Models Stripped of Insurance Cover for Club’s Unauthorized Use of Their Images

The insurer for Mr. Happy’s Cafe is smiling because a federal court has found it is not obligated to defend the adult entertainment club against charges that it used the images and likenesses of six models in its advertising without their approval.

As a result, the models who sued the club and were assigned the club’s rights to the insurance in a settlement have been denied any payout.

Clear Blue Specialty Insurance Co. won the coverage battle because its policy for the Waterbury, Connecticut strip club included an exclusion to its advertising and personal injury coverage for “exhibitions and related marketing.”

The ruling comes five months after another federal court denied 20 models access to insurance they were assigned in a settlement with a club.

Plaintiffs Alyssa Nobriga, Eva Pepaj, Jessica Hinton, Irina Voronina, Monica Leigh, and Ursula Mayes are professional models who allege their images, likenesses, and advertising ideas appeared without their consent in advertising materials for Mr. Happy’s.

Mr. Happy’s insurance policy from Puerto Rico-based Clear Blue provided the club with protection against personal and advertising injury. After the models sued Mr. Happy’s, the owner settled the claims by assigning the club’s rights, remedies, and claims under the club’s Clear Blue insurance policy to them.

Clear Blue denied it had any obligation to the club or models, citing the entertainment and related marketing exclusion. The models sought a declaratory judgment that Clear Blue had an obligation to defend and indemnify Mr. Happy’s so they could collect on the underlying action.

Clear Blue moved for a judgment on the pleadings and a summary judgment.

The models argued that the exclusion operated to make the personal and advertising injury provision of the policy illusory and thus it was ambiguous and should be interpreted in their favor.

But the federal district court for Connecticut rejected the models’ bid and granted Clear Blue’s motions. The court held that the exclusion was “neither illusory nor ambiguous” as to its exclusion of injuries arising from advertising for “promotional events,” and thus it did exclude coverage for Mr. Happy’s alleged injuries.

While the Clear Blue policy provides some protection against claims for personal and advertising injury, the court noted that the policy also limits the insurer’s duty so that the protection does not apply to personal and advertising injuries “if such activities arise out of or are part of ‘exhibitions and related marketing'” as set forth in the exclusion.

The Connecticut case recalls a similar ruling earlier this year involving 20 professional models who sued three Massachusetts-based strip clubs alleging that the clubs used their images in commercial advertisements without their consent and without paying them. The models sought to collect on two insurance policies to cover a $1.9 million consent judgment against one of the three club owners. But in February the federal district court in Massachusetts ruled that Blackboard Specialty Insurance Co. was under no obligation to cover the consent judgment under the two commercial general liability policies it wrote for the clubs.