Eleventh Circuit: Exclusion Bars Coverage for Junk Fax Suit

April 30, 2014 | Insurance Coverage

The U.S. Court of Appeals for the Eleventh Circuit has ruled that an exclusion in a commercial general liability insurance policy for violations of any statute that addresses transmitting any material or information (the “Exclusion”) barred coverage of a “junk fax” lawsuit against the insured for allegedly violating the federal Telephone Consumer Protection Act (the “Act”).

The Case

After Interline Brands, Inc., was sued for sending unwanted “junk” faxes in violation of the Act, Interline gave its commercial general liability insurance carrier notice of the lawsuit and requested defense and indemnity under the policy. The insurer denied coverage, stating that the suit fell within the Exclusion.

Interline then sued the insurer, alleging breach of contract. The district court ruled that the insurer had no duty to defend or indemnify Interline because the Exclusion controlled. Interline appealed.

The Eleventh Circuit’s Decision

The circuit court affirmed the district court’s decision.

In its ruling, the circuit court first found that, under applicable Florida law, the Exclusion was not ambiguous. The circuit court decided that “[a]ny reasonable interpretation” of the Exclusion’s language, which stated “[t]his insurance does not apply to … any act that violates any statute … that includes, addresses or applies to the sending, transmitting or communicating of any material or information, by any means whatsoever,” excluded coverage for violations of the Act.

Then, the Eleventh Circuit ruled that the exclusion was not void for being against public policy given that, even with the exclusion, the policy still contained “extensive coverage.” As the circuit court concluded, the policy provided “a wide range of coverage for bodily injury and property damage liability, personal and advertising injury liability, medical payments, and pollution legal liability.”

The case is Interline Brands, Inc. v. Chartis Specialty Ins. Co., No. 13-10025 (11th Cir. April 15, 2014).

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