Models’ Negligence Allegations against Strip Club Triggers Duty to Defend

The United States District Court for the Northern District of Illinois, in an opinion written by Judge Feinerman, applying Illinois law, granted, in part, Triple Location LLC’s motion for summary judgment as to its insurer First Mercury Insurance Company’s (“First Mercury”) duty to defend.

The underlying case concerns three models who alleged that Triple Location published their images without consent in order to promote a strip club, Club O. The underlying plaintiffs alleged that the publication created the false impression that the models agreed to promote the business, resulting in harm to their brand and image. The underlying plaintiffs also alleged that the unauthorized publication of their images “totally and completely destroyed” any “copyright” that existed for those photos. Furthermore, plaintiffs claimed that Triple Location “was negligent in its failure to promulgate policies and procedures concerning the misappropriation of the [i]mage[s] of [the] models that were used on the Club O Website and social media accounts.”

Triple Location tendered the defense of the suit to First Mercury, its liability insurer, which refused to defend Triple Location on the grounds that the underlying plaintiff’s claims fell outside the scope of coverage. First Mercury then sought a declaration that it had no duty to defend or indemnify its insured.

First Mercury issued three policies to Triple Location, each of which contained a provision whereby First Mercury agreed to defend Triple Location against lawsuits seeking damages for “personal and advertising injury.” Triple Location argued that because plaintiff’s claims for “personal and advertising injury” allegedly arose out of its negligent conduct, no exclusion limits the scope of its insurer’s duty to defend. First Mercury responded that plaintiff’s complaint, when read as a whole, alleged intentional acts of misconduct on the part of its insured, which, unlike claims sounding in negligence, are precluded from coverage.

The court found that because the underling allegations “arguably fall within at least one of the categories of wrongdoing listed in the policies and were not clearly excluded from coverage, First Mercury has a duty to defend Triple Location in the underlying suit.” Having found that First Mercury is obligated to defend Triple Location in the underlying lawsuit, the court held that a decision as to First Mercury’s duty to indemnify was premature as questions relating to an insurer’s duty to indemnify become ripe only after completion of the underlying litigation. First Mercury Ins. Co. v. Triple Location LLC, No. 1:2019cv02395 (N.D. Ill. Apr. 29, 2021).