Stanford Law School - Robert Crown Law Library

Filed 7/3/03

IN THE SUPREME COURT OF CALIFORNIA

MOHAMMED A. HAMEID,
Plaintiff and Appellant,
S104157
v.
) Ct.App.
4/3
G026525
NATIONAL FIRE INSURANCE OF
HARTFORD, )
)
Orange
County
Defendant and Respondent.
Super. Ct. No. 811757

We granted review to determine a limited issue: When a plaintiff alleges in
an underlying complaint that an insured defendant took a competitor’s customer
list and solicited customers from it, was the defendant’s act a misappropriation of
advertising ideas that gave rise to the insurer’s duty to defend defendant under the
“advertising injury” provision of the commercial general liability (CGL) insurance
policy? (On May 15, 2002, we filed the order specifically limiting the issue on
review to coverage under the advertising injury provision.) We conclude the term
“advertising injury” as used in the CGL policy requires widespread promotion to
the public such that one-on-one solicitation of a few customers does not give rise
to the insurer’s duty to defend the underlying lawsuit. For this reason, we reverse
the Court of Appeal judgment, which concluded the allegations satisfied the
“advertising injury” provision of the CGL insurance policy.
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FACTS
In November 1998, plaintiff Mohammed A. Hameid opened Salon T’Shea,
a beauty parlor. Hameid purchased a “Business Account Package Policy” from
National Fire Insurance of Hartford (National). The policy was effective from
November 2, 1998, to November 2, 2001, and provided CGL insurance, including
coverage for “advertising injury” arising out of the “misappropriation of
advertising ideas or style of doing business.” Salon T’ Shea was located near a
competitor, Bellezza Salon/Day Spa (Bellezza). Shortly after Salon T’Shea
opened, Doreen Howard and Heather Billington, two Bellezza hairdressers, left
Bellezza to rent work stations from Hameid, taking most of their customers with
them.
In March 1999, KWP, Inc. (KWP), Bellezza’s owner, sued Hameid,
Howard, and Billington for (1) misappropriation of trade secrets, (2) unfair
competition, (3) breach of contract, (4) breach of the implied covenant of good
faith and fair dealing, (5) intentional interference with prospective economic
advantage, (6) negligent interference with prospective economic advantage, (7)
civil conspiracy, and (8) injunctive relief. KWP claimed that all three defendants
possessed “trade secrets,” including Bellezza’s “customer list, price list and
pricing policies,” and that the defendants had “misappropriated the above-
described trade secrets by committing certain acts, including, but not limited to:
utilizing the customer list in order to identify and solicit [Bellezza’s] customers,
and using [Bellezza’s] confidential price list and pricing policies to undercut
[Bellezza].” As to Hameid specifically, the KWP action alleged direct
misappropriation and unfair competition, conspiratorial activity with the
codefendants, and an agency relationship with them.
Hameid’s own declaration established that he did no advertising, except to
include a flyer in a ValuPak that was sent in a mass mailing to local residents.
2

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Hameid declares: “Defendants Doreen Howard and Heather Billington rent space
at Salon T’Shea which has done no advertising or soliciting for them. What Salon
T’Shea does for advertising is to include a flyer in ValuPak which is sent to local
residents.” KWP, however, did not sue Hameid for mailing the ValuPak flyer.
Instead, KWP sued Hameid for stealing its customer list and soliciting its
customers. Even the coupon on the flyer was not applicable to Howard’s or
Billington’s services; it was restricted to other stylists: “20% Off Any Service.
With Coupon Only. New Clients Only. Discount With Meno or Heidi Only.”1
Hameid tendered defense of the KWP action to National under the CGL
insurance policy’s “advertising injury” coverage provision, but the insurer refused
to defend him. Hameid prevailed against KWP at trial. He then timely filed the
present bad faith action against National for breach of contract and breach of the
implied covenant of good faith and fair dealing, seeking to recover defense
expenses and punitive damages. The trial court struck the punitive damages claim.
It also granted National’s motion for summary judgment on the ground that as a
matter of law National owed Hameid no duty to defend under the relevant policy
provision because the underlying lawsuit claimed misappropriation of trade
secrets, and not advertising injury.
The Court of Appeal reversed the judgment, concluding National owed
Hameid a duty to defend. The court relied on New Hampshire Ins. Co. v. Foxfire
Inc. (N.D.Cal. 1993) 820 F.Supp. 489, 494 (Foxfire), in holding that when we
view Hameid’s business as a “start-up community beauty salon,” the relatively

1
Although a separate Penny Saver advertisement is mentioned in
investigators’ declarations that accompanied KWP’s complaint, KWP did not
claim the advertisement was wrongful or seek damages based on it, and Hameid
did not mention it in any of the initial correspondence between him and National
following his tender of defense. In addition, the Penny Saver advertisement was
not made a part of the record. We therefore refer to the ValuPak advertisement
only, because it was included in the record.
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limited solicitation of customers through phone calls and ValuPak mailers served
to call public attention to the salon’s beauty services. The Court of Appeal
concluded that solicitation was therefore equivalent to the widespread promotional
activities that Foxfire found constituted advertising under the CGL insurance
policy. (See also Sentex Systems, Inc. v. Hartford Acc. & Indem. Co. (N.D.Cal.
1995) 882 F.Supp. 930, 939, affd. (9th Cir. 1996) 93 F.3d 578 [advertising
encompasses one-on-one and group solicitations].) Having concluded the
insured’s conduct fell within the National policy’s definition of advertising
activity, the court considered whether the policy covered that conduct in its
coverage of “advertising injury” arising out of the “misappropriation of
advertising ideas or style of doing business.” The court concluded that business
marketing includes a variety of direct and indirect advertising activities, including
misappropriating confidential customer lists to identify and solicit clients. We
granted review.
DISCUSSION

