SURETY COMPANY ET AL.

(SC 16269)

(SC 16270)

Borden, Katz, Palmer, Sullivan and Vertefeuille, Js.*

Argued November 28, 2000—officially released June 5, 2001

Counsel

(plaintiffs).

pro hac vice, for the appellee (defendant General Star

National Insurance Company).

for the appellees (defendants American Manufacturers

Mutual Insurance Company et al.).

for the appellee (defendant Federal Insurance

Company).

SULLIVAN, J. This appeal arises from a declaratory

judgment action filed by the plaintiffs, Reader’s Digest

Association, Inc. (Reader’s Digest), and QSP, Inc.

(QSP), with respect to a controversy with the defendants,

American Manufacturers Mutual Insurance Company

and American Motorists Insurance Company

(collectively American Motorists), General Star

National Insurance Company (GenStar) and Federal

coverage to be provided by the defendants under

commercial general liability and excess liability policies

that they had issued to the plaintiffs. The policies covered,

among other things, the defense of actions based

on advertising or personal injury. The plaintiffs sought

a declaration as to whether they were entitled, under

the terms of any or all of the policies effective during

the relevant time period, to the defense of and indemnification

for an underlying antitrust class action filed in

United States District Court, Docket No. 93-1953-IEG

that the defendants were not under a duty to

therefore affirm the judgment.

The following facts and procedural history are relevant

to the disposition of the issues on appeal. QSP is

a corporation organized and existing under the laws of

the state of Delaware, with its principal place of business

in Ridgefield. It is a wholly owned subsidiary of

Reader’s Digest. Reader’s Digest is a corporation organized

and existing under the laws of the state of Delaware,

with its principal place of business in

Pleasantville, New York. American Motorists sold commercial

general liability insurance coverage to Reader’s

Federal provided excess liability coverage to Reader’s

Digest from 1989 to 1994. QSP, as a subsidiary of Reader’s

Digest, is covered as an insured under the relevant

policies.

filed their federal antitrust class action lawsuit, alleging

that QSP and Reader’s Digest had violated federal antitrust

laws by monopolizing the school and youth group

magazine fund-raising market. The class of plaintiffs in

in the continental United States that had purchased

magazine fund-raising programs from QSP in any one

alleged that QSP and Reader’s Digest had eliminated

or weakened competition in the school fund-raising

market by conducting ‘‘anticompetitive, predatory and

exclusionary acts’’ including, but not limited to: (1)

defamation of the character and competence of their

competitors; (2) commercial disparagement; (3) unfair

competition; and (4) threatening and instituting bad

faith litigation as part of a campaign of anticompetitive

claimed that they were deprived of substantial magazine

fund-raising revenues that they otherwise would have

received if there were competition in the market. They

further claimed that, because of the diminished revenue,

they were forced to cut important educational and

extracurricular programs and activities.

QSP and Reader’s Digest entered into a settlement

The terms of the settlement expanded the class of

that had purchased magazine fund-raising programs

from QSP between 1990 and 1995, and obligated Reader’s

Digest and QSP to pay members of the class of

of the lawsuit and settlement to their primary carriers,

American Motorists, which refused either to defend

costs incurred in defending or settling the class action

lawsuit. American Motorists stated that their insurance

policies covered only claims by competitors, and did

who alleged damages flowing from the anticompetitive

conduct of the insured. Additionally, American

Motorists argued that their policy provisions covering

‘‘advertising injury,’’ ‘‘advertising offense,’’ and ‘‘personal

injury’’ did not cover federal antitrust violations

when those violations ‘‘arose out of’’ covered offenses,

such as defamation, disparagement, malicious prosecution

or unfair competition, where those offenses had not

and Federal, as Reader’s Digest’s excess liability carriers,

also refused to defend Reader’s Digest and QSP or

action under the ‘‘advertising offense’’ section of their

arose out of the existence of a monopoly, rather than

out of unfair competition committed in the course of

QSP and Reader’s Digest filed the present action in

the Superior Court in response to the insurance companies’

refusal to defend or indemnify them in the underlying

Digest alleged that because the antitrust complaint in

disparagement, bad faith litigation and unfair

competition, they were entitled to defense and indemnification

on the ground that their insurance policies

expressly covered claims arising out of those offenses.

The defendants responded that there was no duty to

on allegations of illegal monopolization and antitrust

violations, rather than any offenses enumerated under

did not suffer any direct injury as a result of the

alleged offenses.

In a thorough and well reasoned decision, the trial

‘‘the defendants were not under a duty to defend [QSP

disparagement, malicious prosecution or unfair

competition [as recognized under the ‘personal injury,’

‘advertising injury’ or ‘advertising offense’ sections of

the American Motorists and GenStar policies]; (2) the

of those offenses; and (3) the antitrust injuries

out of’ these torts.’’ QSP and Reader’s Digest appealed

to the Appellate Court on their motion, and the matter

was transferred to this court pursuant to Practice Book

On appeal, QSP and Reader’s Digest claim that the

trial court, in granting the defendants’ cross motions

for summary judgment, improperly concluded that the

defendants had no duty to defend or indemnify them

in the underlying antitrust action. QSP and Reader’s

Digest challenge the trial court’s granting of summary

judgment in the insurers’ favor, relying on the settled

principle that ‘‘an insurer’s duty to defend, [is] much

broader in scope and application than its duty to indemnify,

[and] . . . [t]he obligation of the insurer to defend

does not depend on whether the injured party will successfully

maintain a cause of action against the insured

but on whether he has, in his complaint, stated facts

which bring the injury within the coverage.’’ (Citation

247 Conn. 801, 807, 724 A.2d 1117 (1999). QSP and

Reader’s Digest argue that, because the antitrust claim

of defamation, commercial disparagement, bad faith

litigation and unfair competition, they were entitled to

defense and indemnification under the ‘‘personal

injury,’’ ‘‘advertising injury’’ and ‘‘advertising offense’’

sections of the relevant policies. We conclude that these

allegations do not trigger the defendants’ duty to

defend.

