This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
STATE OF MINNESOTA
IN COURT OF APPEALS
National Union Fire Insurance Company
of Pittsburgh, Pennsylvania,
Travelers Casualty and Surety Company, et al.,
Gerling-Konzern General Insurance Company,
Filed January 13, 2004
Affirmed; motion granted
Hennepin County District Court
File No. CT-01-1172
Christopher H. Yetka, Thomas C. Mielenhausen, Lindquist & Vennum, P.L.L.P., 4200 IDS Center, 80 South 8th Street, Minneapolis, MN 55402; and
Steven R. Gilford, 190 South LaSalle Street, Chicago, IL 60603 (pro hac vice admission) (for appellant)
Timothy R. Schupp, Heidi A. Schneider, Flynn, Gaskins & Bennett, L.L.P., 333 South 7th Street, Suite 2900, Minneapolis, MN 55402; and
Charles E. Spevacek, Meagher & Geer, PLLP, 33 South 6th Street, Suite 4200, Minneapolis, MN 55402 (for respondent National Union)
Jerome B. Abrams, Lauris A. Heyerdahl, Abrams & Smith, P.A., 12th Floor Pillsbury Center South, 220 South 6th Street, Minneapolis, MN 55402; and
Arthur Liederman, 100 Maiden Lane, 22nd Floor, New York, NY 10038 (pro hac vice admission) (for respondent Gerling-Konzern)
Considered and decided by Kalitowski, Presiding Judge, Halbrooks, Judge, and Stoneburner, Judge.
Appellant Cargill, Inc. (Cargill) challenges two summary judgments entered against it in district court. In the first, the district court concluded that Cargill failed to make a prima facie case for insurance coverage under an excess crime-loss policy issued by respondent National Union Fire Insurance Company of Pittsburgh, Pennsylvania (National Union) and that coverage under that policy was precluded by various applicable exclusions. In the second, the district court concluded that Cargill failed to make a prima facie case for coverage under an excess advertising-injury policy issued by respondent Gerling-Konzern General Insurance Company (Gerling).
By notice of review, respondent Gerling argues that various advertising policy exclusions apply to bar coverage and that Cargill’s alleged damages are insufficient to trigger the level of excess coverage provided under the advertising policy. National Union filed a motion to strike portions of Cargill’s brief and appendix on the ground that they are not a part of the record on appeal. Because we conclude that Cargill failed to make a prima facie case for coverage under either the Gerling policy or the National Union policy, we affirm. As a result, we do not reach the issues raised in Gerling’s notice of review. Motion to strike granted.
Cargill is an international marketer, processor, and distributor of agricultural products, including hybrid corn seed, which is the seed sold to farmers for use in growing feed corn. The goal of commercial corn breeding is to develop hybrid seed, a superior seed that “is produced by planting two inbred parents together and allowing pollen from one inbred (used as the male parent) to fertilize silks on the other inbred (used as the female parent).” Pioneer Hi-Bred Int’l v. Holden Found. Seeds, Inc., 35 F.3d 1226, 1228 n.2 (8th Cir. 1994).
Germplasm is the broad term used to describe the genetic make-up, or coding, of corn seed. Seed companies have a proprietary interest in inbreds and parent lines, and the germplasm of an inbred parent seed is a trade secret that can be legally protected both by patenting and by registering an inbred pursuant to the Plant Variety Protection Act (PVPA), 7 U.S.C. ch. 57 (2003), which provides patent-like rights to seed breeders who develop new types of inbred seeds. Although there are legal methods of obtaining a competitor’s germplasm, even a competitor’s legally obtained germplasm cannot be used in corn-breeding programs to develop new hybrids without the competitor’s permission.
One legal method of obtaining a parent inbred through the purchase of commercially available hybrid seed is a reverse-engineering process called “chasing selfs.” Because a typical bag of hybrid corn seeds contains approximately one female inbred seed for every 100 hybrid seeds, a breeder who plants an entire bag of a competitor’s hybrid seeds can visually identify—or “chase”—self-pollinating inbred plants (“selfs”) by their stunted appearance.
Pioneer Hi-Bred International, Inc. (Pioneer) is a producer of seed corn and a competitor of Cargill’s in the hybrid corn-seed industry. Pioneer has aggressively sought to prevent competitors’ use of its inbreds and germplasm by applying for patent and PVPA protection and by labeling its hybrid seed bags with a warning that any inbred seed inadvertently contained in the bag is not for sale and cannot be used for seed-breeding purposes through methods such as “chasing selfs.”
The record demonstrates that prior to 1998, Cargill’s employees, upper management, and executives were notified and aware that Cargill was improperly obtaining and using Pioneer’s proprietary germplasm. In 1986, Vern Gracen, who eventually became Vice President of Cargill’s Seed Division and the Director of Research and Development for Worldwide Seed, brought Pioneer germplasm with him when he came to Cargill from his previous employer, Cornell University. Throughout his tenure at Cargill, Gracen actively sought to incorporate Pioneer germplasm into the Cargill seed-breeding program, circulated lists of competitor germplasm available to Cargill breeders, and instructed—and required—breeders under his supervision to use Pioneer germplasm. Gracen informed his colleagues that should the use of Pioneer germplasm eventually prove illegal, Cargill could pay Pioneer royalties or licensing fees for use of the germplasm.
In 1989, Gracen made the first of several requests to obtain patented Pioneer inbreds from the American Type Culture Collection (ATCC), a seed-storage bank. Although Gracen was specifically informed at the time by both Pioneer and Cargill counsel that use of ATCC seed lines for breeding is illegal, he planted the inbreds and integrated them into the Cargill seed lines. In a contemporaneous letter, Gracen told Pioneer that he had “no intention of infringing on Pioneer’s patent rights.”
In 1987 and 1990, Pioneer informed Cargill that several Pioneer breeders in the Philippines had reported that Cargill breeders in the Philippines had misappropriated Pioneer germplasm (labeled P106) and were using it for breeding. Although Cargill conducted a preliminary investigation and denied claims of illegality, a subsequent investigation revealed that misappropriated P106 was illegally incorporated into Cargill’s breeding programs in the tropics and Asia.
In 1990, the Cargill legal department prepared a memorandum analyzing whether Cargill could be liable to competitor companies for the unauthorized use of inbred seed corn lines and germplasm in proprietary breeding experiments either under the Lanham Act or trade secret law. The analysis concluded that unauthorized experimentation—such as “chasing selfs”—resulting in the commercial development of new seed corn lines could expose Cargill to liability for misappropriation of trade secrets or for false advertising under the Lanham Act, should Cargill market the resulting hybrids without attributing their etiology.