1. General Principles
Insurance policy interpretation is a question of law. (Waller v. Truck Ins.
Exchange, Inc. (1995) 11 Cal.4th 1, 18.) An insurance policy is a contract
between the insurer and the insured. As with all contracts, “the mutual intention
of the parties at the time the contract is formed governs interpretation.” (AIU Ins.
Co. v. Superior Court (1990) 51 Cal.3d 807, 821-822.) The parties’ intent is
inferred from the “ ‘clear and explicit’ meaning of these provisions, interpreted in
their ‘ordinary and popular sense,’ unless ‘used by the parties in a technical sense
or a special meaning is given to them by usage’ . . . . Thus, if the meaning a lay
person would ascribe to contract language is not ambiguous, we apply that
meaning.” (Id. at p. 822.)
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Liability insurers owe a duty to defend their insureds for claims that
potentially fall within the policy’s coverage provisions. “The carrier must defend
a suit which potentially seeks damages within the coverage of the policy.” (Gray
v. Zurich Ins. Co. (1966) 65 Cal.2d 263, 275.) However, in an action where no
claim is even potentially covered, the insurer owes no duty to defend. (Buss v.
Superior Court (1997) 16 Cal.4th 35, 46.)

2. The National Insurance Policy
In order to determine whether National owed Hameid a duty to defend, we
must examine the CGL insurance policy at issue. As noted, the policy provides
defense and indemnity coverage for “advertising injuries” if the injuries are
“caused by an offense committed in the course of advertising [the insured’s] goods
and services.” The coverage obligates National to defend an action against the
insured if the underlying lawsuit alleges (1) “advertising” by the insured, (2) an
“advertising injury” offense as defined in the policy, and (3) a causal connection
between the advertising injury and the third party claimant’s damages. The
“Umbrella Coverage Endorsement” in the same CGL insurance policy provides
additional coverage for “advertising injury” under essentially identical terms.
Although the CGL insurance policy here does not define “advertising,” it
does define “advertising injury” to mean injury arising out of one or more
offenses, including slander or libel, violation of the right to privacy, copyright,
title or slogan infringement, and, at issue here, “[m]isappropriation of advertising
ideas or style of doing business.”2 Thus in order for Hameid to have a reasonable

2
The term “style of doing business” refers to a company’s comprehensive
manner of operating. (See Novell, Inc. v. Federal Ins. Co. (D.Utah 1998) 141 F.3d
983, 986-988 [holding allegation that insured software company copied software
developer’s efforts did not trigger duty to defend under “advertising injury”
portion of CGL policy as “misappropriation of style of doing business”]; see also
Proof Toy Products, Inc. v. U.S.F.G. (E.D.Mich. 1995) 891 F.Supp. 1228, 1232;
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expectation of coverage under the National CGL policy for “advertising injury” he
must show that: (1) he was engaged in “advertising” during the policy period
when the alleged “advertising injury” occurred; (2) KWP’s allegations created a
potential for liability under one of the covered offenses (i.e., misappropriation of
advertising ideas); and (3) a causal connection existed between the alleged injury
and the “advertising.” (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254,
1276 (Bank of the West); Peerless Lighting Corp. v. Am. Motorists Ins. Co. (2000)
82 Cal.App.4th 995, 1009 (Peerless).)

3. Did Hameid’s Activities Constitute “Advertising” Under the
National CGL Insurance Policy?
The parties do not dispute that KWP’s alleged injuries occurred during the
time National’s policy was in effect. They do, however, disagree on (1) whether
Hameid was involved in “advertising,” and (2) whether KWP’s allegations gave
rise to a potential for coverage under the “advertising injury” policy provision. If
we assume that taking trade secrets in the form of a customer list is an offense that
may inflict advertising injury, we must then decide whether the offense occurred
in the course of Hameid’s advertising his salon’s goods or services. In other
words, does solicitation of customers from a customer list constitute “advertising”
within the meaning of the CGL policy, and, if so, did the alleged advertising
activity cause advertising injury?
The meaning of “advertising” in a CGL insurance policy has presented a
problem for courts interpreting coverage. In Bank of the West, supra, 2 Cal.4th at
page 1276, footnote 9, we interpreted a pre-1986 version of the CGL insurance

