Summary Judgment Against Charlotte Russe In Favor Of Travelers Insurance Company Reversed.

Charlotte Russe stores contracted to become the exclusive sales outlet for “premium, high end” clothing called People’s Liberation, a brand owned by a company called Versatile. Charlotte Russe allegedly offered the clothing at severely discounted “fire-sale” prices.  Versatile brought an action against Charlotte for breach of contract and other causes of action, requesting damages for diminution of its brand and trademark. Charlotte Russe tendered the suit to Travelers for a defense, and Travelers declined to either defend or indemnify Charlotte Russe. Travelers filed a declaratory relief action, and Charlotte Russe cross-complained for breach of contract and breach of the implied covenant.  The trial court granted summary judgment to Travelers. The Court of Appeal reversed, stating the underlying litigation need not allege all elements of a cause of action for trade libel in order to trigger personal injury coverage for product disparagement, and coverage may be triggered by implied allegations of disparaging statements. As to Traveler’s argument that disparagement in the insurance context refers to the tort of trade libel, the appellate court pointed out Versatile’s pleadings allege that Charlotte Russe had published prices for the goods that were impliedly false, and “that is enough.” The court also noted there was a possibility Versatile’s pleadings could be understood to state the dramatic discounts of its premium clothing line meant the line was not, in fact, premium, high-end goods, and that “arguably, a trade libel claim might survive under these theories.” Travelers Property Casualty v. Charlotte Russe  (Cal. App. Second, Div. 1; July 13, 2012) 207 Cal.App.4th 969.