The Appellate Division, First Department recent decision in JMZ USA, Inc. v. Lumbermens Cas. Co. offers a good analysis on the unambiguity of certain insurance provisions.  In the underlying action, the insured was sued by franchise owners who sold an upscale clothing line.  The franchise owners claimed that the plaintiffs were essentially diluting the clothing line’s value and contributing to the loss of the franchises’ goodwill by selling the same line to discount stores in the locations near the franchises.

The insureds sought coverage under two separate policies claiming that the complaint in the underlying action sought damages for "personal injury" and "advertising injury."  The First Department affirmed the trial court’s grant of the insurers’ summary judgment motions to dismiss. 

As to the "personal injury" argument, the First Department held that the injury that the franchise owners complained of did not arise out of "[o]ral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services."   The Court observed that the allegations concerned the alleged presence of lower-priced items in the same market.

The Court similarly rejected the "advertising injury" argument, concluding that the franchise owners’ complaint did not allege that plaintiffs engaged in any advertising activities. (citing Meyers & Sons Corp. v Zurich Am. Ins. Group, 74 NY2d 298, 303 [1989]).  Meyers provides in pertinent part that to trigger the "advertising activity" provision, the claimed injury must both arise out of an offense occurring in the course of the insured’s "advertising activities" and constitutes one of the enumerated offenses.  The enumerated offenses are typically as follows: libel, slander, defamation, violation of right of privacy, piracy, unfair competition or infringement of copyright, title or slogan.