In 1994, Rod Greder, a former Pioneer employee and Cargill’s Director of North American Marketing for Seed Division Global Licensing, wrote a letter to Larry Willey, a Seed Division attorney, questioning Cargill’s use of Pioneer inbreds in its breeding programs. Greder’s letter stated that “[t]hese inbreds may be protected by PVP, utility patents or trade secrets. . . . As a former Pioneer employee I know their most valued asset is their germplasm and that they will not let us take liberties with it.” Willey informed Vern Gracen; Brian Hill, Cargill’s Worldwide Seed Division President; Bruce Priebe, Cargill’s Seed Division President; James D. Moe, Cargill’s General Counsel; and Ronald Laumbach, Cargill’s North American General Counsel that Cargill breeding practices were likely to result in civil and criminal lawsuits against Cargill for misappropriation of trade secrets, patent infringement, and violations of the Lanham Act and the Federal Seed Act. In later deposition testimony, Willey stated that Hill told him that his job was to make the Seed Division’s conduct appear legal or to cover it up.
In 1995, Ruben Falco, a Pioneer employee in Argentina, wrote a letter to Whitney MacMillan, Cargill’s CEO and President, stating that Cargill was illegally possessing and using Pioneer inbred breeding lines and that Gracen was aware of this. Cargill’s Argentina Country Manager was also aware of the Falco allegations.
In 1996, Roger Smith, a former Seed Division employee, wrote a letter to the Chair of the Cargill Business Conduct Committee stating that Cargill was illegally possessing and using Pioneer inbred breeding lines. The letter was copied to MacMillan and other high-ranking Cargill executives. Smith made identical allegations in a letter sent to the Cargill legal department in February 1997. In response to the second letter, two Cargill attorneys investigated Smith’s allegations. In the course of the investigation, Smith and David Nelson, another Seed Division employee, told the attorneys that Tom Ishler and Melvin Johnson, Cargill employees who had both previously worked for Pioneer, had illegally brought protected Pioneer germplasm to Cargill with them and that this germplasm might have been used to develop corn lines for Cargill. The attorneys did not interview either Ishler or Johnson, and the investigation ended without resolving Smith’s allegations.
In May 1997, Ishler wrote a letter to the Cargill legal department relating that, when he had first started working at Cargill in 1989, various Cargill corn breeders came to his home with “shopping lists” of Pioneer seed known to be in his possession and removed the seed to develop breeding lines. The legal department did not respond to this letter or report the allegation to the Seed Division.
In 1997, Cargill decided to sell its International Seed Division and began a series of informal discussions with Monsanto, Inc. (Monsanto), a prospective buyer. In April 1998, Goldman, Sachs, & Co. assisted Cargill with the preparation of three confidential memoranda (the Goldman memos) regarding Cargill’s International Seed Division. The memos were entitled “Cargill Hybrid Seeds Worldwide,” “Cargill Hybrid Seeds Tropical,” and “Cargill Hybrid Seeds Europe.” The purpose of the memos was to furnish prospective buyers with a general business overview, investment considerations, and a financial summary of Cargill’s International Seed Division; the memos addressed Cargill’s global operations and worldwide management organization, research and production capabilities, net sales by region, gross profit in various regions, and unaudited projected income statements. The memos contained disclaimers stating:
Neither [Cargill] nor Goldman, Sachs & Co. makes any representation or warranty, expressed or implied, as to the accuracy or completeness of the information contained in this memorandum, and nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future. . . .
The memos did not make representations regarding specific seed lines but did state that Cargill had a proprietary interest in its germplasm and research. The memos were distributed only to Monsanto and Pioneer as prospective purchasers; by their terms, the memos had to be returned to Cargill upon request. The cost of producing the Goldman memos was not listed as an advertising expenditure in Cargill’s advertising budget.
Cargill subsequently allowed Monsanto to examine documents related to the International Seed Division in a data room on Cargill’s premises and to view Cargill breeding stations and production facilities.
In January 1998, Moe received a letter from Leon Shearer, Pioneer Vice President and General Counsel, stating that both Pioneer’s research and reports from former Cargill employees indicated that Cargill was knowingly using patented Pioneer germplasm in its breeding processes. Shearer informed Moe that Pioneer’s President and CEO had spoken about the matter with Cargill’s President and CEO Ernie Micek. The same month, a Cargill attorney determined that the allegations must be investigated.
In June 1998, Monsanto purchased Cargill’s international seed business for $1.4 billion. The purchase included Cargill’s inbred seed corn and germplasm, seed corn research, development, production, and testing facilities in 24 countries. The purchase and sale agreement provided that none of the transferred germplasm was “the subject of any pending or, to the Knowledge of Seller, threatened litigation or claim of infringement or misappropriation.” “Knowledge of Seller” is defined as the “actual knowledge” of any of several high-ranking Cargill executives and management personnel, including Hill, Gracen, and Greder. The purchase and sale agreement further stated that Cargill’s title to the transferred germplasm was “such that none of the Transferred Intellectual Property and Owned-Germplasm is subject to any claim or potential claim of joint ownership by any third party.” The purchase and sale agreement provided that Cargill’s aggregate liability for breach of the agreement could not exceed $150 million absent a showing of fraud.
There is no evidence in the record that Cargill informed Monsanto prior to the sale that Pioneer was contemplating legal action arising from Cargill’s continuing misappropriation, possession, and use of Pioneer germplasm.
In October 1998, Pioneer filed a complaint against Cargill in federal district court in Iowa, alleging that Cargill violated the Lanham Act, 15 U.S.C. § 1051-1127 (1998), by representing in its local and national commercial advertising, promotional, and sales material that its seed corn was the result of its own research, when in fact Cargill had used and continued to use Pioneer’s proprietary germplasm and other Pioneer proprietary information in developing its seed corn programs. The complaint also alleged misappropriation of trade secrets, breach of contract, and patent infringement, all arising from Cargill’s use of Pioneer’s germplasm. The complaint did not allege conversion arising out of Cargill’s appropriation of Pioneer’s corn seeds.
In February 1999, Pioneer filed a complaint against Monsanto in federal district court in Iowa alleging that Monsanto had misappropriated Pioneer germplasm when it purchased Cargill’s International Seed Division and requesting that it be enjoined from using the misappropriated germplasm. After the suit was filed, Monsanto’s attorneys stated in a letter to Cargill that “the factual allegations in the litigation relate to certain representations and warranty obligations made in connection with the purchase of the international seed business from Cargill and would give rise to a possible claim for breach if the allegations in the litigation are accurate.” Monsanto subsequently demanded that Cargill compensate it for all costs and damages arising out of its defense of the Pioneer suit. There is no evidence that Monsanto based its claim against Cargill on representations made in the Goldman memos.
