Two Pesos v. Gulf Ins. Co

In Two Pesos v. Gulf Ins. Co., 901 S.W.2d 495, 501 (Tex. App.-Houston 14th Dist. 1995, no writ), the appellate court held that Taco Cabana's motion for supplemental damages "did not allege an offense occurring during Gulf's the insurance company policy period, and that coverage for Two Pesos' continued trade dress infringement is precluded because the claim constitutes a known loss or loss in progress." See 901 S.W.2d at 498, 502. Moreover, the Two Pesos court noted that "the risk of liability was no longer unknown because the injuries resulted when Two Pesos first copied Taco Cabana's trade dress. The risk of injury from continued infringement was readily apparent, or should have been." Id. Clearly, the actors in Two Pesos engaged in intentional behavior--infringing on Taco Cabana's trade dress--even after the trial court issued a judgment against Two Pesos for trade dress infringement. Moreover, Two Pesos, based on the knowledge that its actions subjected it to liability (loss), actively sought to insure the known loss. Id.