Before addressing the merits of this dispute, we set

forth the standard of review for summary judgment

which is well established. ‘‘Summary judgment shall be

rendered forthwith if the pleadings, affidavits and any

other proof submitted show that there is no genuine

issue as to any material fact and that the moving party

is entitled to judgment as a matter of law. . . . In deciding

a motion for summary judgment, the trial court must

view the evidence in the light most favorable to the

nonmoving party.’’ (Internal quotation marks omitted.)

A.2d 700 (1999); see Practice Book § 17-49.

Our standard of review with respect to insurance

contracts is also well settled. ‘‘It is the function of the

court to construe the provisions of the contract of insurance.

. . . The [i]nterpretation of an insurance policy

. . . involves a determination of the intent of the parties

as expressed by the language of the policy . . . [including]

what coverage the . . . [insured] expected to

receive and what the [insurer] was to provide, as disclosed

by the provisions of the policy. . . . [A] contract

of insurance must be viewed in its entirety, and the

intent of the parties for entering it derived from the

four corners of the policy . . . [giving the] words . . .

[of the policy] their natural and ordinary meaning . . .

[and construing] any ambiguity in the terms . . . in

favor of the insured . . . .’’ (Citations omitted; internal

of a policy of insurance presents a question of law, the

trial court’s interpretation of the policy is subject to de

n.6, 714 A.2d 1230 (1998).

‘‘It is well established [however] that a liability insurer

has a duty to defend its insured in a pending lawsuit if

the pleadings allege a covered occurrence, even though

facts outside the four corners of those pleadings indicate

that the claim may be meritless or not covered

518, 439 N.Y.S.2d 858 (1981). ‘‘[T]he oft-stated principle

[is] that the duty to defend is broader than the duty

I

PERSONAL INJURY

We begin our analysis with a review of the language

of the American Motorists policies. The American

Motorists’ commercial general liability policies provide

that the insurer ‘‘will pay those sums that the insured

becomes legally obligated to pay as damages because

of [a] ‘personal injury’ . . . to which this coverage part

applies. [The insurer] will have the right and duty to

defend any ‘suit’ seeking those damages. . . . [The

insurer] may . . . investigate any ‘occurrence’ . . .

and settle any claim or ‘suit’ that may result. . . .’’ Section

V (10) of the policy provides in relevant part that

‘‘ ‘[p]ersonal injury’ means injury, other than ‘bodily

injury,’ arising out of . . . malicious prosecution . . .

[or] [o]ral or written publication of material that slanders

or libels a person or organization or disparages a

person’s or organization’s goods, products or services

as ‘‘an accident, including continuous or repeated exposure

to substantially the same general harmful conditions.’’

In order for the allegations of the underlying

complaint to fall within the policy coverage for ‘‘personal

injury,’’ the complaint must allege an injury that

‘‘arose out of’’ one of the offenses listed in the policy.

QSP and Reader’s Digest first contend that the trial

court improperly concluded that the defendants had no

an action for federal antitrust violations not covered

by the policies. More specifically, QSP and Reader’s

Digest claim that the trial court should have found coverage

because the charges of federal antitrust violations

defamation, disparagement and malicious prosecution,

all covered offenses under the ‘‘personal injury’’ section

of the American Motorists policy. We disagree.

As stated previously, the duty to defend does not arise

only when the injured party can successfully maintain a

cause of action against the insured. That duty arises

when the complaint states facts that bring the injury

(‘‘[i]f an allegation of the complaint falls even possibly

within the coverage, then the insurance company must

defend the insured’’). ‘‘On the other hand, if the complaint

alleges a liability which the policy does not cover,

the insurer is not required to defend.’’ (Internal quotation

under New York law ‘‘exceedingly broad’’ but not without

limits). ‘‘[T]he duty to defend derives . . . not from

the complaint [as] drafted by a third party, but rather

from the insurer’s own contract with the insured

supra, 78 N.Y.2d 68.

QSP and Reader’s Digest claim that the following

under the ‘‘personal injury’’ provisions of the American

of individual owners, officers, agents and employees

such individuals had embezzled or stolen large sums

of money, had been fired by QSP for dishonesty or

incompetence, or had illegally taped conversations’’;

(emphasis added); (2) paragraph 29 (d) alleges that QSP

misrepresenting their reliability, capability, integrity

and financial stability’’ through false statements;

(emphasis added); (3) paragraph 29 (e) alleges that QSP

disparagement. (Emphasis added.)

QSP and Reader’s Digest claim that because the

terms of defamation, disparagement and malicious

prosecution, there is at least a possibility of coverage.

The defendants, on the other hand, argue that the

descriptions to identify the primary charge: wilful violation

of federal antitrust laws by Reader’s Digest and

QSP. We agree with the defendants and conclude that

there is no duty to defend under the personal injury

provision of the American Motorists’ policy because

the allegations that QSP and Reader’s Digest claim trigger

injury that would be causally connected to any offense

covered under ‘‘personal injury.’’

