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General Casualty Co. of Illinois v. Four Seasons Greetings12/28/2004
or context and is, therefore, not useful here. Thus, we conclude that the knowledge of falsity exclusion does not bar coverage in this case.
The three elements outlined in Polaris for advertising-injury coverage are met in this case. As a result, the injury was "arguably" within the scope of the policies and GCC had a duty to defend Four Seasons upon tender of the defense by the insured.
B. Tender
The issue of what constitutes legal tender of an insurance claim is a question of law, which this court reviews de novo. Home Ins. Co. v. Nat'l Union Fire Ins. of Pittsburgh, 658 N.W.2d 522, 527 (Minn. 2003). Although an insurer's duty to defend exists from the time an action is filed against the insured, the insured does not invoke that duty until it tenders a defense to the insurer. See SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305, 316-17 (Minn. 1995) (holding, in the context of a state-agency action, that, although the insurer's duty to defend arose when the agency issued a request for information to the insured, the duty was not invoked by the insured until it tendered a defense to the insurer). Tender occurs when an insured's actions give an insurer notice of a lawsuit and the opportunity to defend. Home Ins. Co., 658 N.W.2d at 534. An insurer is not responsible for defense costs incurred prior to tender. Domtar, Inc. v. Niagara Fire Ins. Co., 563 N.W.2d 724, 739 (Minn. 1997).
GCC contends that "the first possible date a duty to defend could have been triggered" is July 15, 2002--the date Four Seasons moved for summary judgment in this case. But Four Seasons initially notified GCC of the underlying complaint on October 26, 2001. The referee found that GCC's duty to defend was triggered on this date and the district court affirmed. GCC argues, however, that its duty to defend was not invoked on this date because Four Seasons did not provide GCC with the additional information GCC requested.
This court addressed a similar situation in Westling Mfg. Co. v. W. Nat'l Mut. Ins. Co., 581 N.W.2d 39 (Minn. App. 1998), review denied (Minn. Sept. 22, 1998). In Westling, the insured was notified by the Minnesota Pollution Control Agency (MPCA) that the MPCA wanted to conduct testing to determine whether the insured was responsible for groundwater pollution. Id. at 42. The insured tendered a defense to its insurers, noting that the MPCA was threatening to issue a request for response action. Id. The insurers denied a duty to defend for a variety of reasons, "including a claim that the groundwater contamination was not sudden and accidental." Id. The insured then sued. Id. at 43. Based on a special verdict issued by the jury, the trial court found for the insured. Id.
On appeal, the primary insurer argued that it had no duty to defend because, when the insured tendered the defense, it did not claim that the release of contaminants had been "sudden and accidental" as required by the policy. Id. at 47. The insurer expressly notified the insured that it believed coverage was barred by a policy exclusion and, prior to the summary-judgment hearing, the insured produced no evidence to the contrary. Id. Nonetheless, this court found that the insurer had a duty to defend. Id.
e conclude that coverage was "arguable" until further investigation of the facts revealed that the exception to the exclusion was inapplicable. . . . here is no authority for the proposition that tender of the claim must await completion of an ongoing investigation of facts such that all conditions of coverage are made evident. We are mindful in resolving this issue of the insurer's burden to establish the applicability of its exclusions and of partiality in the law for
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