St. Paul Fire & Marine Ins. Co. v. Brother Int'l Corp., No. 07-3886, 2009 WL 865077 (3d Cir. (N.J.) April 2, 2009)

Posted on April 22, 2009 by David Gauntlett

Affirming the trial court, at issue was a class action lawsuit for TCPA violations under an “advertising injury” coverage provision. The district court concluded that neither the “advertising injury” nor “property damage” provisions were implicated. While an invasion of privacy did include a right of seclusion, the advertising injury provision in the policy is limited to violations of the privacy right of secrecy, not implicated by a TCPA claim.

It also specifically found that “the consumption of a fax recipient’s toner and paper is the intended consequence of the insured’s intentional act when sending a fax, and is therefore not ‘accidental’ within the meaning of the Policy.” Id. at *2.

The latter determination appears inconsistent with the published court of appeals

ruling in Insurance Corp. of Hanover v. Shelborne Associates, ___ N.E.2d ___, 2009 WL 884898 (Ill. App. Ct. (1st Dist.) March 31, 2009), entered three days before the April 2, 2009 Brother Int’l Order.

The court conceded that under New Jersey law subjective intent is applicable to determine an intent to injure.

The court found Melrose Hotel Co. v. St. Paul Fire & Marine Ins. Co., 432 F. Supp. 2d 488, 501 (E.D. Pa. 2006), aff’d, 503 F.3d 339 (3d Cir. 2007) dispositive as it addressed the same policy.

Melrose's knowledge about the TCPA and its lack of intent to violate the TCPA are irrelevant to whether it intended to cause harm that befell Class members.

Id. at *5.
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Penzer v. Transportation Ins. Co., ___ F.3d ___, 2008 WL 4662164 (11th Cir. (Fla.) 2008) (Tjoflat and Black, Circuit Judges, and Restani, Judge)

Posted on November 6, 2008 by David Gauntlett

In a per curiam decision, the court found that a TCPA blast fax case triggered coverage for invasion of privacy but elected to certify the issue not yet addressed by any state court in Florida, as follows:

DOES A COMMERCIAL LIABILITY POLICY WHICH PROVIDES COVERAGE FOR “ADVERTISING INJURY,” DEFINED AS “INJURY ARISING OUT OF ... ORAL OR WRITTEN PUBLICATION OF MATERIAL THAT VIOLATES A PERSON'S RIGHT OF PRIVACY,” SUCH AS THE POLICY DESCRIBED HERE, PROVIDE COVERAGE FOR DAMAGES FOR VIOLATION OF A LAW PROHIBITING USING ANY TELEPHONE FACSIMILE MACHINE TO SEND UNSOLICITED ADVERTISEMENT TO A TELEPHONE FACSIMILE MACHINE WHEN NO PRIVATE INFORMATION IS REVEALED IN THE FACSIMILE?

Id. at *7.

In determining that the issue was properly certified, the court noted that virtually all cases, with few exceptions, had found potential coverage where the language was identical to that herein. Those reaching contrary views had other pertinent language, typically issued by St. Paul or a subsidiary entity. See *3 n.5 and collected cases.
 

It reversed the district court’s ruling on all matters, determining in accord with its earlier decision applying Georgia law, Hooters of Augusta, Inc. v. American Global Ins. Co., No. 04-11077, 157 Fed. Appx. 201, 210, 2005 WL 3292089 (11th Cir. (Ga.) 2005), that neither the willful penal acts exclusion nor breach of contract exclusion barred coverage.

The penal statute exclusion was logically limited to the statute giving rise to liability, Fla. Stat. § 365.1657, which is not a penal statute.

The court noted that the breach of contract exclusion does not clearly indicate who the applicable contracting parties must be for the exclusion to apply. The court found the insured’s reading reasonable and more obvious. The contract breach was between the claimant and the insured, not between the insured and Nextel, who sent the facsimile advertisements.
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