After Pioneer filed its complaint against Cargill, Cargill hired the law firm of Fish and Richardson to conduct an investigation of Cargill’s breeding records to determine the provenance of the Pioneer germplasm in Cargill’s possession and to determine which Cargill employees, at any level in the corporate hierarchy, knew about or participated in any illegal conduct. The investigation determined that the presence of Pioneer germplasm in Cargill’s breeding lines between approximately 1980 and 1998 could be only partly explained by the practice of “chasing selfs.” The investigation also determined that Cargill’s possession of Pioneer germplasm was primarily the fault of Tom Ishler, a former Pioneer employee who brought Pioneer seeds to Cargill and distributed them to other complicit Cargill employees for integration in the breeding lines. The investigation concluded that knowledge of the wrongdoing extended at least up to Gracen and that almost all Cargill corn breeders were using improperly obtained germplasm.
In June 1999, Cargill executed a settlement agreement with Monsanto pursuant to which Monsanto released all claims against Cargill in exchange for a payment of $335 million. Of the settlement amount, $40 million was for damages, including Monsanto’s delayed integration of the operations it purchased from Cargill with its other operations, its inability to advance the germplasm it purchased from Cargill into its breeding operations, inventory and germplasm recall costs, attorney fees, incidental damages and costs, and interest. The remaining $295 million was designated a partial return of the price Monsanto paid for the international seed operations and as consideration for Monsanto’s loss of use of germplasm and its other undertakings in connection with the settlement agreement.
In May 2000, Cargill executed a settlement agreement with Pioneer pursuant to which Pioneer released all claims against Cargill in exchange for a payment of $100 million. Of the $100 million, $71 million was considered a royalty payment for Cargill’s past and future use of the misappropriated germplasm.
The record indicates that prior to settling Pioneer’s claim, Cargill’s position was that any misappropriated Pioneer germplasm in its possession had come either from Tom Ishler or from chasing selfs and that Ishler was a rogue employee whose wrongdoing was only discovered by those outside the Seed Division after the Fish and Richardson investigation. Cargill conceded that it “made mistakes” by failing to investigate the allegations made by Falco and Smith concerning misappropriation and by failing to interview Ishler or Johnson and further contended that its legal department and senior management were completely unaware of the misappropriation until it was revealed by Fish and Richardson.
Cargill then made claims for insurance coverage against several insurers for amounts paid to defend and settle the Pioneer and Monsanto claims. All of the claims were subsequently settled save for those against (1) respondent National Union under an excess crime-loss indemnity policy and (2) respondent Gerling under an excess advertising-injury policy. The National Union claim was based on Cargill’s liability to Pioneer and Monsanto for Cargill employees’ thefts of Pioneer germplasm. The Gerling claim was based on Cargill’s liability to Monsanto for false advertising—representations that Cargill owned the germplasm it sold to Monsanto—contained in the Goldman memos.
National Union issued Cargill an Excess Crime Loss Indemnity Policy (National Union crime policy) based on a Crime Loss Indemnity Policy issued by St. Paul Fire & Marine Insurance Company (the St. Paul Companies) for the policy period of October 1, 1998 to October 1, 2001. The National Union crime policy is a so-called “follow-form” policy—that is, the coverage it provides “follow[s] the terms, definitions, conditions and exclusions of the [underlying the St. Paul Companies’ crime policy].” The National Union crime policy’s liability limit is $20 million in excess of the $30 million underlying St. Paul Companies’ crime policy limit, plus deductible. The limit of liability is the most that National Union will pay “regardless of the number of Insureds, claims made or suits brought or persons or organizations making claims or bringing suits.” By the policy’s terms, National Union agrees to pay the insured’s net loss “only after the issuers of the Underlying Insurance Policy [St. Paul Companies] have paid or have been held liable to pay the full amount of limits of insurance on the Underlying Insurance Policy.”
Insuring clause (A)(2) of the St. Paul Companies’ crime policy, titled “Liability to Others for Employee Theft or Forgery,” provides that the insurer will indemnify the insured for “[l]oss sustained by the Insured by reason of any claim first made against the Insured during the Policy Period directly caused by Theft or Forgery by any Employee of the Insured and for which loss the Insured is liable.” For the purposes of this clause, the policy defines “theft” as “the intentional unlawful taking of Money, Securities or other property to the deprivation of . . . someone other than the Insured.”
The St. Paul Companies’ crime policy excludes coverage for
(B) loss caused or contributed to by Theft, Forgery or any other fraudulent, dishonest or criminal act committed by the Insured or any partner of the Insured, whether acting alone or in collusion with others;
. . . .
(E) damages of any type, including, but not limited to, punitive, exemplary, and the multiplied portion of multiplied damages, for which the Insured is legally liable, except direct compensatory damages, but not multiples thereof, arising from a loss covered under this Policy;
(F) indirect or consequential loss of any nature;
. . . .
(H) loss resulting directly or indirectly from the accessing of any confidential information, including, but not limited to, trade secret information, computer programs, confidential processing methods or other confidential information of any kind[.]
The policy further provides that the insured “shall give” the insurer notice of the discovery of loss “[a]t the earliest practicable moment, not to exceed 90 days, after discovery,” and that the insured shall furnish the insurer within six months of discovery with a “proof of loss, . . . with full particulars.”
It is undisputed that when the National Union crime policy was bound, neither Cargill management nor the Cargill legal department had informed either the Cargill insurance department or National Union about the possibility of a Pioneer lawsuit arising from Cargill’s misappropriation and use of Pioneer germplasm.
Gerling issued Cargill an excess-coverage policy based on an underlying National Union Umbrella Policy (umbrella policy) for the period of June 1, 1997, to June 1, 2000. The Gerling policy provides $50 million in coverage for damages in excess of $150 million and follows “all the terms and conditions of the Underlying Umbrella Policy.” The underlying policy covered Cargill for “Advertising Injury that takes place during the Policy Period and is caused by an Occurrence happening anywhere in the world.” “Advertising injury means injury arising solely out of [the insured’s] advertising activities as a result of . . . [m]isappropriation of advertising ideas or style of doing business; or [i]nfringement of copyright, title or slogan.” “Occurrence” is defined in the policy as “an offense committed in the course of advertising [Cargill’s] goods, products and services that results in Advertising Injury.” The policy excludes from coverage advertising injury “[a]rising out of oral or written publication of material, if done by or at the direction of the Insured with knowledge of its falsity” and advertising injury arising from “[b]reach of contract” or “[t]he failure of goods, products or services to conform with advertised quality or performance.”
