail their attorney informed
Nationwide that they denied all allegations of intentional wrongdoing.
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                                No. 14-60302
Nationwide sent Coleman a letter on May 1 informing him that it was still
investigating the claim but, pending a final determination, denied a duty to
defend or indemnify.
      Nationwide formally denied coverage on July 12 and 17, 2012. It then
brought this suit in the United States District Court for the Northern District
of Mississippi.   It sought a declaration that it had no duty to defend or
indemnify. The Gum Tree Defendants counterclaimed and also filed a third-
party complaint against Bost and the Nowell Agency, alleging breach of
fiduciary duty, breach of implied covenant of good faith and fair dealing, and
negligence. All of the parties filed motions for summary judgment.
      The district court issued two separate opinions granting summary
judgment for Nationwide, Bost, and the Nowell Agency. In the first opinion,
the district court agreed with Nationwide that it had no duty to defend or
indemnify in the Kentucky litigation. Based on this holding, the court issued
a second opinion in favor of Bost and the Nowell Agency. The Gum Tree
Defendants appeal both decisions.


                                DISCUSSION
      This court reviews a district court’s grant of summary judgment de novo,
applying the same standards as the district court. Catlin Syndicate Ltd. v.
Imperial Palace of Miss., Inc., 600 F.3d 511, 513 (5th Cir. 2010). Summary
judgment is proper “if the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.”
FED R. CIV. P. 56(a). “Under Mississippi law, construction of an insurance
policy presents a question of law, which we review de novo.” State Farm Mut.
Auto. Ins. Co. v. LogistiCare Solutions, LLC, 751 F.3d 684, 688 (5th Cir. 2014)
(citation omitted).


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                                       No. 14-60302
I. True Facts Exception
       Under Mississippi law, “an insurance company’s duty to defend its
insureds derives neither from common law nor statute, but rather from the
provisions of its policy . . . .” Baker Donelson Bearman & Caldwell, P.C. v.
Muirhead, 920 So. 2d 440, 450 (Miss. 2006). In most instances, an insurer’s
“duty to defend is neither greater nor broader than the duty to comply with its
other contractual obligations.” Id.
       Whether an insurer has a duty to defend is primarily determined by
comparing the policy language with the allegations in the underlying
complaint or declaration. Delta Pride Catfish, Inc. v. Home Ins. Co., 697 So. 2d
400, 403 (Miss. 1997) (citation omitted). “An insurance company's duty to
defend its insured is triggered when it becomes aware that a complaint has
been filed which contains reasonable, plausible allegations of conduct covered
by the policy.” Baker Donelson, 920 So. 2d at 451. 1
       There is a narrow exception to this general rule. Even if the allegations
in the underlying complaint do not trigger coverage, an insurer still has a duty
to defend if the insurer learns of facts — not mere assertions — that support
the existence of coverage:
       [W]here, through independent investigation, an insurer becomes
       aware that the true facts, if established, present a claim against
       the insured which potentially would be covered under the policy,
       the insurer must provide a defense until it appears that the facts
       upon which liability is predicated fall outside the policy's coverage.




