DeMond Signs says Cincinnati Insurance failed to defend two lawsuits

Kelly Holleran Jul. 27, 2011, 8:44am


An O'Fallon sign company claims its insurance agency failed to pay the defense costs it incurred after being sued twice.

DeMond Signs filed a lawsuit June 27 in St. Clair County Circuit Court against The Cincinnati Insurance Company.

In its complaint, DeMond Signs claims The Cincinnati Insurance Company issued it a general comprehensive liability insurance policy, which included liability for advertising injury. As part of the policy, the insurance company should have defended and paid for the defense of any lawsuits brought against DeMond Signs, according to the complaint.

On Feb. 22, 2008, a DeMond Signs's competitor, Warren Sign Company, filed a lawsuit against it in U.S. District Court for the Eastern District of Missouri. In its suit, Warren Sign alleged copyright infringement, tortious interference with contract, misappropriation of trade secrets and civil conspiracy, the current suit states.

When faced with the suit, DeMond notified The Cincinnati Insurance Company, requesting it defend the sign company, the complaint says.

In a reply letter, The Cincinnati Insurance Company agreed to reimburse DeMond Signs attorneys' fees of $2,152, although the insurance company made clear that the policy did not provide coverage for such costs.

"Exclusion I precludes coverage for advertising injuries arising out of the infringement of a copyright," the insurance company's letter stated. "As this is exactly what Plaintiff has alleged against Demond Signs, there is no coverage under this policy of insurance for Plaintiff's Complaint."

On Nov. 11, 2009, Warren Signs again filed a complaint against Demond Signs, asserting similar claims as the first complaint, according to the complaint.

Once again, DeMond requested The Cincinnati Insurance Company defend the suit brought against it, the complaint says. This time, however, the insurance company refused to do so, DeMond Signs claims.

Faced with limited choices, DeMond decided to defend itself. Its defense convinced Warren to dismiss the suit with prejudice and to exchange a mutual release with DeMond, according to the complaint.

However, during the defense process, DeMond racked up attorneys' fees of more than $26,000, the suit states.

It now seeks that money from The Cincinnati Insurance Company, plus a penalty of 60 percent of the attorneys' fees incurred in defending the second lawsuit, pre-judgment interest and court costs.

David M. Duree of David M. Duree and Associates in O'Fallon will be representing it.

St. Clair County Circuit Court case number: 11-L-333.

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