Prior to 1997, when Gerling issued the excess-coverage policy to Cargill, National Union provided Cargill with umbrella general-liability coverage. From 1987 to 1997, National Union provided insurance coverage for “advertising liability,” defined as “liability for damages because of . . . piracy or unfair competition or idea misappropriation under an implied contract.” In the 1997 National Union policy, “because of” was changed to “arising solely out of,” and “piracy or unfair competition or idea misappropriation under an implied contract” was eliminated. National Union did not provide Cargill with specific notice of reduced coverage. Cargill purchased three excess-coverage policies, including the Gerling policy, based on the express provisions of the revised 1997 National Union umbrella policy.
In June 2000, after settling the Pioneer and Monsanto claims, Cargill submitted a preliminary proof of loss to St. Paul Companies, as required by the terms of the crime policy. The proof of loss described six separate thefts of Pioneer germplasm by Cargill employees over the course of two decades, alleging that (1) Ishler brought Pioneer germplasm with him to Cargill and that other Cargill employees, including Gracen, knowingly accepted and used the misappropriated germplasm; (2) Cargill employees, including Gracen, knowingly accepted and used Pioneer germplasm stolen by employees of the Vineyard Seed Company, which was purchased by Cargill in 1995; (3) Cargill employees in France improperly took corn seed from Pioneer property in France; (4) employees of the Anderson Clayton Company (ACCO), which was purchased by Cargill in 1980, had stolen seeds from Pioneer property; (5) a Cargill breeder in the Philippines improperly used Pioneer germplasm to develop lines of inbred seeds subsequently sold to Monsanto; and (6) unidentified employees misappropriated Pioneer germplasm by unknown means. The statement did not specify a precise amount of loss, and Cargill did not submit an updated or final proof of loss before bringing suit against National Union and Gerling.
Both National Union and Gerling denied Cargill’s claims for coverage. In January 2001, Cargill filed suit for declaratory judgment and relief against Gerling, National Union, and other insurers. As to Gerling, Cargill requested a judgment declaring that, pursuant to the excess advertising-injury policy, Gerling was obligated to reimburse it $50 million—the liability limit—for “damages, costs, and expenses” incurred in connection with the Monsanto claim and based on the confidential Goldman memos Cargill distributed to Monsanto prior to the sale of the international seed business. As to National Union, Cargill requested a judgment declaring that, pursuant to the excess crime policy, National Union was obligated to reimburse it $20 million—the liability limit—for “damages, costs, and expenses” incurred in connection with the Pioneer and Monsanto claims combined, based on thefts of Pioneer germplasm by Cargill employees.
In Cargill’s suit against Gerling, Cargill and Gerling filed cross-motions for summary judgment. Gerling argued that Cargill had not stated a valid claim for coverage under the terms and definitions of the advertising-injury policy and that various applicable exclusions precluded coverage. Gerling also argued that, insofar as the “damages” portion of Cargill’s settlement with Monsanto was $40 million, the amount of insurable damages was far below the layer of coverage provided by Gerling, which applied only to claims in excess of $150 million. The district court granted Gerling’s motion after concluding that Cargill had failed to make a prima facie case for coverage; the court did not reach the applicability of the policy exclusions or the issue of whether Cargill’s damages, if any, were sufficient to trigger the level of excess coverage provided by Gerling.
Cargill’s claim against National Union is based on the theory that thefts of Pioneer corn seed by Cargill employees—thefts that gave rise to the Pioneer and Monsanto claims against Cargill—are covered by the crime-loss policy. Cargill’s complaint alleges three separate misappropriations of Pioneer corn seed: (1) the theft attributed to Ishler while still a Pioneer employee; (2) the purchase of ACCO, whose employees had improperly obtained Pioneer seed; and (3) the purchase of the Vineyard Seed Company, whose employees had improperly obtained Pioneer seed.
During discovery, Cargill designated its general counsel, Steven Euller, as its proof-of-loss witness pursuant to Minn. R. Civ. P. 30.02(f). In deposition, Euller testified that he was unable to furnish precise estimates of the actual loss associated with any of the thefts alleged in the preliminary proof of loss.
After National Union moved to compel Cargill to provide a final proof of loss statement, Cargill produced a document alleging three categories of theft: (1) the Ishler/Gracen thefts; (2) the ACCO and Vineyard acquisitions; and (3) overseas seed thefts by Cargill employees. In this submission, Cargill—for the first time—treated each of the alleged thefts as separate single losses for the purposes of the policy, thereby exponentially increasing its request for damages.
After discovery closed, Cargill filed a motion for summary judgment against National Union. In submissions accompanying the motion, Cargill alleged 11 additional thefts of Pioneer germplasm by Cargill employees and claimed coverage totaling over $266 million. The additional thefts were described in exhibits accompanying affidavits submitted in conjunction with the motion by attorneys Jonathan Singer and Marc Rosenthal. National Union filed a motion to strike the 11 additional allegations of theft and the supporting affidavits. In the district court’s order ruling on the parties’ cross-motions for summary judgment, the court declined to consider the 11 additional alleged thefts and any supporting arguments or submissions, concluding that “Cargill’s claims of theft are limited to those specifically identified as claims against National Union prior to the close of discovery.”
National Union brought a motion for summary judgment of Cargill’s crime-policy claim, arguing that Cargill has not stated a valid claim for coverage under the terms and definitions of the Crime Policy and that coverage is precluded by the policy’s applicable exclusions. The district court granted National Union’s motion.
Cargill now appeals the district court’s grants of summary judgment to both Gerling and National Union. Gerling filed a notice of review disputing various conclusions made by the district court, arguing for the applicability of various policy exclusions barring coverage, and arguing that Cargill alleged no damages sufficient to trigger the level of excess coverage provided by the Gerling policy.
After the appeal was filed, National Union filed a motion to strike from the appellate record and from consideration on appeal the arguments and affidavits referring to the 11 additional thefts first alleged in Cargill’s motion for summary judgment and not considered by the district court in deciding Cargill’s and National Union’s cross-motions for summary judgment.
Summary judgment is appropriate when a district court determines that “there is no genuine issue as to any material fact and that either party is entitled to a judgment as a matter of law.” Minn. R. Civ. P. 56.03; see also Zip Sort, Inc. v. Comm’r of Revenue, 567 N.W.2d 34, 37 (Minn. 1997). The interpretation of an insurance contract is a question of law, which this court reviews de novo. Am. Nat’l Prop. & Cas. Co. v. Loren, 597 N.W.2d 291, 292 (Minn. 1999).
