published on
8 February, 2017

Strip Club Says Insurer Must Cover Models' Privacy Suit
Article witten by scladmin. Additional content from law360.com.

A gentlemen's club in a case removed Friday to New York federal court says its insurer must cover the club as it defends itself in a suit brought by models accusing the club of publishing sexually explicit photos of them to advertise the business without their permission.

TFS NY Inc., a Long Island City, New York, strip club doing business under the name of Sugardaddy's Gentlemen's Club, said Houston Specialty Insurance Co. insured it for liability coverage and that under the terms of the policy, it must be covered for all sums the club would be legally obligated to pay as damages due to personal and advertising injury claims.

"Houston has disclaimed coverage under their policy issued to TFS, and has refused to assume the defense of TFS, and to pay any judgment although due demand has been made," the club said Dec. 20 in its civil action filed in New York state court. "As a result of the refusal of Houston to assume the defense of TFS in the aforesaid action, TFS has been obliged to offer a defense of said action to avoid a default being taken against it."

Sugardaddy's requested that the court rule in its favor by deciding that Houston Specialty Insurance should defend it in the suit filed by eight models on Jan. 5. Sugardaddy's seeks to recover $25,000 from Houston for the defense of the models' action to date, along with attorney's fees and expenses.

On Friday, Houston Specialty Insurance Co. removed the suit to New York federal court, arguing that the disputed amount exceeds the sum of $75,000 and is between citizens of different states.

"While the complaint does not specifically quantify plaintiffs' damages, it asserts a claim against a policy of insurance issued by Houston that provides a limit of $1 million coverage, as well as $25,000 in defense costs and attorneys' fees incurred to date. Furthermore, the underlying Edmondson action alleges damages that exceed $75,000," Houston Specialty said in its notice of removal.

The suit filed by the models on Jan. 5. alleges that Sugardaddy's stole, altered and then published unauthorized and sexually suggestive images of the eight women, "each of whom are world renowned professional models," in order to promote the strip club. The alleged theft and unauthorized use of the images constitutes violations of the Lanham trademark act, New York civil rights law and New York's Deceptive Trade Practices Act, the models said.

A representative for Houston Specialty Insurance Co. declined to comment on Monday.

A representative for Sugardaddy's did not immediately respond Monday to a request for comment.

Sugardaddy's is represented by Michael J. Jannuzzi.

Houston Specialty Insurance Co. is represented by Daniel A. Schilling of Kaufman Borgeest

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