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A Great American Insurance Group entity has no obligation to defend or indemnify a marketing agency in litigation over a failed franchise agreement, a federal district court ruled.
In 2018, Beyond Gravity Media Inc., based in Moorcock, California, signed a deal with Code Ninjas LLC of Pearland, Texas, which teaches children computer programming, math, logic, and teamwork, to open Code Ninjas franchise centers, so that Judgment Wednesday in the United States District Court in Galveston, Texas, in the Great American Insurance Company v. Beyond Gravity Media, Inc.
Just over a year later, Beyond Gravity and its sole shareholder Branden Matalon attempted to dissolve the franchise agreements, alleging alleged violations of California law and claiming economic damage, according to the ruling.
Code Ninjas filed a lawsuit in Galveston Court alleging that Beyond Gravity and Mr. Matalon obtained confidential and proprietary information from Code Ninja through its training programs, annual franchise conference, and other communications.
The lawsuit accused them of misappropriating Code Ninja's confidential information and brand to create and promote a competing educational center.
The parties eventually reached a confidential settlement and Code Ninjas voluntarily dismissed the complaint.
Prior to the settlement, Beyond Gravity insurer Great American filed a lawsuit in the Galveston Court, requesting a statement stating that it was under no obligation to defend the company and Mr. 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 lawsuit concern personal injury or property damage that would be covered by its general public liability insurance, nor is coverage under its personal and advertising damage provisions. "Express" policy exclusions also exclude coverage, the ruling says.
"Because Great American has found that the exclusion of the policy completely exempts them from the defense obligation, Great American has accordingly no obligation to compensate the defendant," says the verdict in the insurer's reasoning.
The lawyers on the case did not respond to requests for comment.
Great American is the property insurer for the Surfside, Florida condominium that collapsed in June.