First, we address the claim by QSP and Reader’s

the character and competence of individual owners,

officers, agents and employees of competitors’’;

policy coverage under the ‘‘personal injury’’ provision

as defined previously. The trial court disagreed, concluding

action did not allege a claim for defamation which the

defendants were required to defend.’’ We agree with

the trial court. Where the alleged defamatory statements

do not satisfy the ‘‘of and concerning’’ element crucial

to prevailing on a common-law defamation claim. See

Sup. 34, 37 n.4 (S.D.N.Y. 1991); 3 Restatement (Second),

Torts § 564 and comment (a) (1976) (‘‘[a] defamatory

communication is made concerning the person towhom

its recipient correctly, or mistakenly but reasonably,

In order for QSP and Reader’s Digest to establish

they must show that: (1) QSP and Reader’s Digest

made a defamatory statement; (2) the defamatory statement

third person; (3) the defamatory statement was published

reputation suffered injury as a result of the defamatory

219–20, 709 A.2d 50 (1996), aff’d, 244 Conn. 156, 709

A.2d 1 (1998); see also 3 Restatement (Second), supra,

§ 559 (‘‘[a] communication is defamatory if it tends to

so harm the reputation of another as to lower him in

the estimation of the community or to deter third persons

from associating or dealing with him’’). Where a

plaintiff cannot prove a fundamental element of the

underlying tort, e.g., defamation, a claim for personal

(E.D.N.Y. 1987).

whom the defamatory statements allegedly had been

plaintiffs suffered any harm to their reputation from the

suggests, QSP and Reader’s Digest defamed ‘‘individual

in the school/youth group magazine fund raising market

. . . .’’ (Emphasis added.) QSP and Reader’s Digest do

not provide any authority that the ‘‘of and concerning’’

element is unnecessary when establishing a cause of

aware of no case law suggesting that publication not

‘‘of and concerning’’ identifiable target can be converted

into ‘‘of and concerning’’ attack due to actions of third

parties). They argue only that no ‘‘of and concerning’’

requirement appears in the policy language. This observation

is inapposite because we interpret the words of

the policies according to their ‘‘common, ordinary and

203 Conn. 305, 309, 524 A.2d 641 (1987). In this case,

it was the competitors of QSP and Reader’s Digest who

allegedly were defamed, and they have been compensated

through the settlement of a separate underlying

plaintiffs make no claim for damages arising out of

defamation. We conclude, therefore, that QSP and

Reader’s Digest are not entitled to ‘‘personal injury’’

coverage for defamation charges that never were

did suffer damages as a result of the defamation by

QSP and Reader’s Digest of their magazine fund-raising

competitors, those damages were indirect and only tenuously

related to that defamatory conduct.

We next address the argument by QSP and Reader’s

action for commercial disparagement, also known as

‘‘injurious falsehood’’ or ‘‘trade libel,’’ committed by

QSP and Reader’s Digest against their competitors.

relevant part that QSP and Reader’s Digest ‘‘disparaged

competing firms by misrepresenting their reliability,

capability, integrity and financial stability’’ by falsely

alleging, among other things, that they did not deliver

magazine orders despite having been paid. Included

in the definition of ‘‘personal injury’’ in the American

Motorists’ policy is coverage for injuries arising out of

the ‘‘[o]ral or written publication of material that . . .

disparages a person’s or organization’s goods, products

or services . . . .’’

Defamation or disparagement of a business’ goods

1995), cert. denied, 516 U.S. 1114, 116 S. Ct. 916, 133

is recognized by Connecticut and New York courts as a

(where statement impugns basic integrity or creditworthiness

of business, action for defamation lies and injury

(1992) (‘‘trade defamation is the knowing publication

of a false matter derogatory to the plaintiff’s business

calculated to prevent or interfere with relationships

order to sustain an action for commercial disparagement,

an insured must ‘‘[paint] a picture which . . .

conceivably could subject [it] to liability for commercial

supra, 862.

The torts of trade libel and commercial disparagement,

like defamation, require that the alleged damaging

cert. denied, 499 U.S. 961, 111 S. Ct. 1586, 113 L. Ed.

2d 650 (1991) (claims for product disparagement or

trade libel or tortious interference with business relationships

subject to same first amendment requirements

Cal. App. 2d 69, 73, 407 P.2d 649, 36 Cal. Rptr. 256 (1964)

(cause of action for injurious falsehood or disparagement

resembles that for defamation). This is consistent

with our treatment of business disparagement like defamation,

requiring that the statement that disparages a

person’s goods or services be made ‘‘of and concerning’’

plaintiffs not harmed in their trade or business, but no

such claim of business disparagement was made by the

that any commercially disparaging conduct on

the part of QSP and Reader’s Digest had been directed

targets of the alleged commercial disparagement committed

by QSP and Reader’s Digest, the complaint simply

does not give rise to a disparagement action. As a

result, the complaint did not trigger coverage for commercial

disparagement under the defendants’ policies.

We finally address the claim by QSP and Reader’s

In a malicious prosecution or vexatious litigation

action, ‘‘it is necessary to prove want of probable cause,

malice and a termination of [the] suit in the plaintiffs’

for vexatious suit requires proof that a civil action has

been prosecuted not only without probable cause but

139 Conn. 186, 194, 91 A.2d 778 (1952) . . . . It must

also appear that the litigation claimed to be vexatious

terminated in some way favorable to the defendant

suffered injury as a result of ‘‘malicious prosecution’’

or ‘‘vexatious litigation.’’ In paragraph 29 (e) of the

QSP and Reader’s Digest ‘‘threatened and instituted bad

faith litigation’’ as part of their campaign of anticompetitive

disparagement. Paragraph 29 (m) also alleged that

QSP and Reader’s Digest ‘‘made unfounded allegations

of possible legal and ethical violations, and have threatened

to initiate actions against individual lawyers and

did not allege that they had suffered personal injury

due to vexatious litigation or malicious prosecution,

personal injury coverage was not triggered.