       1 Some states, such as Texas, refer to this as the “eight-corners rule,” because what is
within the four corners of the policy is compared with the assertions within the four corners
of the complaint. See, e.g., GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d
305, 308 (Tex. 2006). Mississippi case law does not recognize that term, though some of this
court’s opinions have affixed the label to the similar analysis under Mississippi insurance
law. See, e.g., QBE Ins. Corp. v. Brown & Mitchell, Inc., 591 F.3d 439, 443 (5th Cir. 2009).
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                                 No. 14-60302
Auto. Ins. Co. of Hartford v. Lipscomb, 75 So. 3d 557, 559 (Miss. 2011) (citing
Mavar Shrimp & Oyster Co., Ltd. v. U.S. Fid. & Guar. Co., 187 So. 2d 871, 875
(Miss. 1966)).
      We just described the exception as “narrow” because the Mississippi
courts have applied the exception only when the insured becomes aware that
the “true facts” of the events leading to the claim support at least a duty to
defend. For example, in one of the more recent cases, the insurance company
investigated the claim and discovered — contrary to the complaint — that its
insured, who was covered only under a home-owner’s policy, admitted that the
structure subject to the claim was actually rental property. See Lipscomb, 75
So. 3d at 560–61. Because the person seeking coverage admitted to his insurer
facts proving there was no coverage, there was no duty to defend. Id.
      In an earlier case, we discussed the Mississippi doctrine in a manner
relevant to the case before us now. Am. States Ins. Co. v. Natchez Steam
Laundry, 131 F.3d 551, 553 (5th Cir. 1998). There, the insured argued that its
insurer had notice of true facts that triggered the duty to defend. Id. The
complaint alleged that the insured had acted intentionally at its laundry when
it engaged in bawdy behavior toward the plaintiff; the conduct constituted
sexual harassment and created a hostile work environment. Id. at 552. Based
on the assertions, the insurer determined there was no coverage because of an
intentional-act exclusion in the policy. Id. at 552–53. The insured, though,
argued that by informing the insurer that it denied acting intentionally, it
created a “true fact” sufficient to trigger the duty to defend. Id. at 553. This
court disagreed. We held that a denial “is not a ‘fact,’ but only an assertion.”
Id. A contrary conclusion would allow an insured to “trigger the duty to defend
merely by denying the allegations in the complaint.” Id.
      The Gum Tree Defendants suggest that Nationwide’s duty to defend was
triggered after it presented the insurer with various pleadings and evidence.
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                                  No. 14-60302
Their answer denied any intentional conduct. Coleman, president of the other
two Gum Tree Defendants, also presented a sworn affidavit that denied any
intentional conduct. The Gum Tree Defendants claim that these documents
establish the falsity of the underlying allegations.         The district court
determined that these items do not contain any true facts and are simply
denials of the allegations in the complaint.
      The general rule for determining whether the duty to defend has been
triggered relies on what the plaintiff alleges, regardless of what the defendant
denies, and compares the allegations to the policy language. Perhaps more
often than not in duty-to-defend cases, it is the plaintiff’s claim that creates
coverage. Here, though, as in Natchez Steam Laundry, the plaintiff’s claim
presents a case excluded from the coverage provided by the relevant policies.
We do not interpret the “true facts” rule to require an insurance company,
when the claim is outside coverage, to consider the denials in an answer when
deciding whether to defend or to review affidavits from the insured that
support the denials. Such a rule would transform the narrow exception into a
broad one. Mississippi case law does not support such a broad reading. Under
our diversity jurisdiction, we will not extend this state-law doctrine to a place
the state courts have not gone.
      We agree with the district court that a determination of coverage in this
case is limited to the underlying complaint.


II. Personal Injury
      The Gum Tree Defendants claim that they are entitled to coverage
because the underlying complaint contains allegations of a “personal injury.”
Each of the Nationwide policies extends coverage to a “personal injury” or a
“personal and advertising injury.”


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                                  No. 14-60302
      The commercial general liability policies issued to The Southern Group
define “[p]ersonal and advertising injury” to include “[o]ral or written
publication, in any manner, of material that slanders or libels a person or
organization or disparages a person’s or organization’s goods, products or
services” or “oral or written publication, in any manner, of material that
violates a person’s right of privacy.” The commercial general liability policies
issued to the Gum Tree Defendants and one of the umbrella policies issued to
The Southern Group contain nearly identical definitions of “personal and
advertising injury.”
      The remaining two umbrella policies contain slightly different language.
These policies define “personal injury” as an “injury, other than advertising
injury, arising out of one or more of the following offenses committed during
the policy period in the conduct of your business: . . . (2) The publication or
utterance of libel or slander or of other defamatory or disparaging material, or
[a] publication or utterance in violation of an individual’s right of privacy.”
      The district court held that the allegations in the complaint do not fit
within either of the definitions of personal injury, either as disparagement or
invasion of privacy. We will analyze each definition.