“In an action to determine coverage, the initial burden of proof is on the insured to establish a prima facie case of coverage.” SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305, 311 (Minn. 1995). “What constitutes a prima facie showing of coverage depends on the language of the particular policy. The policy must be read as a whole, and unambiguous language must be accorded its plain and ordinary meaning.” Id. The meaning of contract language that is reasonably subject to more than one interpretation—and therefore ambiguous—must be “resolved against the insurer and in accordance with the reasonable expectations of the insured.” Minn. Mining & Mfg. Co. v. Travelers Indem. Co., 457 N.W.2d 175, 179 (Minn. 1990). Once the insured meets its initial burden of demonstrating coverage, “the burden of establishing the applicability of exclusions rests with the insurer.” Domtar, Inc. v. Niagara Fire Ins. Co., 563 N.W.2d 724, 736 (Minn. 1997).
Cargill argues it is entitled to coverage under the National Union Crime Loss Indemnity Policy Insuring Clause (A)(2), entitled “Liability to Others for Employee Theft or Forgery.” As a threshold matter, we observe that the follow-form National Union policy provides coverage “only after the issuers of the Underlying Insurance Policy [the St. Paul Companies] have paid or have been held liable to pay the full amount of limits of insurance [on] the Underlying Insurance Policy.” Here, Cargill settled its claim against the St. Paul Companies while the district court was considering National Union’s motion for summary judgment. Cargill does not argue, and the record does not indicate, that the settlement between itself and St. Paul Companies required St. Paul Companies to pay or accept liability for paying the full amount of limits on the underlying policy. By the terms of the policy, National Union is therefore under no obligation to provide coverage for the loss alleged by Cargill.
We also conclude that, even had the St. Paul Companies paid the limit on the underlying policy, Cargill has not demonstrated that insuring clause (A)(2) entitles it to indemnification for the costs of settling the Pioneer and Monsanto claims. The clause provides that the insurer will indemnify the insured for “[l]oss sustained by the Insured by reason of any claim first made against the Insured during the Policy Period directly caused by Theft or Forgery by any Employee of the Insured and for which loss the Insured is liable.” Because this provision, when read in the context of the policy as a whole, is unambiguous, extrinsic or parol evidence is inadmissible to determine its meaning. Pedersen v. United Servs. Auto. Ass’n, 383 N.W.2d 427, 430 (Minn. App. 1986).
Cargill’s principal contention is that the clause provides general-liability coverage indemnifying it for indirect losses incurred defending and settling claims brought by third parties, and not, as National Union argues, fidelity coverage indemnifying Cargill solely for loss directly caused to it by acts of employee theft or forgery. Cargill’s interpretation is not supported by case law distinguishing fidelity coverage from general-liability coverage, by the clause’s plain language, or by the policy read as a whole. See Smitke v. Travelers Indem. Co., 264 Minn. 212, 214, 118 N.W.2d 217, 218 (1962) (stating that contract provisions “must be read and studied independently and in context with all [other] relevant provisions and the language of the policy as a whole”).
A fidelity bond is an indemnity contract that “guarantee[s] reimbursement for losses sustained by the insured resulting from the dishonesty of the insured’s employees.” Continental Corp. v. Aetna Cas. & Sur. Co., 892 F.2d 540, 543 (7th Cir. 1989); see also Farmers & Merchants State Bank of Pierz v. St. Paul Fire & Marine Ins. Co., 309 Minn. 14, 18, 242 N.W.2d 840, 843 (1976) (stating that “[a] . . . fidelity bond is intended to protect [an insured] from losses sustained as a result of dishonest, fraudulent, or criminal acts on the part of its employees”). “A fidelity bond is not ordinarily liability insurance which covers third parties” who have been injured by the insured’s conduct. Foster v. Nat’l Union Fire Ins. Co., 902 F.2d 1316, 1318 (8th Cir. 1990). The difference between liability insurance and fidelity bonding is that “[i]nsurance covers the liability of the insureds to a third-party, while fidelity bonding covers the loss of property owned by the insureds or held by the insureds, as a consequence of employee dishonesty.” Aetna Cas. & Sur. Co. v. Kidder, Peabody & Co., 676 N.Y.S.2d 559, 565 (N.Y. App. Div. 1998). “In contrasting liability insurance with a fidelity bond, it is helpful to note that in the liability context, the insured’s loss is indirect; it is a third party who directly suffers the loss.” City of Burlington v. Western Sur. Co., 599 N.W.2d 469, 472 (Iowa 1999).
Although insurance typically covers third parties, for the purposes of a fidelity bond, “[t]hird-party claims arise only within this specific context: the employee acted dishonestly and property is taken from or lost by the insureds/employer that has custody of the property.” Aetna Cas. & Sur. Co., 676 N.Y.S.2d at 565. “That the insureds may be liable to a third-party for a loss of money resulting from employee [theft] does not transform a policy covering the insureds against a direct loss into one indemnifying them against liability.” Id. at 566. “Although employee dishonesty policies may cover the loss of third-party property in the possession of the insured, these policies do not serve as liability insurance to protect employers against tortious acts committed against third-parties by their employees.” Lynch Props., Inc. v. Potomac Ins. Co., 140 F.3d 622, 629 (5th Cir. 1998) (citations omitted) (emphasis added).
Here, insuring clause (A)(1), directly preceding the disputed clause and entitled “Employee Theft or Forgery,” provides coverage for a “[l]oss sustained by the Insured which is discovered by the Insured during the Policy Period and is directly caused by Theft or Forgery by any Employee of any Insured acting alone or in collusion with others.” The parties do not dispute that this is a standard fidelity provision covering employee theft from the insured. See Continental Corp., 892 F.2d at 543 (stating that a fidelity bond is an indemnity contract that “guarantee[s] reimbursement for losses sustained by the insured resulting from the dishonesty of the insured’s employees”). The dispute concerns whether the following clause, (A)(2), entitled “Liability to Others for Employee Theft or Forgery,” is a fidelity bond covering employee theft of a third party’s property in the insured’s possession, as National Union argues, or a general-liability policy covering losses incurred settling claims resulting from employee theft of a third party’s property in that party’s possession, as Cargill argues.