1990), in which the court found a duty to defend in an

antitrust action that, when stripped of its antitrust label,

met the requirements for a malicious prosecution claim

were also the victims of the vexatious litigation. As a

result, the court held that they satisfied the elements

necessary to raise such a claim and trigger personal

hand, are not claiming injuries as a result of vexatious

litigation and do not base their complaint on that

charge.

In this case, the threats of litigation were lodged

against competitors of QSP and Reader’s Digest, and

phrase ‘‘bad faith litigation’’ in their description of the

complaint was not a personal injury action arising out

of vexatious litigation or malicious prosecution and

could not trigger personal injury coverage under that

policy language.

II

ADVERTISING INJURY

QSP and Reader’s Digest also make a claim for coverage

under the ‘‘advertising injury’’ and ‘‘advertising

offense’’ provisions of the American Motorists and Gen-

allegation that [Reader’s Digest] and QSP

engaged in a ‘campaign’ of disparagement, misstatements

to customers in promoting [Reader’s Digest] and

QSP, and subsidizing promotional activities constitute

advertising.’’ Second, QSP and Reader’s Digest argue

that several subparagraphs of paragraph 29 of the

policies for the advertising offense of unfair competition.

The trial court concluded that ‘‘[b]ecause the

by the defendants’ policies was caused by advertising,

there was no duty to defend under the advertising injury

[or] advertising offense coverage of either [the American

complaint did not allege a cause of action for unfair

competition under the advertising offense provision of

the GenStar and Federal policies because ‘‘it neither

alleged the misappropriation of a commercial advantage

injury.’’

QSP and Reader’s Digest challenge the trial court’s

conclusions and argue that: (1) the term ‘‘advertising’’

should be defined broadly, to include a ‘‘campaign’’ of

conduct; and (2) the term ‘‘unfair competition’’ also

should be defined broadly to include underlying allegations

of antitrust violations, even where the acts consti-

tuting such violations are not committed directly

against the parties bringing the cause of action. We are

not persuaded by their argument and, therefore, agree

with the conclusions of the trial court.

We first address the claim of QSP and Reader’s Digest

that the defendants have a duty to defend under the

‘‘advertising injury’’ and ‘‘advertising offense’’ sections

of their policies. Section V (1) of the American Motorists

policies provides in relevant part that ‘‘ ‘[a]dvertising

injury’ means injury arising out of . . . [o]ral or written

publication of material that slanders or libels a person

or organization or disparages a person’s or organization’s

goods, products or services . . . .’’ This coverage

applies to only ‘‘ ‘[a]dvertising injury’ caused by an

offense committed in the course of advertising [the

insured’s] goods, products or services . . . .’’ Gen-

Star’s policy language defines ‘‘ ‘Advertising Offense’ ’’

in relevant part as any ‘‘(1) libel, slander or defamation

under an implied contract . . . .’’

(Emphasis added.) The policy states that GenStar will

‘‘defend any suit against the Insured seeking damages

on account of . . . [an] advertising offense,’’ where

such offense is ‘‘committed or alleged to have been

committed in any advertisement, publicity article,

broadcast or telecast and arising out of the Named

Insured’s advertising activities.’’

A

The trial court in this case defined ‘‘ ‘advertisement,’ ’’

according to its dictionary definition, as ‘‘ ‘the act or

process of advertising . . . a public notice; esp: one

published in the press or broadcast.’ Webster’s Ninth

New Collegiate Dictionary (1991).’’Wedefined the word

208 Conn. 146, 155, 543 A.2d 1339 (1988), as

follows: ‘‘to announce publicly esp[ecially] by a printed

notice or a broadcast; [and] to call public attention to

esp[ecially] by emphasizing desirable qualities so as

to arouse a desire to buy or patronize.’’ ‘‘Black’s Law

Dictionary defines advertising in a manner that would

include such dissemination of information [as]: [a]ny

oral, written, or graphic statement made by the seller

in any manner in connection with the solicitation of

business . . . .’’ (Internal quotation marks omitted.)

pointed out by the trial court, in New York, advertising

has been defined by the courts as ‘‘the calling of information

to the attention of the public, by whatever

51 N.Y.2d 140, 146, 412 N.E.2d 927, 432 N.Y.S.2d

872 (1980).

‘‘Courts have differed over precisely what type of

conduct constitutes advertising activity. A number of

courts have defined the term expansively to include

even individual sales pitches to individual consumers;

ordinary reading of the definition of advertising activity

in [the insurer’s] policies would include an insured’s

dissemination of information to promote a product or

service.’’ Id., 1377. ‘‘Moreover, the courts that have considered

the issue of advertising activity in similar contexts

have defined it in terms that include the

dissemination of information to promote a product. See

(1993) (‘[A]dvertising means a public announcement to

proclaim the qualities of a product. . . . Wide dissemination

of information is typically the objective of advertising.’)

of clinical studies to develop market for one of

Elan’s products appears to fall well within definition

of advertising activity provided in insurance policies

and case law). A common theme, however, is the

requirement that information must be publicly or widely

disseminated in order to be considered ‘‘advertising.’’

2d 400, 403 (Miss. 1997).