      A. Disparagement
      The Gum Tree Defendants argue that the complaint alleges facts that fit
within the “disparagement” category of “personal injury.” They concede that
the complaint does not contain explicit allegations of disparagement. Instead,
they argue that allegations in the complaint describe conduct that is the
equivalent of disparagement. For example, they argue in their appellate brief
that Lexington’s allegation that the Gum Tree Defendants “induced, persuaded
or otherwise caused third parties not to enter into or continue their”
relationship with Lexington, a claim the complaint labels as “tortious
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                                   No. 14-60302
interference,” means that the Gum Tree Defendants must have disparaged
Lexington in order to induce or persuade. They also argue that the complaint’s
allegation that defendants and third parties conspired to deprive Lexington of
business opportunities constitutes an allegation that they conspired to
disparage Lexington.       Further, the damages claimed by Lexington are
allegedly of the kind that would result from disparagement.
      The district court found that there were “no allegations that the Gum
Tree Defendants ‘disparaged’ Lexington Relocation while allegedly soliciting
its current and prospective customers.” The court explained that, because the
policies do not define “disparage,” the court may rely on the plain, ordinary,
and popular understanding of the term. The court noted that, according to
Merriam-Webster’s Dictionary, disparage means “‘to describe (someone or
something) as unimportant, weak, bad, etc.; to lower in rank or reputation.”
Using this definition, the court reasoned that the complaint does not allege
that the Gum Tree Defendants used the trade secrets or confidential
information to disparage Lexington in any way.
      The Gum Tree Defendants contend that the district court erred in failing
to consider several court opinions it cited. All except one of the opinions are
from state courts. None of those are courts in the relevant states of Kentucky
or Mississippi. Those opinions are inconsistent with this court’s precedent, as
discussed below, and the district court’s failure to apply them was not error.
      In the most relevant precedent from this court, the insured argued that
it was entitled to coverage because the underlying complaint alleged
disparagement. Lamar Adver. Co. v. Cont’l Cas. Co., 396 F.3d 654, 663 (5th
Cir. 2005). The insured relied on language in the complaint alleging that it
intentionally induced customers to terminate their contracts with the plaintiff;
other language alleged that the insured improperly solicited and hired the
plaintiff’s employees.     Id.   The insured urged this court to construe the
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                                 No. 14-60302
pleadings liberally to find allegations of disparagement.            Id. at 664.
Interpreting Louisiana law, we rejected this claim. Id. We noted that because
Louisiana is a fact-pleading jurisdiction, in order for coverage to exist, the
complaint would need to allege the elements of a disparagement claim. Id.
The complaint failed to satisfy this requirement, and we therefore concluded
that the insured was not entitled to coverage. Id. at 665.
      Here, the relevant language in the complaint is nearly identical to that
in Lamar. Consequently, the complaint is similarly devoid of any allegations
of disparagement. The Gum Tree Defendants have attempted to distinguish
this case by noting that Louisiana is a fact-pleading jurisdiction. This does not
affect our analysis.   Regardless of whether fact or notice pleading is the
standard, Lexington has not alleged that the Gum Tree Defendants disparaged
its business, under either dictionary definition of disparagement presented by
the parties. The Gum Tree Defendants suggest that the complaint alleges that
by soliciting Lexington’s customers, they necessarily harmed Lexington’s
reputation. What the complaint asserted is that the Gum Tree Defendants
induced customers to leave Lexington. It never claimed that the inducement
resulted from disparagement, as opposed to other strategies such as price cuts,
personal service, or any other aspects of the services offered by the inducer.
      To allege a personal injury under the language of the policy, the
complaint must allege that the Gum Tree Defendants published material that
disparaged a person or organization. The complaint did not do so.


