This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Stan Williamson, d/b/a The Vacuum Doctor,



North Star Companies, d/b/a North Star

Insurance Company and North Star

General Insurance Company,


Filed February 11, 1997


Willis, Judge

Mower County District Court

File No. C495839

Paul A. Sortland, Sortland Law Office, 701 Fourth Avenue South, Suite 500, Minneapolis, MN 55415-1810 (for Respondent)

Roderick D. Blanchard, William M. Hart, Katherine A. McBride, Meagher & Geer, P.L.L.P., 4200 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN 55402 (for Appellant)

Considered and decided by Peterson, Presiding Judge, Willis, Judge, and Foley, Judge.[*]



Appellant North Star Companies, d/b/a North Star Mutual Insurance Company and North Star General Insurance Companies (North Star), appeals from the district court's grant of summary judgment to Stan Williamson, d/b/a The Vacuum Doctor (Williamson). The district court determined that North Star breached its insurance contract by withdrawing its defense of Williamson in a lawsuit brought by the Scott Fetzer Company, the Kirby Company Division (Kirby). On appeal, North Star argues that (1) it had no duty to defend Williamson after Kirby abandoned its claims for money damages and (2) the policy did not cover Kirby's claims against Williamson. Williamson asks for review of a special term panel's decision regarding Northstar's supersedeas bond. We affirm.


Kirby sells its vacuum cleaners only through authorized Kirby dealers. Williamson operates a small, independent vacuum cleaner store in Austin. Although he is not an authorized Kirby dealer, Williamson legally obtained new Kirby vacuum cleaners from an authorized dealer to sell to the public. Williamson also is qualified to repair Kirby vacuum cleaners. Williamson placed several advertisements in local newspapers stating that he could special order Kirby vacuum cleaners and that he was a certified Kirby technician. The advertisements stated that Williamson was not an authorized dealer.

Based on the advertisements, Kirby commenced an action against Williamson in federal district court in July 1993, asserting claims of (1) trademark infringement in violation of 15 U.S.C. § 1114; (2) false or misleading advertising in violation of 15 U.S.C. § 1125(a); (3) deceptive trade practices in violation of Minn. Stat. § 325D.44; (4) unlawful trade practices in violation of Minn. Stat. § 325D.13; (5) false advertising in violation of Minn. Stat. § 325F.67; (6) consumer fraud in violation of Minn. Stat. § 325F.69; (7) common law unfair competition; and (8) common law trade disparagement. Kirby sought injunctive relief, an accounting of profits, treble damages, and attorney fees. Williamson counterclaimed, alleging defamation, deceptive trade practices, consumer fraud, unfair competition, and trade disparagement.

North Star was Williamson's liability insurer. The policy obligated North Star to defend Williamson against claims for damages resulting from "advertising injury." In October 1993, North Star agreed to pay the reasonable costs of Williamson's defense, but the parties agreed that North Star would not pay for prosecuting Williamson's counterclaims. North Star, however, in its reservation of rights letter to Williamson, stated that it would stop providing for his defense in the event that Kirby's allegations were "valid." North Star did not deny that there was coverage.

On May 13, 1994, Kirby submitted an offer to North Star to settle all claims against Williamson in exchange for dismissal of Williamson's counterclaims and his agreement to a series of limitations on his use of the Kirby name in advertising. North Star urged Williamson to settle the lawsuit and stated that if he pursued the action, North Star would no longer pay for his defense. Williamson did not settle, and North Star withdrew from Williamson's defense, characterizing Williamson's refusal to settle with Kirby as "unreasonable."

On the first day of the trial, the federal district court granted Kirby's motion to dismiss the counts of its complaint that sought money damages against Williamson, thereby limiting trial to Kirby's claims for injunctive relief, an accounting, and attorney fees and costs, as well as Williamson's counterclaims. Kirby was awarded nothing, and Williamson was granted judgment for $90,000 on his defamation counterclaim.

Williamson then commenced the present action against North Star, alleging breach of the insurance contract for withdrawing from his defense. The district court granted Williamson's motion for summary judgment, awarding Williamson his attorney fees and costs incurred in defending against Kirby's claim and in prosecuting the breach of contract claim against North Star. The district court reasoned that the policy required North Star to defend against "advertising injury" claims, regardless of the remedy sought.

This appeal follows. This court, by special term order, upheld the district court's approval of North Star's supersedeas bond with North Star General Insurance Company.


On appeal from summary judgment, an appellate court determines whether there are genuine issues of material fact and whether the district court correctly applied the law. Offerdahl v. University of Minn. Hosps. & Clinics, 426 N.W.2d 425, 427 (Minn. 1988). The construction of an insurance policy is a question of law subject to de novo review. Meister v. Western Nat'l Mut. Ins. Co., 479 N.W.2d 372, 376 (Minn. 1992).

1. Money Damages

North Star claims that the policy on its face limits coverage to claims for the recovery of money damages, and North Star therefore had no duty to defend after Kirby abandoned its claims to money damages. The district court disagreed and concluded that "North Star is required to defend [the advertising injury] claims, whatever the appropriate remedy may be."