QSP and Reader’s Digest argue that the term ‘‘advertise’’

141 Conn. 288, 299, 106 A.2d 152 (1954) (term ‘‘ ‘advertise’

’’ covers ‘‘a wide range . . . through [a] whole

gamut of means and devices for arousing public interest

and patronage’’); and should include the ‘‘campaign’’ of

monopolistic conduct that ultimately gave rise to the

complaint, phrased in terms of monopolistic and anticompetitive

conduct, never mentions the word ‘‘advertising,’’

nor is there any evidence that the alleged

anticompetitive conduct was facilitated by a widespread

advertising campaign by QSP and Reader’s

there is little evidence in the record that even suggests

that a derogatory advertising campaign was launched

by QSP and Reader’s Digest against their competitors

in the magazine fund-raising market. QSP and Reader’s

Digest seem to be relying on catchphrases from their

own complaint, such as ‘‘ ‘scheme’ to obtain monopoly

power,’’ and ‘‘advertising . . . the Reader’s Digest

name,’’ to sustain an argument that they launched a

campaign of anticompetitive and disparaging conduct

that would be covered under the auspice of advertising

that the alleged defamatory or disparaging conduct

would have taken place in connection with advertising

against anyone other than competitors in the magazine

fund-raising market. More importantly, there is nothing

injury in the first place. Thus, because there was

no public dissemination of defamatory or disparaging

materials, there can be no causal connection between

the advertising by QSP and Reader’s Digest and the

B

QSP and Reader’s Digest also argue that there is

coverage under the ‘‘advertising offense’’ provision of

complaint stated a cause of action for common-law

(emphasis added); and states that GenStar will

‘‘defend any suit against the Insured seeking damages

on account of [unfair competition] . . . committed or

alleged to have been committed in any advertisement,

publicity article, broadcast or telecast and arising out

to trigger coverage for ‘‘unfair competition,’’ the policies

require that the underlying action allege not only the

offense itself, but also that it arose out of the insured’s

advertising activities.

‘‘[T]he policy imposes two requirements for coverage

of an advertising injury, even when a specified offense

. . . is involved. First, that [the] injury must have been

one arising out of the offense in order to qualify under

the definition of advertising injury. Second, it must have

been caused by an offense committed in the course of

advertising [the insured’s] goods.’’ (Internal quotation

Conn. App. 281, 289–90, 682 A.2d 611 (1996); see also

1277, 833 P.2d 545, 10 Cal. Rptr. 2d 538 (1992). The

Appellate Court ‘‘construe[d] [the advertising injury]

provision to mean that a covered advertising injury

would have to be causally related to an offense . . .

that is itself causally related to the insured’s advertising

a tenuous connection between advertising and the

claimed injury in order to trigger advertising injury coverage.

patent infringement is independent of advertising there

can be no causal connection between advertising and

sufficient for coverage when there is unfair competition

and also advertising unless nexus between two caused

injury). Instead, ‘‘the injury for which coverage is sought

968, 971 (9th Cir. 1994).

plaint allege that QSP and Reader’s Digest ‘‘predatorily

‘‘engaged in predatory pricing,’’ ‘‘intentionally interfered

with the actual or prospective contractual or other

‘‘engaged in various unfair and misleading business

practices, including . . . making false and deceitful

misrepresentations’’ as to the nature of their organization

and activities. (Emphasis added.) QSP and Reader’s

Digest claim that these underlying allegations of unfair

‘‘advertising offense’’ provision of the GenStar policy.

complaint ‘‘did not allege a . . . cause of action for

unfair competition because it neither alleged the misappropriation

of a commercial advantage belonging to the

plaintiffs suffered competitive injury.’’ We agree with

the trial court.

QSP and Reader’s Digest argue that Connecticut construes

the term ‘‘unfair competition’’ as a ‘‘ ‘generic

name for a number of . . . torts involving improper

under New York law is that a party misappropriate

838, 849 (S.D.N.Y. 1982), aff’d, 724 F.2d 290 (2d Cir.

1983), cert. denied, 467 U.S. 1252, 104 S. Ct. 3536, 82

Connecticut has not addressed the issue, New York

does not require direct competition between a plaintiff

and a defendant in order to sustain a cause of action

795–96, 101 N.Y.S.2d 483 (1950), aff’d, 279 App. Div.

632, 107 N.Y.S.2d 795 (1951). ‘‘At a minimum, however,

the law is meant to protect property rights of commercial

value and a plaintiff must establish such rights

as a prerequisite to relief.’’ (Internal quotation marks

a cause of action for unfair competition, there must be

some evidence in the record that the defendant misappropriated

a commercial or business advantage. See

(‘‘misappropriation of another’s commercial advantage

[is] . . . cornerstone of the tort’’ of unfair competition,

which should not ‘‘be equated with the far more amorphous

1105 (2d Cir.), cert. denied, 495 U.S. 826, 103 S. Ct. 60, 74

L. Ed. 2d 63 (1982) (tort of unfair competition ‘‘broadly

described as encompassing ‘any form of commercial

immorality’ ’’ but requires ‘‘ ‘misappropriat[ion] for the

commercial advantage of one person . . . a benefit or

953–54 (2d Cir. 1980), cert. denied, 459 U.S. 832, 103 S.

591 (9th Cir. 1987) (no claim for unfair competition

where plaintiff cannot show misappropriation of legitimate

were not being deprived of a commercial business

advantage, nor did they allege such a claim in their complaint.

We acknowledge that we have interpreted the phrase

‘‘unfair competition’’ broadly in certain contexts. In the

context of advertising injuries, however, we agree with

the Court of Appeals for the Third Circuit opined that

‘‘the Supreme Court of Pennsylvania would hold that

a competitor of the insured, but not its customer, can

assert a claim which may be covered under the ‘unfair

competition’ category of . . . ‘advertising injury’ coverage.’’

We agree with this reasoning and find that ‘‘the

word ‘competition’ as used in ‘unfair competition’ limits

coverage to claims by competitors of the insured.’’ Id.