      B. Invasion of Privacy
      The district court also held that there were no allegations in the
complaint that Lexington was injured by oral or written publication of material
that violated its right of privacy.    Although the policies contain slightly
different language, they generally provide coverage for personal injuries
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                                  No. 14-60302
resulting from “oral or written publication, in any manner, of material that
violates a person’s right of privacy.” Other policies provide coverage for oral or
written publication of material that violates an “individual’s” right of privacy.
      The Gum Tree Defendants claim that the underlying complaint alleges
that they infringed upon Lexington’s right of privacy by acquiring its
confidential information without permission. The district court rejected this
argument on the grounds that the right of privacy does not extend to entities
like Lexington. The court noted that although the policy does not define
“person,” the phrase “persons or organizations” is used in other provisions, and
the policies differentiate between an individual and a business. Thus, the
provisions providing coverage for offenses that violate a person’s right of
privacy cannot apply in this case because Lexington is a business, not a person.
      The Gum Tree Defendants argue that because “person” is not defined in
the policies, there is, at the very least, some ambiguity as to this question,
which requires the provision to be construed in favor of the insured under
Mississippi law. The Gum Tree Defendants have not cited any law suggesting
that the right to privacy applies to an entity like Lexington.            Further,
Nationwide has correctly noted that Kentucky does not provide a cause of
action for invasion of a business’s right to privacy. Finally, it is suggestive that
the policies omit the word “organizations” in the provisions addressing
invasion of privacy, while including it in other provisions.
      The district court correctly concluded that the allegations do not amount
to an invasion of privacy.


III. Advertising Injury
      The Gum Tree Defendants further assert that the district court erred in
holding that they failed to establish that an advertising injury was alleged in
the complaint. The district court reasoned that the Gum Tree Defendants’
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                                 No. 14-60302
argument failed for four reasons: (1) the alleged offenses were not committed
in the course of advertising, (2) the allegations do not constitute an “offense”
under the policies, (3) coverage is precluded by the “Knowing Violation of
Rights of Another” and “Breach of Contract” exclusions, and (4) there is no
causal connection between the alleged conduct and injury. An analysis of each
of these reasons is unnecessary. We agree with the district court that the lack
of a causal connection between any “advertising” and the alleged “advertising
injury” is alone enough to preclude coverage.
      Mississippi law requires a causal connection between any advertising
and an alleged advertising injury.     Delta Pride, 697 So. 2d at 404.       The
Mississippi Supreme Court concluded that this “majority rule . . . best
articulates the insured’s objectively reasonable expectations about the scope of
coverage” and “is partly a matter of interpretation and partly a matter of
common sense.” Id. The court went on to explain, “Virtually every business
that sells a product or service advertises . . . . If no causal relationship were
required between advertising activities and advertising injuries, then
advertising injury coverage, alone, would encompass most claims related to the
insured’s business.” Id. at 404–05 (internal quotation marks omitted).
      This court, in interpreting the same requirement under Louisiana law,
has noted that there is an insufficient causal connection if the same claim could
have been asserted regardless of any advertising. Delta Computer Corp. v.
Frank, 196 F.3d 589, 591 (5th Cir. 1999). Here, the alleged injury resulted
from the alleged misappropriation of trade secrets. Regardless of whether the
trade secrets were used to advertise, Lexington still could have brought the
same claim.
      The Gum Tree Defendants are not entitled to coverage for an advertising
injury.


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                                 No. 14-60302
IV. Claims Against Bost and the Nowell Agency
      On the same day that the district court granted summary judgment in
favor of Nationwide, it also issued a separate opinion granting summary
judgment for Bost and the Nowell Agency. The court concluded that because
there was no coverage, Bost and the Nowell Agency could not have violated
either the fiduciary duty to procure coverage or the implied covenant of good
faith and fair dealing. The Gum Tree Defendants appeal this ruling but have
not meaningfully briefed the argument. Accordingly, review of that judgment
is waived. See Willis v. Cleo Corp., 749 F.3d 314, 319 (5th Cir. 2014).
      AFFIRMED.




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