St. Paul Fire & Marine Ins. Co. v. Advanced International Systems, Inc. (E.D.Va.
1993) 824 F.Supp. 583, affd. (4th Cir. 1997) 21 F.3d 424.) Because KWP did not
allege that Hameid, Howard, or Billington misappropriated its comprehensive
manner of operating, the underlying action did not assert claims connected to
misappropriation of style of doing business.
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policy. It covered advertising injury arising out of an offense that occurred during
the course of the insured’s advertising activities. (Id. at p. 1262.) We observed
that, when interpreting CGL insurance policies, “courts have disagreed on the
question of what constitutes ‘advertising’ . . . . Most of the published decisions
hold that ‘advertising’ means widespread promotional activities directed to the
public at large.” (Ibid.) Although we did not decide the meaning of the term
because the question was not before us, Bank of the West acknowledged that only
a sparse minority of federal district court cases hold “that the term ‘advertising’
can also encompass personal solicitations.” (Id. at p. 1276; see Foxfire, supra, 820
F.Supp. at p. 494; American States Ins. Co. v. Canyon Creek (N.D.Cal. 1991) 786
F.Supp. 821; and John Deere Ins. Co. v. Shamrock Industries, Inc. (D.Minn. 1988)
696 F.Supp. 434 (John Deere).)
Here, the Court of Appeal questioned Bank of the West’s statement that
most courts have defined “advertising” to mean “widespread promotional
activities directed to the public at large.” The court relied on Foxfire, supra, 820
F.Supp. at page 494, which opined that whether an insured’s activity is
“advertising” under a CGL insurance policy hinges on “the context of the overall
universe of customers to whom a communication may be addressed.” Foxfire
commented that “[w]here the audience may be small, but nonetheless comprises
all or a significant number of a competitor’s client base, the advertising activity
requirement is met . . . . [W]here the business is one with a small customer base
and that base, or a significant part of it, is the target audience, the reach is
extensive enough to constitute advertising injury.” (Ibid.; accord, Amway Distribs.
Benefits Ass’n v. Federal Ins. Co. (W.D.Mich. 1997) 990 F.Supp. 936, 945
[“advertising comes in many forms and may differ in scope from business to
business, depending on the product, the size of the company, the company’s
marketing system, or the size of the target market”]; New Hampshire Ins. Co. v.
7

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R.L. Chaides Constr. Co., Inc. (N.D.Cal. 1994) 847 F.Supp. 1452, 1456 (Chaides)
[“[a]dvertising activity must be examined in the context of the overall universe of
customers to whom a communication may be addressed; to hold otherwise would
effectively preclude small businesses . . . from ever invoking their rights to
coverage for advertising injury liability”].)
The Court of Appeal also relied on Peerless, supra, 82 Cal.App.4th at
pages 1008-1009, which questioned whether “widespread promotional activities”
“in fact [was] the rule adopted by a majority of published opinions.” (Ibid.)
Peerless, however, does not support the Court of Appeal’s analysis. Peerless
actually held that an insured’s participation in a competitive bidding process on a
single product involving a single customer did not constitute “advertising” under
the CGL insurance policy and rejected a duty to defend. (Ibid.) Peerless
discussed several cases interpreting the advertising injury coverage and suggested
that a majority of other jurisdictions do require widespread advertising to the
public. Peerless also observed that only a few federal courts interpret advertising
injury coverage to apply to personal solicitations to a limited number of individual
customers. (Id. at pp. 1008-1010 [citing several cases following the “widespread
promotion” approach, including Select Design Ltd. v. Union Mut. Fire Ins. (Vt.
1996) 674 A.2d 798 (Select Design)].)
Contrary to Foxfire, we prefer the majority approach as stated in Bank of
the West, supra, 2 Cal.4th at page 1276, and interpret the term “advertising” as
used in CGL policies to mean widespread promotional activities usually directed
to the public at large.3 The definition reflects the commonly understood meaning

3
Hameid observes that the Insurance Services Office (ISO), which drafts the
standard CGL insurance policies, defines “advertising” as “a notice that is
broadcast or published in the general public or specific market segments for the
purpose of attracting customers or supporters.” (Mooning, ISO Advertising and
Personal Injury Revisions: Major Surgery or Just a Band-Aid Fix? (1999) 4
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of the word.4 As noted, a majority of the other jurisdictions that have considered
the question have come to a similar conclusion.
In Select Design, supra, 674 A.2d 798, the insured sought a defense after
being sued for allegedly using proprietary information, including a customer list
that a competitor’s former employee provided, to solicit the competitor’s
customers. The insured’s CGL insurance policy provided coverage for
“advertising injury.” (Id. at p. 799.) The Vermont Supreme Court stated that the
“majority view” defined “advertising” as “widespread distribution of promotional
material to the public at large” partially because the majority “read the policy
provisions according to their plain, ordinary meaning.” (Id. at pp. 801-803.) The
court reasoned that defining “advertising” to include customer solicitations would
stretch too far: “If the act of contacting potential customers is advertising for the
purposes of the policy, then any dispute related to economic competition among
businesses is covered by the policy provision for advertising injury.” (Id. at p.
803.) Thus, the court held that solicitation of the competitor’s customers did not
constitute “advertising” under the CGL insurance policy. (Id. at p. 802.)
In Monumental Life Ins. Co. v. U.S. Fidelity & Guaranty Co.
(Md.Ct.Spec.App. 1993) 617 A.2d 1163, the insured was accused of mailing
recruiting letters to a competitor’s employees and courting a competitor’s
customers with a personal solicitation that caused many of them to defect. When