‘‘[R]egardless of the nature of the insured’s conduct, a

claim by a consumer of its products or services arising

from that conduct hardly can be characterized as a

claim for unfair competition. After all, ‘competition’

connotes an insured’s relationship with other persons

or entities supplying similar goods or services.’’ Id., 319.

states a cause of action for improper interference

with business practices, analogous to unfair competition

thereby warranting coverage as an ‘‘advertising

injury.’’ GenStar argues that QSP and Reader’s Digest

are manufacturing coverage by injecting into their briefs

phrases like ‘‘ ‘wrongfully competed’ ’’ or ‘‘ ‘unfair competitive

practices,’ ’’ which did not appear in the underlying

action. We conclude not only that there was no

but also that, even if there were such a claim,

there would have been no plausible nexus between it

and the insureds’ advertising activity. We conclude that

there was nothing in the record to show that QSP and

Reader’s Digest improperly interfered with anyone’s

business or property, or that they did so through advertising.

Emphasizing our original personal injury analysis,

made no allegations of advertising offenses, or unfair

competition arising therefrom, that would trigger advertising

injury coverage.

III

‘‘ARISING OUT OF’’

QSP and Reader’s Digest also argue that the trial

court improperly concluded that the defendants had no

did not arise out of covered torts, but rather arose

out of the existence of a monopoly; and (2) there was

no coverage where the underlying action alleged only

consequential damages by parties not directly injured

by the covered torts. QSP and Reader’s Digest assert

were indirect, they arose out of the torts of defamation,

disparagement, malicious prosecution and unfair competition,

all of which are covered by the defendants’

policies. They assert, therefore, that coverage is triggered

as a result of the consequential damages arising

in the underlying complaint. The defendants, on the

other hand, assert that the ‘‘arising out of’’ language in

an insurance policy refers to the injury suffered and

cannot be used to expand the list of enumerated

offenses or broaden coverage to include even those

remote injuries suffered by a tenuously connected plaintiff.

We agree with the defendants.

The relevant policy language covers ‘‘personal injury’’

malicious prosecution or unfair competition.

out of’’ is very broad, and that it is the phrase that

provides the causal connection between the injury and

the offense in both the American Motorists and GenStar

policies. ‘‘[I]t is generally understood that for liability

for an accident or an injury to be said to ‘arise out of’

[an occurrence or offense], it is sufficient to show only

that the accident or injury ‘was connected with,’ ‘had

its origins in,’ ‘grew out of,’ ‘flowed from,’ or ‘was incident

to’ [that occurrence or offense], in order to meet

the requirement that there be a causal relationship

between the accident or injury and [that occurrence or

172 (1975), and cases cited therein. To ‘‘arise’’ out of

means ‘‘to originate from a specified source.’’ Webster’s

Third New International Dictionary (1961); see also

Black’s Law Dictionary (7th Ed. 1999) (defining ‘‘arise’’

as ‘‘1. [t]o originate; to stem [from] . . . 2. [t]o result

[from]’’). ‘‘The phrase arising out of is usually interpreted

as indicat[ing] a causal connection.’’ (Internal quotation

Docket No. 99-9300 (2d Cir. February 14, 2001); see also

Sup. 1263, 1267 (S.D.N.Y. 1986). Simply because we

recognize, however, the breadth of the term ‘‘arising

out of’’ and often interpret coverage ambiguities in favor

of the insured does not mean that we will ‘‘obligate an

insurer to extend coverage based . . . [upon] a reading

of the complaint that is . . . conceivable but tortured

936 F.2d 1420, 1428 (2d Cir. 1991).

plaintiffs described their class action as one seeking

‘‘Damages and Injunctive Relief Based on Violation of

Federal Antitrust Laws’’ through the ‘‘monopolization

of trade or commerce in the sale of magazine fund

raising plans . . . in violation of Section 2 of the Sherman

[Antitrust] Act (15 U.S.C. § 2)’’ by QSP and Reader’s

Digest. Paragraph 29 outlines the monopolistic conduct

including the claims of defamation, disparagement,

malicious prosecution and unfair competition. As this

language suggests, and the preceding analysis concludes,

none of these torts were committed against the

effects intended by and resulting from the monopolistic

violations, along with the ‘‘anticompetitive, predatory,

and exclusionary acts’’ of QSP and Reader’s Digest

caused them to suffer injury in their business and property

‘‘because they have received lower percentages

of magazine subscription revenues from QSP, and/or

[have] paid more for promotional prizes, than would

have been the case in a competitive marketplace.’’

It is plain, from a reading of the complaint, that the

in the school fund-raising market, and not out of the

torts of defamation, disparagement, malicious prosecution

or unfair competition. As the trial court pointed

inextricably connected to the loss of profits they suffered

as a result of the monopoly created by QSP and

this conclusion, QSP and Reader’s Digest appear to rely

on the general concept that where ‘‘an allegation of the

complaint falls even possibly within the coverage, then

the insurance company must defend the insured.’’

supra, 78 N.Y.2d 61 (insurer must defend claim whenever

complaint suggests reasonable possibility of coverage

despite merits of action). QSP and Reader’s Digest

also rely on those cases that hold that the duty to defend

does not hinge on the skill or manner in which a complaint

60 (1966); but rests on the substantive thrust of the

complaint and the surrounding facts. However, ‘‘[t]he

language [of the policies] in no way can be interpreted

to extend coverage to other torts, not specifically enumerated,

which bear [only] some similarity to those

Therefore, although we adhere to ‘‘broad interpretation’’

standards in construing insurance policies, we

from antitrust violations, rather than the indeterminately

pleaded common-law torts that serve solely as

factual background in the underlying complaint.

QSP and Reader’s Digest argue that ‘‘insurers . . .

have a duty to defend their insureds against antitrust

suits that also allege other common law business torts

[e.g., commercial disparagement] where the insurer has

1037, 1043 (7th Cir. 1987), and cases cited therein.