We conclude that the language of clause (A)(2) does not support Cargill’s assertion that the clause provides general-liability coverage or creates a duty to defend or settle suits brought against Cargill by third parties. Cargill argues that the provision must be read as indemnifying it for a claim directly caused by theft, and not exclusively for a loss directly caused by theft, as National Union argues, and that National Union therefore has a duty to defend and settle the claims brought by Pioneer and Monsanto. Although Cargill’s argument is not without merit, it disregards the provision’s other language, which states that indemnification is triggered only by a “[l]oss sustained by the insured.” Under Cargill’s interpretation, the loss is sustained by a third party, which then brings a claim against the insured. But the policy contains no language creating a duty to defend on the part of National Union or indemnify third parties who suffer losses due to the dishonesty of the insured’s employees.
We conclude that the provision unambiguously covers only Cargill’s direct losses, not claims arising from a third party’s direct losses, and requires that the insured’s loss—and not the third party’s claim—be directly caused by employee theft in order for coverage to become available. “That the insureds may be liable to a third-party for a loss of money resulting from employee [theft] does not transform a policy covering the insureds against a direct loss into one indemnifying against liability.” Aetna Cas. & Sur. Co., 676 N.Y.S.2d at 566. We also agree with National Union’s argument that the “claim” language in the provision merely sets forth a condition of coverage—that the claim be brought during the policy period—and does not create a duty to defend such claims on the part of the insurer.
Cargill’s interpretation of the clause is not supported by the policy’s other provisions and exclusions. General Condition (G) provides that “[t]he Underwriter’s liability under this Policy shall only apply to Money, Securities or other property owned or leased by the insured, or held by the insured in any capacity, or for which the Insured is liable.” The policy thus plainly requires that any loss claimed by the insured involve the theft of property owned, leased, or held by the insured. In this context, third-party liability can arise if the property stolen from the insured belongs to a third party. See id. But Cargill reads clause (A)(2) as indemnifying it for costs associated with a theft perpetrated against a third party and involving property not owned, leased, or held by Cargill. We disagree with this interpretation in that it cannot be reconciled with General Condition (G), which it renders inconsequential by allowing coverage even where the stolen property is not owned, leased, or held by the insured. See W. Bend Mut. Ins. Co. v. Armstrong, 419 N.W.2d 848, 850 (Minn. App. 1988) (stating that “[c]onstruction of an insurance policy which entirely neutralizes one provision should not be adopted if the contract is susceptible of another construction which gives effect to all of its provisions and is consistent with the general intent”), review denied (Minn. May 16, 1988).
Nor is Cargill’s interpretation of the disputed provision supported by policy exclusion (F), which excludes coverage for “indirect or consequential loss of any nature.” According to Cargill’s interpretation of clause (A)(2), National Union is obligated to indemnify it for costs associated with claims arising from a theft committed against Pioneer, and not for a direct loss of property owned, leased, or held by Cargill. Exclusion (F) bars coverage for the consequential loss associated with settling the Pioneer and Monsanto claims and further indicates that the only reasonable construction of clause (A)(2) is as requiring that the insured’s “loss,” and not the third party’s claim, be “directly caused by theft.”
Although clause (A)(2) promises to protect Cargill for the loss of third-party property in its possession, we cannot conclude that the clause provides liability coverage to protect Cargill against theft committed against third-parties by its employees. The language providing coverage for a loss “for which . . . the insured is liable” does not change the policy’s status as a fidelity bond. See Lynch Props., 140 F.3d at 629 (stating that “[m]ere insertion of the words ‘legal liability’ into an employee dishonesty policy does not transform the policy into a liability policy”). We find no language in the policy indicating that National Union assumed an obligation to respond to Cargill’s liability to third persons. National Union’s obligation is to respond to actual loss sustained by the insured, not the loss of third persons, and we can see no reasonable construction of the policy under which it can it be considered to be a third-party beneficiary contract. We therefore conclude that the provision’s language shows that National Union intended to indemnify Cargill for an actual loss of specified property sustained by Cargill because of theft by its employees, but did not intend to indemnify Cargill for funds expended defending or settling suits brought by third parties.
Even were we to conclude, as Cargill argues, that the policy indemnifies it for losses incurred settling the Pioneer and Monsanto claims, Cargill has failed to demonstrate that those claims (1) caused it to sustain a loss or (2) were directly caused by theft, both as required by the policy. First, Cargill has not demonstrated that the money it paid to settle the claims constituted a “loss.” The word “loss” is not defined in the policy; its plain meaning is “financial detriment.” Black’s Law Dictionary 956 (7th ed. 1999); see also American Employers’ Ins. Co. v. Roundup Coal Mining Co., 73 F.2d 592, 595 (8th Cir. 1934) (stating that “in a suit to recover on [a fidelity] bond the dishonesty must have resulted in pecuniary loss”).
Here, the money paid to settle the Monsanto claim was a combination of damages—specifically excluded from coverage by exclusion (E)—and a partial return of the purchase price to reimburse Monsanto for payments made in exchange for misappropriated germplasm. The money paid to settle the Pioneer claim consisted of royalties for Cargill’s unauthorized use of Pioneer germplasm. The record demonstrates that both settlements were restitutionary in nature—serving only to offset Cargill’s prior gain from the misappropriated germplasm—and did not therefore represent a financial detriment for which Cargill was entitled to coverage under the crime-loss indemnity policy. See Level 3 Communications, Inc. v. Federal Ins. Co., 272 F.3d 908, 910 (7th Cir. 2001) (stating that “a ‘loss’ within the meaning of an insurance contract does not include the restoration of an ill-gotten gain”). The record also amply supports the district court’s finding that the misappropriated Pioneer germplasm was incorporated into Cargill’s breeding program “for the purpose of benefiting Cargill.” We cannot conclude that an insured suffers a loss when it reimburses a third party for employee dishonesty carried out for the benefit of the employer/insured. See Drexel Burnham Lambert Group, Inc. v. Vigilant Ins. Co., 595 N.Y.S.2d 999, 1009 (N.Y. Supp. 1993) (stating that a corporate insured seeking indemnification for settling claims of third persons who have suffered from the dishonest acts of the insured’s employees cannot allege a loss where the “activities of the employees have accrued to the benefit of the company”).
The record further demonstrates that Cargill, in contravention of the policy’s mandate that it furnish National Union within six months of discovery, with a proof of loss with full particulars, never provided National Union with a definitive, particularized proof of loss statement.
Cargill has further failed to demonstrate that the Pioneer and Monsanto claims were “directly caused by Theft” perpetrated by its employees. “Theft” is defined by the policy as “the intentional unlawful taking of Money, Securities or other property to the deprivation of . . . someone other than the Insured.” The plain meaning of “taking,” which is not defined in the policy, is “[t]he act of seizing an article.” Black’s Law Dictionary 1467 (7th ed. 1999).
