Therefore, GSSC has no right to indemnification from Royal for any liability GSSC may have to Data General due to GSSC's activities prior to January 1, 1989.
Furthermore, Royal owes GSSC no duty of indemnification as to any liability GSSC has incurred to Data General subsequent to January 1, 1989. Just before the inception of the Royal policy, an injunction was issued which specifically enjoined GSSC from continuing to use or copy, for any purpose, Data General's ADEX software. GSSC was further ordered to furnish to Data General any copy of such software which it had in its possession, custody, or control. Despite this injunction, GSSC apparently continued to use this software.
In Public Service Mutual Insurance Company v. Goldfarb, 53 N.Y.2d 392, 442 N.Y.S.2d 422, 425 N.E.2d 810 (1981), the New York Court of Appeals held that "one who intentionally injures another may not be indemnified for any civil liability thus incurred." Id. at 426. In the instant case, the Massachusetts District Court, as a basis for granting the injunction, specifically found that a presumption existed that Data General would suffer irreparable harm if GSSC's activities continued. Therefore, this Court finds that GSSC's continued use of Data General's software after December 29, 1988 was an intentional act which GSSC knew would cause injury to Data General. Consequently, GSSC is precluded from seeking indemnification from Royal.
Moreover, even if there were some doubt as to whether GSSC used the ADEX software with the intent to cause Data General damage or loss, the fact that this use was in violation of an injunction is sufficient reason to preclude any indemnification. This Court finds that an insurance agreement that indemnifies for liability incurred as a direct result of a violation of an injunction is void as against public policy.
Allowing such coverage would significantly weaken the effectiveness of a court's injunctive powers. Those enjoined would be free to blatantly ignore court orders so long as they had an insurance policy which indemnified them against any liability arising from their violation of the injunctions.
See Drexel Burnham Lambert Group, Inc. v. Vigilant Insurance Company, 595 N.Y.S.2d 999, 1010 (Sup. Ct. 1993) ("It is long standing public policy that 'no one shall be permitted to profit by his own fraud, or to take advantage of his own wrong, or to found any claim upon his own iniquity, or to acquire property by his own crime.'") (citing Riggs v. Palmer, 115 N.Y. 506, 511, 22 N.E. 188 (1889)).
Having determined that GSSC has no possibility of a claim against Royal for any indemnification, the other issues raised by Defendant in support of its motion need not be addressed.
Accordingly, for the aforementioned reasons, Royal's motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure is granted.
LEONARD D. WEXLER
UNITED STATES DISTRICT JUDGE
Dated: Hauppauge, New York
August 4, 1993