Although we do not disagree with this proposition, we

conclude nonetheless that in order for covered common-

law torts to trigger coverage, those torts and their

resultant injuries must have been alleged by the proper

plaintiffs. The proper plaintiffs are those individuals

who can prove direct injury as a result of defamation,

other defendants in a nine count antitrust damages

action brought in federal court in Illinois entitled

[were] accused of conspiring to make ‘false, misleading

and defamatory’ statements ‘disparaging’ the Cedar

Park plaintiffs’ [funeral] services and products ‘with

the expressed interest of discouraging’ consumers from

buying the Cedar Park plaintiffs’ products and services.’’

Insurance Company, to determine its rights to

defense and indemnification for costs arising out of the

antitrust action after a dispute arose regarding coverage.

The Seventh Circuit Court of Appeals, adopting

the trial court opinion, found that the insurance company

did have a duty to defend where ‘‘the federal

suit ‘painted a picture which, had it been established,

conceivably could have subjected defendant’s insured

. . . to liability for commercial disparagement.’ ’’ Id.,

ever, because the plaintiffs in the underlying action in

that case were the direct targets of the commercial

disparagement. In this case, on the other hand, the

commercial disparagement when it was not their goods

or services that were being disparaged. The damages

they suffered were economic damages arising out of

the monopoly allegedly created by the commercial disparagement

of the competitors of QSP and Reader’s

Digest. The connection between the covered offenses

and the resultant injury is far too tenuous to trigger

coverage under the policies.

example, we declined to impose a duty to defend under

a workers’ compensation and employer’s liability policy

where the plaintiffs in the underlying action claimed

injuries for slander and invasion of privacy arising out

of sexual harassment and discrimination in the workplace.

Farmington Casualty Company for the claims that had

been brought against it in the underlying action by

arguing that the workers’ compensation policy language

was ambiguous.We concluded, however, that the policy

‘‘[v]iewed in its entirety . . . unequivocally indicate[d]

that [it] was intended to provide coverage only for

claims for worker’s compensation benefits.’’ Id., 809.

The plaintiffs in the underlying action had not gone

through the workers’ compensation commission, nor

did they state any claim for workers’ compensation

benefits. Therefore, where the plaintiff was not making

a claim for benefits paid pursuant to workers’ compensation

law, there was no coverage under the policies. Id.

to support their argument that ‘‘[t]he ‘arising out of’

language . . . refers to the injury, not to the offense’’

alleged in the underlying complaint and that the ‘‘broad

construction [of the phrase ‘arising out of’ applies to]

. . . causation, not interpretation of the covered

offenses.’’ In that case, the plaintiff, Wake Stone Corporation,

argued that there was a duty to defend under

its ‘‘personal injury’’ coverage for an underlying action

brought by a competitor, Martin Marietta Corporation,

for unfair trade practices. The personal injury coverage

at issue, however, covered injuries arising out of libel

and slander, but did not list unfair competition or unfair

trade practices among the covered torts. Refusing to

impose a duty to defend on the insurer, the court held

that where coverage for libel or slander did not include

coverage for unfair trade practices, it could not be

extended to any tort simply because ‘‘a claim may arise

out of the same facts as the [covered offense]. . . .

Otherwise, the enumeration in the policy of covered

offenses would be purposeless.’’ Id. We agree with

this reasoning.

QSP and Reader’s Digest, on the other hand, rely on

plaintiffs did not have to suffer direct injury in order

(2000). As the trial court pointed out, these cases are

injured in an automobile accident sought coverage

under a $300,000 ‘‘ ‘per occurrence’ ’’ limit of bodily

injury coverage for loss of consortium, after his wife

recovered $100,000 under the ‘‘ ‘per person’ ’’ limit of

309. Denying recovery for the husband, we concluded

that it was the wife who could not perform the spousal

functions who suffered the bodily injury, not the husband

claiming a resultant loss of consortium. Id., 312.

Even though we considered the loss of consortium a

separate cause of action, we held that it was ‘‘derivative

and inextricably attached to the claim of the injured

spouse.’’ Id. The couple, therefore was limited to the

‘‘ ‘per person’ ’’ coverage. QSP and Reader’s Digest

claim that this language supports their argument that

courts recognize policy coverage even in cases where

the injury is suffered indirectly, as long as that indirect

injury is derivative and inextricably connected to the

coverage, and followed the well settled principle that

‘‘damages for loss of consortium . . . are subject to

‘per person’ limitation.’’ Id., 310, and cases cited therein.

between husband and wife. Its holding, therefore,

is inapposite for purposes of our analysis in this case.

a duty to defend derivative claims brought by the

spouses and grandchildren of women who had taken

DES, a harmful prenatal drug prescribed from the 1940s

to the 1960s to prevent miscarriages. The issue in that

case, however, was whether the injuries claimed by

these individuals had become apparent or had manifested

themselves before termination of coverage, not

whether the injuries were proximately caused by the

pointed out, the analysis has no bearing on this case.

N.Y.2d 779, the plaintiff was a construction subcontractor

who installed skylights in the building of a local

company. Because of faulty installation, the area around

the skylights leaked, causing the floor underneath them

to become wet and slippery. Employees of the company

occupying the building suffered ‘‘slip and fall’’ injuries

for which their employer brought an action. In that

underlying action the employer alleged that, owing to

the leaking roof, his employees ‘‘ ‘slipped and fell in

puddles . . . and were injured,’ ’’ and his company was

‘‘forced to incur expenses in the form of lost time and

workers compensation claims.’’ Id., 780. The Court of

Appeals held that the defendant insurance company

had a duty to defend the employer’s underlying action

because the bodily injury coverage in the plaintiff’s

policy covered ‘‘ ‘those sums that the insured becomes

legally obligated to pay as damages because of ‘‘bodily

injury,’’ ’ ’’; id.; which the court found ‘‘at least ambiguous’’

with respect to whether the claims in the employer’s

action were covered. Id. Thus, although the plaintiff

employer in the underlying action did not suffer direct

bodily injury, the ambiguity in the policy was interpreted

does not allege damages suffered as the result of

any covered offense.

