A unit in the Great American Insurance Group is not required to defend or indemnify a marketing agency in disputes over a failed franchise agreement, a federal district court has ruled.
In 2018, Moorcock, California-based Beyond Gravity Media Inc., entered into an agreement with Pearland, Texas-based Code Ninjas LLC, which teaches children programming coding, math, logic and teamwork, to open franchises for Code Ninjas centers, according to Wednesday's ruling by the U.S. District Court in Galveston, Texas, Great American Insurance Company v. Beyond Gravity Media, Inc.
A little over a year later, Beyond Gravity and its sole shareholder, Branden Matalon, tried to revoke the franchise agreements, alleged violations of California law and claimed financial damages, according to the ruling.
Code Ninjas brought an action before the Galveston Court, alleging that Beyond Gravity and Mr Matalon had obtained Code Ninja's confidential and proprietary information through their training programs, annual franchise conferences and other communications.
In the lawsuit, they were accused of misrepresenting Code Ninja's confidential information and trademarks to create and advertise a competing training center.
The parties eventually reached a confidentiality agreement and Code Ninjas voluntarily rejected the complaint.
Before they settled, Beyond Gravity insurer Great American sued Galveston Court and demanded a declaration that it had no duty or defended the company and Matalon.
The court ruled in favor of the insurer. The court said it agreed with the insurer that none of the allegations in the underlying complaint concerned bodily injury or damage to property that would be covered by its commercial general liability policy, nor that there was coverage under its personal and advertising damage provision. "Express" policy exclusions also exclude coverage, the ruling said.
"Since the Great American has determined that the exclusion of the policy completely relieves it of the duty to defend, the Great American has similarly no obligation to compensate the defendants," it said in the judgment, by granting the insurer a summary judgment in the case.
The lawyers in the case did not respond to a request for comment.
Great American is the property insurer for Surfside, Florida, condominium that collapsed in June.