Yesterday, the Missouri federal court in Travelers Indem. Co. v. Max Margulis & Surrey Vacation Resorts, 2016 U.S. Dist. LEXIS 173420 (E.D. Mo. Dec. 15, 2016), held that coverage for an underlying Telephone Consumer Protection Act (“TCPA”) lawsuit for “robo” calls to cell phones was prohibited by the “unsolicited communications” endorsement. Because this endorsement is being used more often, and because it does not receive as much fanfare as its sister-exclusion for “Distribution of Material,” I decided to write about it here in The Coverage Inkwell.
The insured, Surrey Vacation Resorts, Inc., d/b/a Grand Crowne Resorts (“Surrey”), was sued for an alleged, unsolicited June 18, 2013 call to his cell phone through use of an automated telephone dialing system and without his prior consent. Id. at *1. Plaintiff filed suit under the TCPA, alleging that plaintiff “incurred ‘damages’ due to receipt of one telephone call from Surrey on June 18, 2013, which he did not specifically request to receive.” Id. at *6. The TCPA makes it unlawful “to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system…to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call….” Id. at *8. Travelers defended the insured under a reservation of rights and commenced coverage litigation. Id. at *1.
In the coverage action, the United States Court for the District of Missouri determined that Travelers had no duty to defend. First, it noted that many of the policies at issue had incepted and expired prior to the June 18, 2013, and therefore – as a matter of law – there could be no coverage under them. Id. at *6. (You would think this conclusion is a no-brainer, but you’d be surprised what some policyholders argue.)
Next, the court further held that there was no coverage under an “unsolicited communications” endorsement, which prohibited coverage for “injury or damage arising out of any actual or alleged violation of any law restricting or prohibiting the sending, transmitting, or distribution of ‘unsolicited communication’.” Id. at *6. The policies defined “unsolicited communications” as “any form of communication, including but not limited to facsimile, electronic mail, posted mail or telephone, in which the recipient has not specifically requested the communication.” Id. at *6-7. The court held that the underlying lawsuit fell squarely within the exclusion: because the TCPA prohibits unsolicited “robo” calls without prior consent, the statute “restricts or prohibits the sending, transmitting or distributing of ‘unsolicited communication’ as the phrase appears in the ‘Unsolicited Communications’ Endorsements.” Id. at *8.
What this case means: This is a straightforward case. What I found interesting is that the decision highlighted and discussed, albeit without much analysis, the unsolicited communications exclusion, an exclusion that may be added to a policy by endorsement to preclude coverage for the bombardment of unsolicited communications we received by fax, email, cell phone, and landline every day.