An insurance policy is "construed according to the terms the parties have used, and the language used must be given its ordinary and usual meaning so as to give effect to the intention of the parties." Dairyland Ins.Co. v. Implement Dealers Ins. Co., 294 Minn. 236, 244-45, 199 N.W.2d 806, 811 (1972). The policy does not use the term "money damages." It provides that North Star "will pay those sums that the insured becomes legally obligated to pay as damages because of * * * 'advertising injury.'" The policy does not define "damages." Undefined terms in insurance contracts are given their plain and ordinary meaning. Minnesota Mining & Mfg. Co. v. Travelers Indem. Co., 457 N.W.2d 175, 179 (Minn. 1990). The ordinary meaning of damages may include both legal and equitable claims. Id. at 179-80. We conclude, however, that use of the words "pay" and "sums" in the policy here limits coverage to claims that would obligate the insured to pay money to the claimant and that claims for only injunctive relief are not covered.

North Star asserts that Kirby abandoned its money damages claims when it made its May 1994 settlement proposal. However, that proposal was merely an offer by Kirby to dismiss its claims for money damages as part of a complete settlement of the lawsuit. The offer was rejected. North Star is liable for Williamson's defense until the date Kirby actually dismissed its claims for money damages, which was the first day of the federal court trial, March 27, 1995. We conclude that North Star further is liable for Williamson's defense costs at trial because, even after it dismissed the counts of the complaint seeking money damages, Kirby continued to seek attorney fees, costs, and an accounting, which, if Kirby had been successful, would have obligated Williamson to pay money. Therefore, while we do not agree with the district court that North Star was liable for the costs of Williamson's defense regardless of the remedy sought, we agree that North Star is liable for all costs incurred in defending against Kirby's claims.

North Star also argues that Kirby's claims for money damages were mere "surplusage" and therefore not entitled to coverage. North Star cites Haarstad v. Graff, 517 N.W.2d 582 (Minn. 1994), where the injured party, to invoke the defendant's insurance coverage, alleged that the defendant had committed a negligent act. Id. at 583. The supreme court held that the insurer had no duty to defend because the insurer had sufficient knowledge, by looking at facts beyond the complaint, that the defendant's act was intentional, rather than negligent. Id. at 585. Here, the federal district court, in granting a preliminary injunction, concluded that Kirby would likely "succeed on the merits of its claims against [Williamson]." Kirby's claims for money damages were not surplusage.

2. Covered Claims

North Star argues that it had no duty to defend Williamson because Kirby's claims did not fall within the definition of advertising injury and therefore were not covered by the policy. In determining whether an insurer has a duty to defend, appellate courts compare the complaint's allegations with the relevant policy language. Ross v. Briggs & Morgan, 540 N.W.2d 843, 847 (Minn. 1995).

A duty to defend an insured on a claim arises when any part of the claim is "arguably" within the scope of the policy's coverage, and an insurer who wishes to escape that duty has the burden of showing that all parts of the cause of action fall clearly outside the scope of coverage.

Jostens, Inc. v. Mission Ins. Co., 387 N.W.2d 161, 165-66 (Minn. 1986).

Kirby's complaint alleges, among others, a claim of trademark infringement. The policy defines advertising injury as follows:

"Advertising Injury" means injury arising out of one or more of the following offenses:

* * *

c. Misappropriation of advertising ideas or style of doing business; or

d. Infringement of copyright, title, or slogan.

(Emphasis added.) Because the word "title" appears in the same clause with "copyright," we conclude that the policy means "title" in the intellectual property sense. A "title" becomes a trademark through extended usage or by compliance with statutory registration. Black's Law Dictionary 1485 (6th ed. 1990). Moreover, in P.J. Noyes Co. v. American Motorists Ins. Co., 855 F. Supp. 492 (D.N.H. 1994), a federal district court construed a definition of "advertising injury" identical with that here and held that trademark infringement arguably fell within the scope of "misappropriation of advertising ideas * * * or infringement of a title or slogan." Id. at 494-95. Accordingly, the policy arguably covers the alleged trademark infringement.

Because we conclude that the claim of trademark infringement is arguably covered by the policy, we need not address whether other claims might be covered. See Jostens, 387 N.W.2d at 165 (concluding that "[a] duty to defend an insured on a claim arises when any part of the claim is 'arguably' within the scope of the policy's coverage").

Finally, North Star contends for the first time on appeal that Kirby's claims invoke the policy's exclusion of coverage for advertising injury caused by the insured "with knowledge of its falsity" because Kirby alleged deliberate, willful, and intentional acts by Williamson. This issue was not presented to and considered by the district court, and we therefore will not consider it on appeal. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988). We do note, however, that North Star's intentional acts exclusion argument conflicts with the position it took in its reservation of rights letter to Williamson, where North Star stated that "if there is no basis for the allegations of Kirby Vacuum Cleaner against you, there is coverage under your policy." On appeal, North Star takes the position that the form of the allegations precludes coverage.

3. Supersedeas Bond

Williamson urges this court to review the special term panel's conclusion that the district court did not abuse its discretion in approving the supersedeas bond. This court will not reconsider an issue that we have already addressed at special term. In re Estate of Sangren, 504 N.W.2d 786, 788 n. 1 (Minn. App. 1993), review denied (Minn. Oct. 28, 1993); see also Minn. R. Civ. App. P. 140.01 (providing that "[n]o petition for rehearing shall be allowed in the Court of Appeals.")


[ ]* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.