The United States District Court for the Middle District of Florida recently issued an Order denying coverage to an insured for an underlying class action suit alleging violations of the Telephone Consumer Protection Act of 1991, as amended by the Junk Fax Prevention Act of 2005. See Interline Brands, Inc. v. Chartis Specialty Insurance Company, No. 3:11-cv-731-J-25JRK (M.D. Fla. November 21, 2012). The insured filed the action seeking personal and advertising injury coverage under a series of general liability policies.
Among other points of contention in the coverage lawsuit, the insured argued that a statutory exclusion in the policies was inapplicable because the exclusion only applied to “violations” of statutes. In other words, because there had been no adjudication of liability in the underlying suit of any statute, the insured contended the exclusion did not apply. In response, however, the court had little difficulty finding the insured’s argument meritless, reasoning in part as follows:
The Court cannot find legal precedence to rewrite the insurance contract to necessitate there being an “adjudged violation” for the exclusion to apply. Instead, the Court construes the Exclusion to require the underlying Complaint against the insured to sufficiently allege a violation of a strict liability law, statute or ordinance. The plain intention of the Violation of Statutes Exclusion is that if the insured desires additional coverage for claims resulting from violations of law, the insured must simply pay a premium for it.
As a result, because the court found that the allegations in the underlying complaint were not even potentially within the relevant policies’ coverage (due to the presence of the statutory exclusion within the policies), the court held that the insurer was under no duty to defend or indemnify.
A copy of the district court’s Order can be found here.
