A federal appeals court has upheld dismissal of defense coverage litigation filed by a breakaway Episcopal parish being sued for trademark infringement by its former parent organization.

Prince George Parish of Prince George Winyah in Charleston, South Carolina, was one of dozens of parishes in South Carolina to dissociate itself from the national church in 2012 over the ordination of women and other doctrinal changes, according to a news report.

The Charleston, South Carolina parish was sued by the South Carolina Episcopal church and two bishops for trademark infringement, according to court papers in Prince George Parish of Prince George Winyah v. GuideOne Mutual Insurance Co.

The underlying litigation charged that although a schismatic group led by a bishop left the Episcopal church in 2012, they have continued to call themselves an Episcopal diocese, which is confusing and has caused harm to the church, its associated diocese and church bishops.

Des Moines, Iowa-based GuideOne refused to provide a defense in the case, and Prince George filed suit in U.S. District Court in Charleston, alleging breach of contract and bad faith.

The district court ruled in the insurer’s favor, and was upheld by a unanimous three-judge appeals court panel of the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, in Wednesday’s ruling. 

“Under the Parish’s insurance policy, GuideOne agreed to defend any suit seeking tort damages, allowed by law, arising out of personal and advertising injury,” the ruling said.

“However, the plaintiffs in the underlying action did not specifically request damages; rather, they sought declaratory relief, injunctive relief, cancellation of trademark registration, attorney’s fees and costs, and any other appropriate relief.  Thus, on the surface it is clear that the Parish’s policy did not provide coverage for the trademark action.”

The ruling said the parish maintains the allegations “could have supported an award of tort damages, thus bringing the action with the scope of the policy. We disagree.

“Although as the Parish contends, there are circumstances in which a court might award damages to a plaintiff who did not request them….such an outcome here was far too remote to constitute a reasonable possibility that the Parish would be held liable for damages,” the ruling said, in affirming the lower court’s ruling that the trademark litigation did not trigger GuideOne’s duty to defend.

Attorneys in the case did not respond to requests for comment.