Medley’s Emerging Ins. Disputes 16, italics added.) We have limited our review
to the question presented and do not have occasion to decide whether widespread
promotional activities directed at specific market segments constitute advertising
under the CGL policy.
4
Hameid also claims the word “advertising” and the phrase “advertising
ideas” are ambiguous because the CGL insurance policy does not define the terms.
We have, however, held that “the absence from the policy of a definition of [a]
term . . . does not by itself render the term ambiguous.” (Bay Cities Paving &
Grading, Inc. v. Lawyers’ Mut. Ins. Co. (1993) 5 Cal.4th 854, 866-867.)
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the insured sought a defense under the “advertising injury” coverage of its CGL
insurance policy, the trial court determined the insured’s alleged activities were
not “advertising.” The Maryland Court of Special Appeals affirmed. It
distinguished between “advertising” and “solicitation,” stating that “[t]he lower
court clearly viewed advertising and solicitation as mutually exclusive, the
difference being that advertising must be of a public nature.” (Id. at p. 1173.) The
Court of Appeals agreed “with the lower court that there is no bona fide ambiguity
in the language of the policies at issue, nor is there any legitimate doubt as to its
application under the circumstances. ‘Advertising’ means advertising, i.e.,
‘widespread distribution or announcements to the public.’ Consequently,
Monumental’s individual, one-to-one solicitations were clearly not ‘advertising’
within the normal meaning of the word and, accordingly, the lower court acted
properly.” (Id. at p. 1174.)
A federal district court applying Virginia law similarly recognized that
“advertising” means “widespread distribution of promotional material to the
public at large.” (Solers, Inc. v. Hartford Cas. Ins. Co. (E.D.Va. 2001) 146
F.Supp.2d 785, 795 (Solers).) In Solers, a subcontractor sought a defense under
the “advertising injury” provision of its liability insurance policy after allegedly
using proprietary information to submit bids on two government contracts. The
insured claimed that “[w]idespread public dissemination of solicitation material is
not appropriate for [its] business,” and that “its only advertising mechanism is the
submission of written business proposals.” (Id. at p. 790.) Thus, the insured
asserted that “the [c]ourt must find that the proposals constitute advertising
because to hold otherwise on the grounds that the proposals are not directed at the
public at large would be to hold that companies with small, but well-defined
markets cannot, as a matter of law, engage in advertising.” (Ibid.)
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The district court rejected the insured’s contention, holding that the
subcontractor’s bids were “not covered by the [p]olicy because such submissions
were not ‘widespread distribution of promotional material to the public at large.’ ”
(Solers, supra, 146 F.Supp.2d at p. 790, quoting Playboy Enterprises, Inc. v. St.
Paul Fire & Marine Ins. Co. (7th Cir. 1985) 769 F.2d at pp. 428-429 [applying
Illinois law].) The district court also pointed out that “small businesses are not
limited to insurance coverage for claims based in ‘advertising injury’ for the
protection of their profession. Small businesses may obtain broad coverage by
purchasing several forms of insurance, including coverage for errors and
omissions liability, directors and officers liability, and completed operations and
products liability.” (Solers, supra, 146 F.Supp.2d at p. 796, fn. 2.) There is no
evidence in this action that Hameid obtained any such small business insurance
coverage that may have assisted him in defending the KWP action.
Massachusetts, Missouri, Illinois, and Kansas have also defined
“advertising” as “widespread promotional activities directed to the public at
large.”5 (See Smartfoods, Inc. v. Northbrook Property & Cas. Co. (Mass.App.Ct.
1993) 618 N.E.2d 1365, 1368 (Smartfoods) [affirming judgment that insurer owed
no duty to defend when insured allegedly solicited distributors by mail because
“[w]ide dissemination of information is typically the objective of advertising”];
American States Ins. Co. v. Vortherms (Mo.Ct.App. 1999) 5 S.W.3d 538, 542

5
Zurich Ins. Co. v. Amcor Sunclipse N.A. (7th Cir. 2001) 241 F.3d 605, 608,
explains that “[m]ost cases concerning advertising injury seem to arise between
parties of diverse citizenship, at least one of which prefers federal court.” Thus, it
seems few state courts have explicitly considered the question. Compounding the
difficulty of finding specific holdings defining “advertising” is the fact courts
often dispose of unmeritorious claims of “advertising injury” through other
avenues. (See, e.g., Associated Aviation Underwriters, Inc. v. Vegas Jet, LLC
(D.Nev. 2000) 106 F.Supp.2d 1051, 1056 [holding insured did not prove causal
connection between alleged injury and “advertising” activity].)
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[affirming determination based on “numerous cases as authority for holding
‘advertising’ involves the widespread distribution of promotional material to the
public at large”]; Intern’l Ins. Co. v. Florists’ Mut. Ins. Co. (Ill.App.Ct. 1990) 559
N.E.2d 7, 10 [stating “the term ‘advertising’ has been held to refer to the
widespread distribution of promotional material to the public at large”]; MGM,
Inc. v. Liberty Mut. Ins. Co. (Kan.Ct.App. 1992) 839 P.2d 537, 540 [“We find that,
in sum, the term ‘advertising’ as used in Liberty Mutual’s policy means public or
at least widely disseminated solicitation or promotion”].)6
Recent decisions interpreting California law also apply the majority
definition of “advertising.” The Seventh Circuit, applying California law,
concluded individual solicitations are not advertising because California would not
“depart from the normal understanding of ‘advertising.’ ” (Zurich Ins. Co. v.
Amcor Sunclipse N.A., supra, 241 F.3d at p. 608 (Amcor Sunclipse); see also El-
Com Hardware, Inc. v. Fireman’s Fund Ins. Co. (2001) 92 Cal.App.4th 205, 217
[commonly understood meaning of the term “advertising” is “widespread
promotional activities”]; Zimon v. Fireman’s Fund Ins. Co. (1999) 73 Cal.App.4th
1382, 1388-1389 [insured could not reasonably have thought painting placed in
lobby of building to attract new tenants fell under “advertising injury” coverage].)
In addition to propounding Foxfire’s minority view, Hameid asks us to
adopt the approach taken in John Deere, supra, 696 F.Supp. 434. In John Deere,