The term ‘‘arising out of’’ requires that we look at

than the underlying offenses that QSP and Reader’s

Digest claim caused those injuries. As stated previously,

covered offenses of defamation, disparagement, malicious

prosecution or unfair competition, because the

schools and youth groups making up the class of plaintiffs

were not the parties injured by those offenses. The

injuries that arose out of the monopolization of the

magazine fund-raising market by QSP and Reader’s

Digest. We conclude that because there was no causal

the torts that QSP and Reader’s Digest claim caused

those injuries, there is no duty to defend.

IV

DUTY TO INDEMNIFY

The final contention of QSP and Reader’s Digest is

that the trial court improperly concluded, as a result of

the aforementioned determinations, that the defendants

settlement. We disagree. As we previously have held,

where there is no duty to defend, there is no duty to

indemnify, given the fact that the duty to defend is

The judgment is affirmed.

In this opinion the other justices concurred.

* The listing of justices reflects their seniority status on this court as of

the date of oral argument.

1 The appeal does not involve Travelers-Aetna Insurance Company, Fireman’s

Fund Insurance Company, or TIG Insurance Company, which were

all defendants in the underlying action.

and youth group magazine fund-raising market filed in California Superior

state law causes of action including defamation, business disparagement

pursuant to a settlement agreement entered into in May, 1993. The Aetna

Casualty and Surety Company exhausted its $1 million policy limits in settling

3 American Manufacturers Mutual Insurance Company sold Reader’s

Digest a commercial general liability policy for the period from 1990 to

1991. American Motorists Insurance Company took over coverage with policies

issued during the period from 1991 through 1996.

4 Reader’s Digest and QSP also were accused of practicing predatory and

discriminatory pricing, interfering with competitors’ contracts, making false

representations to potential customers, making exclusive dealing arrangements

with the publishers of the magazines participating in the fund-raising

programs, using the valuable Reader’s Digest name to further their monopoly

position, and threatening potential members of the class action with legal

action based on allegations of legal and ethical violations.

5 The cash equivalents consisted of products including books, videos,

music and discount coupons valued at $25 million.

6 On March 21, 1994, American Motorists sent a letter to Reader’s Digest

7 Specific to GenStar’s policy was a modified definition of ‘‘advertising

offense’’ from one of the relevant policy periods. That definition included

as an ‘‘advertising offense’’ ‘‘(3) piracy or unfair competition or idea misappropriation

under an implied contract . . . .’’

GenStar’s policy also contained a ‘‘New York Amendatory Endorsement’’

that added the following exclusion: ‘‘(n) to personal injury or property

damage resulting from any intentional act committed by or at the direction

of the Insured.’’

GenStar forwarded a letter to Reader’s Digest denying coverage and

indemnification on August 10, 1994.

decision on whether the law of Connecticut or the law of New York governed

the consequences of the defendants’ alleged breach of their duty to defend

their insureds. Applying the Restatement (Second), Conflict of Laws, §§ 6

held that ‘‘the substantive law of Connecticut govern[ed] the scope of the

defendants’ respective duties to defend QSP’s claims and the substantive

law of New York govern[ed] the scope of the defendants’ respective duties

to defend [Reader’s Digest’s] claims.’’ The choice of law issue is not raised

on appeal, and, therefore, we adopt the decision of the trial court with

respect thereto.

9 Practice Book § 65-2 provides: ‘‘After the filing of an appeal in the appellate

court, but in no event after the case has been assigned for hearing, any

party may move for transfer to the supreme court. The motion, addressed

to the supreme court, shall specify, in accordance with provisions of Section

66-2, the reasons why the party believes that the supreme court should hear

the appeal directly. A copy of the memorandum of decision of the trial

court, if any, shall be attached to the motion. The filing of a motion for

transfer shall not stay proceedings in the appellate court.

‘‘If, at any time before the final determination of an appeal, the appellate

court is of the opinion that the appeal is appropriate for supreme court

review, the appellate court may file a brief statement of the reasons why

transfer is appropriate. The supreme court shall treat the statement as a

motion to transfer and shall promptly decide whether to transfer the case

to itself.’’

QSP and Reader’s Digest also filed a motion for transfer to the Supreme

Court, which the defendants opposed. Despite the opposition, the motion

was granted.

10 The original judgment of the trial court granted summary judgment in

favor of American Motorists and GenStar. Pursuant to a motion for articulation,

the trial court amended its judgment to include Federal Insurance

Company, also concluding that it had no duty to defend or indemnify.

11 ‘‘ ‘A necessary predicate to this rule of construction, however, is a

determination that the terms of the insurance policy are indeed ambiguous.

. . . The fact that the parties advocate different meanings of the [insurance

policy] does not necessitate a conclusion that the language is ambiguous.’ ’’

247 Conn. 806.

12 As pointed out by the trial court, although American Motorists Insurance

Company and American Manufacturers Mutual Insurance Company ‘‘use

different language in some respects, the coverage and exclusions of each

1994). The excess liability policies issued by GenStar and Federal contain

similar language under the ‘‘advertising offense’’ provision.

all of alleged offenses committed by QSP and Reader’s Digest.

14 The United States Supreme Court also has found that it