As the district court concluded, Pioneer’s suit against Cargill does not allege a loss because of Cargill’s physical appropriation or possession of a small amount of Pioneer corn seed. Pioneer’s claim for damages arose from Cargill’s improper use of proprietary Pioneer germplasm in its breeding program. Pioneer never set forth a claim for conversion. See Midwest Oilseeds, Inc. v. Limagrain Genetics Corp., 231 F. Supp. 2d 942, 953-54 (S.D. Iowa 2002) (observing that the value of a claim such as Pioneer’s lies in the utility of the germplasm in breeding programs and not the seeds themselves).
Cargill argues that “taking,” as used in the definition of “theft,” must be broadly interpreted to include accepting or using goods that were first physically taken by others, citing to Lawrence v. State, 284 Minn. 535, 169 N.W.2d 59 (1969), State v. Mancino, 257 Minn. 580, 102 N.W.2d 504 (1960), and State v. McCartey, 17 Minn. 76, 17 Gil. 54 (1871). We find those cases, which consider “taking” for the purposes of Minnesota’s larceny statute, Minn. Stat. § 622.01 (repealed 1963), inapposite, and are not persuaded by Cargill’s attempt to use a statutory definition to broaden an unambiguous policy term. See Atwater Creamery Co. v. Western Nat’l Mut. Ins. Co., 366 N.W.2d 271, 275 (Minn. 1985) (holding that “[t]here is no reason an insurer must necessarily define terms in its contracts in the same manner as a statute that exists for an entirely different purpose . . . [where t]he policy definition . . . is different and more limited than the criminal statute definition”). We conclude that this improper use did not constitute a taking for the purposes of the policy.
We further conclude that Cargill failed to show that Pioneer suffered a deprivation as the term is used in the policy. The deprivation alleged by Pioneer concerned the exclusive use of the germplasm. Cargill’s use of specific Pioneer germplasm did not deprive Pioneer of the use of identical germplasm, and Pioneer continued developing its own breeding program using germplasm identical to that possessed by Cargill. Pioneer never alleged losses due to Cargill’s exclusive physical possession of certain seeds. We conclude that Pioneer did not suffer a deprivation under the policy as a result of Cargill’s use of its germplasm. Cargill has failed to establish that the Pioneer and Monsanto claims were directly caused by theft.
We next conclude that coverage, even if otherwise available to Cargill, is barred by policy exclusion (H), which excludes coverage for “loss resulting directly or indirectly from the accessing of any confidential information, including, but not limited to, trade secret information, computer programs, confidential processing methods or other confidential information of any kind.” It is undisputed that proprietary germplasm and seed lines are intellectual property and are protected trade secrets. See Pioneer Hi-Bred Int’l v. Holden Found. Seeds, Inc., 35 F.3d 1226, 1235 (8th Cir. 1994) (holding that “genetic messages” contained in germplasm are trade secrets). There is ample evidence in the record before us that many of Cargill’s seed breeders were using misappropriated germplasm for breeding purposes. Indeed, Pioneer’s suit against Cargill involved not theft as defined in the policy, but misappropriation—“accessing”—of trade secrets arising from Cargill’s improper use of Pioneer germplasm in its breeding programs.
Cargill argues that the term “accessing” is ambiguous as used in the policy and must be construed in its favor as referring only to computer files and not to the use of germplasm. But the record demonstrates that Cargill’s counsel and other employees regularly used the verb “access” to refer to the process of extracting the genetic information contained in germplasm for the purpose of incorporating the information into its breeding programs. It nearly strains credulity for a party with Cargill’s experience and sophistication in the corn-seed industry to argue that seed germplasm is not confidential information. Cargill’s losses were indirectly caused by its accessing confidential information, and that coverage is barred under exclusion (H).
We therefore conclude that Cargill has failed to demonstrate it is entitled to coverage under the crime-loss policy, and that even had it done so, coverage is barred under at least three applicable exclusions. In light of this conclusion, we do not address the applicability of other exclusions in the policy. The district court did not err by granting National Union summary judgment.
Cargill challenges the district court’s grant of Gerling’s motion for summary judgment under the advertising-injury policy. Cargill argues that the distribution of the confidential Goldman memos to Monsanto prior to Cargill’s sale of its International Seed Division constituted false advertising that caused Monsanto to purchase the division and that it is entitled to coverage for the losses it sustained in settling the Monsanto claim.
Gerling contends that the advertising-liability provisions do not arguably cover the injury alleged by Cargill and that they have no corresponding duty to defend Cargill or compensate it for the settlement. To determine whether “advertising injury” coverage exists, this court must evaluate (1) whether the advertising activity was a direct or proximate cause of the alleged injury; (2) whether the injury fell within the scope of the policy’s definition of “advertising injury”; and (3) whether any policy exclusions apply. Polaris Indus. v. Continental Ins. Co., 539 N.W.2d 619, 621-23 (Minn. App. 1995), review denied (Minn. Jan. 25, 1996).
Under the Gerling policy, coverage exists for “Advertising Injury that takes place during the Policy Period and is caused by an Occurrence happening anywhere in the world.” “Advertising injury means injury arising solely out of [the insured’s] advertising activities as a result of . . . [m]isappropriation of advertising ideas or style of doing business; or [i]nfringement of copyright, title or slogan.” “Occurrence” is defined in the policy as “an offense committed in the course of advertising [Cargill’s] goods, products and services that results in Advertising Injury.” The policy excludes from coverage advertising injury “[a]rising out of oral or written publication of material, if done by or at the direction of the Insured with knowledge of its falsity” and advertising injury arising from “[b]reach of contract” or “[t]he failure of goods, products or services to conform with advertised quality or performance.”
“Advertising” is not defined in the policy; it must therefore be given its plain and ordinary meaning: “[t]he action of drawing the public’s attention to something to promote its sale.” Black’s Law Dictionary 55 (7th ed. 1999). The Goldman memos were not distributed to the public; they were confidential documents over which Cargill retained control and that were distributed to only two parties, both of whom had already expressed interest in purchasing the International Seed Division. Cargill does not cite to any authority to support the proposition that the International Seed Division, the entity described in the memos, can be considered a “good or product” sufficient to justify considering the memos to be advertising. But because the policy does not define advertising, the term must be interpreted in favor of coverage, and we conclude that distribution of the Goldman memos therefore constituted “advertising activity” under the policy.