6
In addition, New Hampshire and Minnesota have made similar rulings.
(See First Bank & Trust Co. v. New Hampshire Ins. Group (N.H. 1983) 469 A.2d
1367, 1368 [affirming judgment that “ ‘the mere explanation of bank services to a
couple in a private office cannot be considered ‘advertising’ ”]; Fox Chem. Co. v.
Great American Ins. Co. (Minn. 1978) 264 N.W.2d 385, 386 [determining that
sending 400 copies of a pamphlet to aid distributors in training salespeople was
not “advertising” as used in insurance policy exclusion because “public or
widespread distribution of the . . . material” was necessary for it to be considered
advertising].)
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a Minnesota district court held that three letters extolling the virtues of a pail-
filling machine constituted “advertising.” The district court noted that “[w]hile
activity directed at one customer seems to stretch the meaning of advertising,
Black’s Law Dictionary’s definition of ‘advertise’ encompasses any form of
solicitation, presumably including solicitation of one person.” (Id. at p. 440.)
Mirroring this argument, Hameid contends that “[a]dvertising is defined by
Black’s Law Dictionary as: ‘To advise, announce, apprise, command, give notice
of, inform, make known, publish. To call a matter to public attention by any
means whatsoever. Any oral, written, or graphic statements made by the seller in
any manner in connection with the solicitation of business and includes: . . .
statements and representations . . . contained in any notice, handbill, sign, catalog,
or letter.’ ”
National points out, however, that the most recent edition of Black’s Law
Dictionary has deleted the sentences on which both Hameid and the John Deere
court rely. (See Black’s Law Dict. (7th ed. 1999) p. 55 [defining “advertising” as
“[t]he action of drawing the public’s attention to something to promote its sale” or
“[t]he business of producing or circulating advertisements”].)7 Black’s less
expansive definition, and its use of the words “public attention,” indicate that
“advertising” does not encompass personal solicitations. In addition, Smartfoods,
supra, 618 N.E.2d at page 1368, criticized John Deere, calling it “unpersuasively
reasoned” and noting that “[w]e doubt that every pitch made by one businessman
in a letter to another constitutes advertising as the word is understood in American

7
Random House Webster’s Dictionary (2d ed. 1997) also defines
“advertising” in a way that reflects “widespread promotional activities directed to
the public at large,” stating that it is the “act or practice of calling to public
attention one’s product, service, need, etc., esp. by paid announcements in
newspapers and magazines, over radio or television, on billboards, etc.”) (Id. at p.
29.)
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usage.” Thus, John Deere, which frankly acknowledged that its interpretation
“seemed to stretch the meaning of advertising,” offers Hameid little support.8
(John Deere, supra, 696 F.Supp. at p. 440.)
Hameid also relies on Ford Dealers Assn. v. Dept of Motor Vehicles (1982)
32 Cal.3d 347, 355 (Ford Dealers) and its definition of “advertising” found in a
regulation promulgated under the Vehicle Code. As defendant National observes,
Ford Dealers reviewed an administrative regulation the Department of Motor
Vehicles adopted under the former Administrative Procedure Act to address
vehicle licensing and business. As National also observes, Ford Dealers
recognized that its role was a “limited one” that involved inquiring into a
regulation’s validity, not its wisdom. (Ford Dealers, supra, 32 Cal.3d at p. 355.)
The Legislature amended Vehicle Code section 11713 to make it unlawful for an
auto dealer to “ ‘make or disseminate . . . before the public . . . in any newspaper
or other publication, or any advertising device, or by public outcry or
proclamation, or in any other manner or means whatever, any statement which is
untrue or misleading.’ ” (Ford Dealers, supra, 32 Cal.3d at p. 357.)
As National points out, Ford Dealers upheld the administrative regulation
that defined “advertising” “in the broad context of Vehicle Code Section 11713[,
subdivision] (a)” to include statements communicated to the public. (Ford
Dealers, supra, 32 Cal.3d at p. 356.) Initially, we note that we do not find
compelling the interpretation of regulations in a statutory context like the Vehicle
Code rather than an insurance context. (See, e.g., Bluehawk v. Continental Ins.

