Federal District Court Opinions

COLUMBUS FARMERS MARKET v. FARM FAMILY CASUALTY INS., (N.J.
12-21-2006) COLUMBUS FARMERS MARKET, LLC et al.,
Plaintiffs, v. FARM FAMILY CASUALTY INSURANCE COMPANY, et
al., Defendants. Civil Action Nos. 05-2087. United States
District Court, D. New Jersey. December 21, 2006

William R. Herman, Esq., LAW OFFICES OF WILLIAM R. HERMAN,
Washington Crossing, PA, and Ralph A. Jacobs, Esq., RALPH
A. JACOBS & ASSOCIATES LLC, Haddonfield, New Jersey,
Attorneys for Plaintiffs Columbus Farmers Market, LLC,
Columbus Flea World, LLC, John C. Ackerman, Jr. and Charles
F. Pratt.

Edward R. Murphy, Esq., James W. Watson, Esq., MURPHY &
O’CONNOR, LLP, Cherry Hill, NJ, Attorneys for Farm Family
Casualty Insurance Company.

Marc L. Dembling, Esq., METHFESSEL & WERBEL, P.C., Edison,
NJ, Attorney for Lead Underwriter of Certain Underwriters
at Lloyd’s London Policy No. WAPC 20000701-002, WAPC
20010701-005, WAPC 20020701-010, WAPC 20030701-028.

OPINION

JEROME SIMANDLE, District Judge Page 2

The plaintiffs in this matter are two entities (Columbus
Farmers Market, LLC and Columbus Flea World, LLC) that own
and/or operate a large flea market in Burlington County,
New Jersey and the principals of these entities (John C.
Ackerman, Jr. and Charles F. Pratt) (collectively, the
“Plaintiffs”).[fn1] The Plaintiffs are also defendants in a
related case pending before this Court, Arista Records,
Inc. v. Flea World No. 03-2670 (D.N.J. June 3, 2003) (the
“Arista Litigation”), in which they face potentially
millions of dollars in damages for contributory copyright
infringement and vicarious liability related to the sale of
counterfeit and contraband compact discs by third-party
vendors at the flea market. The present matter is an
insurance case in which Plaintiffs (1) seek a declaration
that the insurance policies at issue give rise to a duty to
defend Plaintiffs in the Arista Litigation, (2) claim that
the insurers breached their respective insurance contracts
with Plaintiffs, and (3) seek a declaratory judgment that
the insurers have a duty to indemnify Plaintiffs against
all claims in the Arista Litigation. Page 3

Presently before the Court are the following motions: (1)
Plaintiffs’ motion for partial summary judgment on the issue
of whether the defendant-insurers have a duty to defend
Plaintiffs in the Arista Litigation [Docket Item No. 12];
(2) defendant-insurer Lead Underwriter of Certain
Underwriters at Lloyd’s London (“Lloyd’s”) motion for
summary judgment [Docket Item No. 14];[fn2] and (3)
defendant-insurer Farm Family Casualty Insurance Company’s
(“Farm Family”) cross-motion for summary judgment [Docket
Item No. 17]. Central to these three motions is whether the
insurance policies at issue provide coverage under the
“advertising injury” provision for the contributory
copyright infringement and vicarious liability claims
alleged in the Arista Litigation. A second and related
issue is whether coverage is excluded under a variety of
defenses raised by Lloyd’s and/or Farm Family. Third, if
the Court holds that Lloyd’s and Farm Family have a duty to
defend, the Court must determine how the amount payable to
Plaintiffs should be allocated between the underwriters who
issued the policies. Finally, the Court must address
Lloyd’s and Farm Family’s arguments that, because Lloyd’s
and Farm Family have no duty to Plaintiffs in the Arista
Litigation, summary judgment is appropriate on the issue of
Lloyd’s and Farm Family’s duty to indemnify. Page 4

For the reasons expressed in this Opinion, Plaintiffs’
motion for partial summary judgment will be granted in part
and denied in part. The Court will grant Plaintiffs’ motion
pertaining to Lloyd’s and Farm Family’s duty to defend
Plaintiffs in the Arista Litigation under the insurance
policies in effect from July 1, 1999 through July 1, 2003.
However, Plaintiffs’ motion will be denied relating to the
policy in place from July 1, 2003 to July 1, 2004 because,
as Plaintiffs concede, there is no coverage under the
policy that was in place between July 1, 2003 through July
1, 2004. The Court will also deny Plaintiffs’ motion as to
the issues of (a) whether Columbus Flea World, LLC is
covered by the Farm Family insurance policy (it is not) and
(b) whether the defense costs should be allocated equally
among the three underwriters (they will not be and the
Court will require additional submissions from the parties
as discussed in Section III.D, infra.) In addition, Farm
Family’s motion for summary judgment on the issue of the
duty to indemnify will be denied as to Columbus Farmers
Market, LLC and granted as to Columbus Flea World, LLC; and
Lloyd’s motion for summary judgment will be denied with
respect to its three policies pre-dating July 1, 2003 and
granted with respect to the July 1, 2003 — July 1,
2004 policy. Page 5