In order to show that the advertising activity was a direct or proximate cause of the alleged injury, Cargill must demonstrate that the advertising injury arose “solely out of” its advertising activities “as a result of . . . [m]isappropriation of advertising ideas or style of doing business.” Generally, “the policy term ‘arising out of’ means ‘originating from,’ or ‘having its origin in,’ ‘growing out of,’ or ‘flowing from.’” Associated Indep. Dealers, Inc. v. Mut. Serv. Ins. Cos., 304 Minn. 179, 182, 229 N.W.2d 516, 518 (1975).
Under Polaris, to satisfy the “arising out of” requirement, Cargill must show direct causation between the advertising activity and the claimed injury to trigger liability coverage. 539 N.W.2d at 622. An insured has a “reasonable expectation that advertising-injury coverage should apply to injuries from advertising, rather than injuries arising out of other activities that coincidentally were advertised.” Id.
Cargill cannot show that any injury suffered by Monsanto arose out of the Goldman memos. First, although there is conflicting evidence concerning the degree to which Monsanto may have considered the memos prior to purchasing the International Seed Division, it is undisputed that the memos were not the sole source of information about the seed division submitted to Monsanto prior to the sale. Second, the Goldman memos expressly disclaim any warranty or representation of accuracy; indeed, the actual contract of sale of the International Seed Division did not incorporate the Goldman memos, which were expressly disclaimed in the final contract. Third, Cargill expressly warranted ownership of the germplasm and related research and breeding material in the purchase and sale agreement it entered into with Monsanto; there is explicit evidence that Monsanto relied on Cargill’s warranties in alleging a possible claim of breach against Cargill. We conclude that the Monsanto claim “arose from” the purchase of the International Seed Division, not from the representations in the Goldman memos.
In order to support coverage, the advertising injury must arise out of an offense specifically listed in the policy; the only arguably applicable listed offense here is “[m]isappropriation of advertising ideas or style of doing business.” “Misappropriation of advertising ideas” has been defined as the wrongful taking of another’s manner of advertising. Fluoroware, Inc. v. Chubb Group of Ins. Cos., 545 N.W.2d 678, 682 (Minn. App. 1996). The phrase “style of doing business” has been used to refer to “a company’s comprehensive manner of operating its business.” Id. The record demonstrates that Cargill misappropriated Pioneer’s germplasm, not its manner of advertising or style of doing business. The Goldman memos contain no representations or allegations concerning Cargill’s manner of advertising or manner of doing business.
We therefore conclude that (1) even if the Goldman memos constituted advertising activity, that activity was not a direct or proximate cause of Monsanto’s alleged injury and (2) the injury does not fall within the scope of the policy's definition of “advertising injury” because it does not arise out of an offense specifically listed in the policy.
Cargill argues that, because Gerling did not provide it with specific notice of reduced coverage in 1997 when it altered the terms of the policy to eliminate “liability for damages because of . . . piracy or unfair competition or idea misappropriation under an implied contract,” it was not bound by the terms of the new policy. It is true that when an insurer substantially reduces a policyholder’s coverage, it has an affirmative duty to notify the policyholder in writing. Canadian Universal Ins. Co., Ltd. v. Fire Watch, Inc., 258 N.W.2d 570, 575 (Minn. 1977). If proper notice is not given, any reduction in coverage is void and the terms of the prior policy apply. Id.
We conclude that the notice rule does not apply here to require coverage under the advertising-injury policy because the record demonstrates that the piracy and unfair competition provisions would not have entitled Cargill to coverage had that language remained in the policy; their removal therefore did not constitute a reduction in coverage. “Piracy” in advertising policies means a misappropriation found in the elements of the advertisement itself, not in the products being advertised. Fluoroware, Inc., 545 N.W.2d at 683. Cargill misappropriated germplasm, not advertising elements. As to unfair competition, Cargill was not in a competitive relationship with Monsanto concerning the sale of the International Seed Division, so damages based on unfair competition are not available. We conclude that the removal of the piracy and unfair competition language did not constitute a reduction in coverage.
We further disagree with Cargill’s portrayal of itself as an unsophisticated insured in need of the protection afforded by the notice rule. While we recognize the general rule that insurers are typically more sophisticated than insureds, the record demonstrates that Cargill has extensive experience in negotiating and purchasing insurance, and we are not convinced by its attempt to equate its sophistication with that of the insured in Samuelson v. Farm Bureau Mut. Ins. Co., 446 N.W.2d 428, 431 (Minn. App. 1989)—a man buying no-fault automobile insurance for his son. It is true that “[b]oth primary and umbrella insurers are typically more sophisticated than the insured—they know their policies intimately, including their duties under the contract and how courts have interpreted language in the policies.” Home Ins. Co. v. Nat’l Union Fire Ins. of Pittsburgh, 658 N.W.2d 522, 533 (Minn. 2003). But the record here is clear that Cargill’s insurance division carefully analyzed its insurance policies and was intimately familiar with insurance interpretation and jurisprudence; it was not a typical unsophisticated insured. The record also demonstrates that Gerling’s was just one of three excess-coverage policies that Cargill purchased based on the express provisions of the revised 1997 National Union umbrella policy.
Finally, we agree with Gerling’s contention that policy exclusion (L), excluding coverage for “[b]reach of contract, other than misappropriation of advertising ideas under an implied contract,” applies to bar coverage. The record clearly demonstrates that Monsanto’s injury and its claim against Cargill arise from Cargill’s breach of the warranties of ownership in the International Seed Division sales agreement. Therefore, even were Cargill otherwise entitled to coverage from injury associated with the Goldman memos, coverage would be barred by this exclusion.
We conclude that the Monsanto settlement for which Cargill is seeking indemnification from Gerling was caused by Cargill’s failure of consideration in the sale of the International Seed Division—it sold stolen germplasm as its own—rather than from any representations made in the Goldman memos. We also conclude that Cargill failed to make a prima facie case for coverage under the advertising-injury policy. Even if the Goldman memos were advertising, Monsanto’s injury did not arise solely from the memos or from any offense listed in the policy. Coverage is further barred by the policy exclusion concerning breach of contract. The district court did not err by granting Gerling’s summary-judgment motion. Because we conclude both that Cargill has failed to make a prima facie case for coverage and that coverage is barred under exclusion (L), we do not reach the other arguments against coverage raised by Gerling.
We also grant National Union’s motion to strike those parts of Cargill’s appellate submissions not considered by the district court in granting National Union’s motion for summary judgment. See Thiele v. Stich, 425 N.W.2d 580, 582-83 (Minn. 1988) (court will not consider matters not considered below).
Affirmed; motion granted.