8
Hameid does not mention American States Ins. Co. v. Canyon Creek, supra,
786 F.Supp. at page 821, the second case cited in Bank of the West as an example
of an exception to the majority rule. Notably, American States also relied in part
on a definition of “advertising” found in an older edition of Black’s. (See
American States at p. 828 [quoting now-deleted language from Black’s Law Dict.
(5th ed. 1979) p. 50].)
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Co. (1996) 50 Cal.App.4th 1126, 1131-1132.) But as National also observes, the
challenged regulation also provided, that “advertising” refers to a “ ‘statement,
representation, act or announcement intentionally communicated to the public
generally for the purpose of arousing desire to buy or patronize.’ ” (Ford Dealers,
supra, 32 Cal.3d at p. 357.) Thus, even under Ford Dealers, the common
understanding of the term “advertising” includes its public character.
Finally, we consider the approach the Foxfire court itself took. (Foxfire,
supra, 820 F.Supp. at p. 494.) As mentioned, Foxfire held that courts should
determine whether activities are “advertising” on a case-by-case basis, noting to
whom the promotions are directed. (Ibid.) We disagree. Due to the pervasiveness
of CGL insurance policies, and of advertising, if we adopted Foxfire’s malleable
definition, we likely would encourage litigation. Giving identical policy language
different meanings for different insureds would eliminate the clarity and certainty
that is essential to the insurance industry. Standardization of policy terms is
important to insurers and insureds alike. It enables insurers to compare losses and
calculate rates and premiums so that rates remain stable and not based on
destabilizing ad hoc views of a particular coverage. It also gives effect to the
parties’ mutual intent as it existed at the time of contracting, so far as that intent is
ascertainable and lawful. (Civ. Code, § 1636.) In other words, the majority view
defines “advertising” to mean the widespread distribution of promotional materials
to the public at large because it interprets the contractual term under its ordinary
and popular meaning. It allows uniformity in interpretation under different factual
circumstances that may or may not lead to coverage. (See Amcor Sunclipse,
supra, 241 F.3d at p. 608 [concluding individual solicitations are not advertising
because California would not depart from the normal understanding of the term].)
Because the parties’ mutual intention is to be inferred, if possible, solely from
contract’s written provisions, the clear and ordinary meaning of those terms should
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control our interpretation. (See AIU Ins. Co. v. Superior Court, supra, 51 Cal.3d
at pp. 821-822.)
In addition, we are not persuaded by Foxfire’s assertion that adopting the
majority approach “would effectively preclude small businesses . . . from ever
invoking their rights to coverage for advertising injury liability.” (Foxfire, supra,
820 F.Supp. at p. 494; see also Chaides, supra, 847 F.Supp. at p. 1456.) Under the
proposed definition of “advertising,” small businesses like Hameid’s may still rely
on CGL coverage for “advertising injury” if they place spots on the radio or
television, buy space on billboards or bus benches, or take out advertisements in
newspapers directed to the public at large, and their content caused advertising
injury. Therefore, we conclude that excluding personal solicitations from the
definition of “advertising” in the CGL insurance policy will not foreclose small
businesses from invoking their rights under CGL insurance policies or from
otherwise purchasing insurance protection that does cover potential liability for
such solicitations. (Solers, supra, 146 F.Supp.2d at p. 795, fn. 2.)
Here, KWP alleged Howard and Billington made telephone calls and sent
mailers to Bellezza customers advising them of their new location and of
Hameid’s lower prices. These activities strongly resemble the solicitations of a
competitor’s customers in Select Design, supra, 674 A.2d at pages 801-803, the
recruiting letters to a competitor’s employees in Monumental Life Ins. Co. v. U.S.
Fidelity & Guaranty Co., supra, 617 A.2d at page 1173, and the subcontractor’s
submission of bids in Solers, supra, 146 F.Supp.2d at page 795all of which
were held to be “solicitation,” not “advertising.”9

9
Because we conclude no advertising occurred, we find it unnecessary to
decide whether the insured misappropriated advertising ideas or whether there was
a causal connection between the claimed misappropriation and the alleged
advertising injury. In addition, we have considered, but find unpersuasive,
Hameid’s reliance on additional authorities filed in his two supplemental briefs.
16

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CONCLUSION
We conclude that Hameid has failed to show KWP alleged any cause of
action amounting to a potentially covered offense under the National CGL
insurance policy. We therefore reverse the Court of Appeal on the issue of
National’s duty to defend and remand the matter for further proceedings consistent
with this opinion.

CHIN, J.
WE CONCUR:

GEORGE, C. J.
KENNARD, J.
BAXTER, J.
WERDEGAR, J.
BROWN, J.
MORENO, J.

17

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See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Hameid v. National Fire Insurance of Hartford
__________________________________________________________________________________

Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted

XXX 94 Cal.App.4th 1155
Rehearing Granted

__________________________________________________________________________________

Opinion No.

S104157
Date Filed: July 3, 2003
__________________________________________________________________________________

Court:

Superior
County: Orange
Judge: David R. Chaffee

__________________________________________________________________________________

Attorneys for Appellant:

Daniel S. Klein; Law Offices of Barnard F. Klein and Barnard F. Klein for Plaintiff and Appellant.

Homampour & Associates and Arash Homampour for Coast to Coast Computer Products as Amicus Curiae
on behalf of Plaintiff and Appellant.

Gauntlett & Associates, David A. Gauntlett and Eric R. Little for United Policyholders as Amicus Curiae
on behalf of Plaintiff and Appellant.
__________________________________________________________________________________

Attorneys for Respondent:

Hawkins, Schnabel, Lindahl & Beck, Lindahl, Schnabel, Kardassakis & Beck, Jon Kardassakis, Jeffrey D.
Wolfe and Kurt G. Gresenz for Defendant and Respondent.

Nielsen, Haley & Abbott, James C. Nielsen and Jennifer S. Cohn for United National Group as Amicus
Curiae on behalf of Defendant and Respondent.

Wiley Rein & Fielding, Laura A. Foggan, John C. Yang, Thomas S. Garrett; Sinnott, Dito, Moura &
Puebla, Randolph P. Sinnott and J. Karren Baker for the Complex Insurance Claims Litigation Association
as Amicus Curiae on behalf of Defendant and Respondent.

Law Offices of Michael A. Mathews and Michael A. Mathews for National Association of Independent
Insurers and Lumbermens Mutual Casualty Company as Amici Curiae on behalf of Defendant and
Respondent.

Horvitz & Levy, Frederic D. Cohen and Peter Abrahams for American International Companies Amicus
Curiae on behalf of Defendant and Respondent.

