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Court rules provision of insurance policy was ambiguous, however insurer owed no duty to defend

Coral Reef Productions sued Axis Surplus Insurance Company, arguing that Axis owed it a duty to defend against claims that Coral Reef "hacked into" a website maintained by the plaintiff in a separate action (Primesites, Inc.), illegally soliciting Primesite's customers.  The reviewing court concluded that since the insurance policy did not provide any definition of "membership services," "members" or "others" in the "Insured Services" section of the policy, those terms must be interpreted consistently with the broader meaning alleged by the insured. 

Nevertheless, the Court concluded that the illegal conduct which formed the entire basis of the third-party's allegations would also be included in coverage exceptions relating to "dishonest, fraudulent, criminal" behavior, "unfair competition," and illegal gain, profit or advantage.   Therefore, the lower court properliy denied coverage, even for defenses costs.

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