Selman • Breitman, Neil H. Selman, Jan L. Pocaterra and Lynette Klawon for Scottsdale Insurance
Company Amicus Curiae on behalf of Defendant and Respondent.
1

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Counsel who argued in Supreme Court (not intended for publication with opinion):

Barnard F. Klein
Law Offices of Barnard F. Klein
31852 Apuesto Way
Coto De Caza, CA 92679
(949) 858-4331

David A. Gauntlett
Gauntlett & Associates
18400 Von Karman, Suite 300
Irvine, CA 92612
(949) 553-1010

Jon Kardassakis
Lindahl, Schnabel, Kardassakis & Beck
660 S. Figueroa Street, Suite 1500
Los Angeles, CA 90017-3457
(213) 488-3900

2

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Opinion Information

Date:	Docket Number:
Thu, 07/03/2003	S104157

Disposition
Jul 3 2003	Opinion: Reversed

Dockets
Feb 5 2002	Petition for review filed   respondent National Fire Insurance of Hartford
Feb 8 2002	Received Court of Appeal record   blue plastic file
Feb 11 2002	Received letter from:   respondent National Fire Insurance of Hartford
Feb 25 2002	Request for depublication (petition for review pending)   respondent National Fire Insurance of Hartford
Feb 27 2002	Received:   answer to petition for review--late>>appellant Mohammed A. Hameid
Mar 6 2002	Opposition filed   By counsel for Long Lee NON-PARTY, to request for depublication filed by National Fire Insurance of Hartford.
Mar 12 2002	Answer to petition for review filed with permission   by counsel for appellant (Mohammed Hameid).
Mar 21 2002	Received:   record from Orange County Superior Court. 4 volumes.
Mar 22 2002	Time extended to grant or deny review   to and including May 6, 2002.
Apr 4 2002	Received:   fax copy of Change of address from attorney Paul A. Hilding. Change made to party screen.
Apr 8 2002	Change of Address filed for:   attorney Paul A. Hilding (counsel for Long Lee, non-party).
Apr 10 2002	Petition for Review Granted (civil case)   Votes: Kennard, Chin, Brown & Moreno, JJ. George, CJ., was absent and did not participate.
Apr 24 2002	Certification of interested entities or persons filed   respondent National Fire Insurance of Hartford
Apr 29 2002	Certification of interested entities or persons filed   appellant Mohammed A. Hameid
May 10 2002	Opening brief on the merits filed   by counsel for resp National Fire Insurance Of Hartford
May 15 2002	Order filed   The issue to be argued in this case is limited to whether an allegation in an underlying lawsuit that the insured took a competition's customer list and customer preference information, and then solicited those customers, gives rise to an insurer's duty to defend under the "advertising injury" provision of a commercial general liability insurance policy as the "misappropriation of advertising ideas".
Jun 5 2002	Answer brief on the merits filed   counsel for appellant Mohammed A. Hameid
Jun 24 2002	Reply brief filed (case fully briefed)   by respondent National Fire Insurance of Hartford
Jul 23 2002	Received application to file amicus curiae brief; with brief   American International Companies in support of resp National Fire Insurance of Hartford
Jul 24 2002	Received application to file amicus curiae brief; with brief   by The United National Group in support of respondent National Fire Insurance of Hartford. (appli & brief under same cover)
Jul 24 2002	Received application to file Amicus Curiae Brief   from United Policyholders in support of respondent (National Fire Ins. of Hartford). (appli & brief separate)
Jul 24 2002	Received:   Request for Judicial Notice from A/C applicants United Policyholders.
Jul 24 2002	Received application to file Amicus Curiae Brief   by Coast to Coast Computer Products, Inc. in support of appellant (Mohammed A. Hameid). (Appli & brief separate)
Jul 24 2002	Received application to file amicus curiae brief; with brief   by National Assoc. of Independent Insurers and Lumbermens Mutual Casualty Company in support of respondent. (appli & brief under same cover)
Jul 24 2002	Received application to file amicus curiae brief; with brief   by The Complex Insurance Claims Litigation Assoc. in support of respondent. (appli & brief under same cover)
Jul 29 2002	Permission to file amicus curiae brief granted   The United National Group in support of respondent National Fire Insurance of Hartford.
Jul 29 2002	Amicus Curiae Brief filed by:   The United National Group in support of respondent National Fire Insurance of Hartford. Answer due within 20 days.
Jul 29 2002	Permission to file amicus curiae brief granted   United Policyholders in support of respondent National Fire Ins. of Hartford.
Jul 29 2002	Amicus Curiae Brief filed by:   United Policyholders in support of respondent National Fire Ins. of Hartford. Answer due within 20 days.
Jul 29 2002	Request for judicial notice filed (in non-AA proceeding)   by amicus applicant United Policyholders.
Jul 29 2002	Permission to file amicus curiae brief granted   Coast to Coast Computer Products, Inc. in support of appellant Mohammed A. Hameid.
Jul 29 2002	Amicus Curiae Brief filed by:   Coast to Coast Computer Products, Inc. in support of appellant Mohammed A. Hameid. Answer due within 20 days.
Jul 29 2002	Permission to file amicus curiae brief granted   National Assoc. of Independent Insurers and Lumbermens Mutual Casualty Company in support of respondent.
Jul 29 2002	Amicus Curiae Brief filed by:   National Assoc. of Independent Insurers and Lumbermens Mutual Casualty Company in support of respondent. Answer due within 20 days.
Jul 29 2002	Permission to file amicus curiae brief granted   The Complex Insurance Claims Litigation Assoc. in support of respondent.
Jul 29 2002	Amicus Curiae Brief filed by:   The Complex Insurance Claims Litigation Assoc. in support of respondent. Answer due within 20 days.
Jul 29 2002	Permission to file amicus curiae brief granted   American International Companies in support of respondent.
Jul 29 2002	Amicus Curiae Brief filed by:   American International Companies in support of respondent. Answer due within 20 days.
Aug 7 2002	Request for extension of time filed   Appellant requesting to Sept. 12, 2002 to file an answer brief in response to 4 amicus curiae briefs filed on behalf of respondent. (4 a/c briefs: Complex Insurance Claims Litigation Assoc.; National Assoc. of Independent Insurers & Lumbermens Mutual Casualty Co.; American International Companies; and United National Group.) **granted - order being prepared**
Aug 13 2002	Extension of time granted   On application of appellant and good cause appearing, it is ordered that the time to serve and file a consolidated answer brief in response to four amicus curiae briefs filed on behalf of respondent is extended to and including September 12, 2002.
Aug 16 2002	Request for extension of time filed   Respondent requesting to Aug. 23, 2002 to file an answer brief in response to amicus curiae briefs filed on behalf of appellant. (8/15/02 recvd via fax - 8/16 hard copies recvd in LA) *ok to grant-order being prepared*
Aug 20 2002	Extension of time granted   On application of respondent and good cause appearing, it is ordered that the time to serve and file a consolidated answer brief in response to the amicus briefs filed on behalf of respondent is extended to and including August 23, 2002.
Aug 23 2002	Response to amicus curiae brief filed   resp National Fire Insurance Of Hartford
Aug 26 2002	Application for relief from default filed   in assn w/reqt to file ac brief [reqt to file ac brief by 9-25] Scottsdale Insurance Co. in support of respondent (National Fire Insurance of Hartford)
Aug 26 2002	Received application to file Amicus Curiae Brief   Scottsdale Insurance Co. in support of National Fire Insurance of Hartford.
Sep 4 2002	Order filed   The application of Scottsdale Insurance Company for permission to file an amicus curiae brief in support of respondent is hereby granted.The brief shall be served and filed on or before Sep. 29, 2002. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Sep 12 2002	Response to amicus curiae brief filed   by appellant Mohammed A. Hameid.
Sep 26 2002	Amicus Curiae Brief filed by:   Scottsdale Insurance Company in support of Respondent Nat'l Fire Insurance of Hartford
Oct 16 2002	Response to amicus curiae brief filed   respondent National Fire Insurance of Hartford>>to ac brief of Scottsdale Insurance Company
Dec 12 2002	Filed letter from:   counsel for amicus Scottsdale Ins. Co. advising the court of a new decision from the federal district court.
Feb 20 2003	Filed letter from:   counsel for amicus Scottsdale Ins. Co. advising the court of new decision from the Ninth Circuit Court of Appeal.
Mar 6 2003	Case ordered on calendar   *** to be rescheduled (was 4-2-03, 9am, L.A.)
Mar 10 2003	Filed:   request of aplt's counsel for change of oral argument date.
Mar 13 2003	Argument rescheduled   to May oral argument calendar. (S.F. first week in May)
Mar 20 2003	Supplemental brief filed   by counsel for appellant (Hameid).
Apr 2 2003	Cause called and continued   to May calendar.
Apr 9 2003	Case ordered on calendar   5-6-03, 1:30pm, S.F.
Apr 18 2003	Filed:   request of aplt to allocate oral argument time to A/C (faxed)
Apr 23 2003	Order filed   Aplt. counsel's request to allow two counsel to present oral argument on behalf of aplt. is granted.
Apr 23 2003	Order filed   Aplt's request to allocate 20 min. of oral argument time to A/C United Policyholders is granted.
Apr 25 2003	Supplemental brief filed   appellant Mohammed A. Hameid
Apr 25 2003	Supplemental brief filed   resp, National Fire Ins. of Hartford
May 6 2003	Cause argued and submitted
May 7 2003	Change of Address filed for:   Notice of change of firm name - for counsel for respondent (National Fire Insurance of Hartford). New firm name: Lindahl, Schnabel, Kardassakis & Beck LLP.
May 8 2003	Change of Address filed for:   Counsel for amicus curiae - Complex Insurance Claims Litigation Association. New address: 555 Montgomery Street, Suite 720, San Francisco 94111
Jul 3 2003	Opinion filed: Judgment reversed   and remanded. Majority Opinion by Chin, J. joined by George C.J., Kennard, Baxter, Werdegar, Brown & Moreno JJ.
Jul 18 2003	Rehearing petition filed   by counsel for appellant (Mohammed A. Hameid).
Jul 21 2003	Time extended to consider modification or rehearing   The time for granting or denying rehearing in the above-entitled case is hereby extended to and including October 1, 2003, or the date upon which rehearing is either granted or denied, whichever occurs first.
Jul 25 2003	Answer to rehearing petition filed   respondent National Fire Insurance of Hartford
Sep 10 2003	Rehearing denied   Request for modification denied.
Sep 10 2003	Remittitur issued (civil case)
Sep 24 2003	Received:   receipt of superior court record (4 volumes) from Orange County Superior Court.
Sep 29 2003	Note:   record sent to CA4/3 (2 volumes)
Oct 3 2003	Received:   Receipt for remittitur from 4 DCA Div. 3.

Briefs
May 10 2002	Opening brief on the merits filed
Jun 5 2002	Answer brief on the merits filed
Jun 24 2002	Reply brief filed (case fully briefed)
Jul 29 2002	Amicus Curiae Brief filed by:
Jul 29 2002	Amicus Curiae Brief filed by:
Jul 29 2002	Amicus Curiae Brief filed by:
Jul 29 2002	Amicus Curiae Brief filed by:
Jul 29 2002	Amicus Curiae Brief filed by:
Jul 29 2002	Amicus Curiae Brief filed by:
Aug 23 2002	Response to amicus curiae brief filed
Sep 12 2002	Response to amicus curiae brief filed
Sep 26 2002	Amicus Curiae Brief filed by:
Oct 16 2002	Response to amicus curiae brief filed

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