Commercial General Liability Policy Covers ‘Blast’ Faxes: Florida Court

Insurance Journal

Commercial general liability CGL) insurance policies generally
cover liability for unsolicited “blast faxes” that violate federal law,
a Florida court has ruled.
The Supreme Court of Florida issued its ruling
Jan. 28 in a case involving a 2003 CGL policy provision on advertising
injuries and the Telephone Consumer Protection Act TCPA).
As a result, plaintiffs in a class action suit who sued Nextel South
Corp. for violating their privacy by sending 24,000 blast faxes may be
entitled to insurance benefits from Transportation Insurance Co.
Transportation had sold the CGL insurance policy at issue to Southeast
Wireless, an authorized agent of Nextel.
In June 2003, Michael Penzer filed a class action suit in a Florida
state court against Nextel South Corp., alleging that Nextel or one of
its agents sent him an unsolicited facsimile advertisement in violation
of the TCPA. Nextel in turn filed a third-party complaint against
Sunbelt, a blast-fax advertiser, and Southeast Wireless, an authorized
agent of Nextel, seeking indemnity and contributions for any liability
Nextel may have in the class action.
Nextel also alleged that Southeast Wireless hired Sunbelt to create
the advertisement and that Nextel did not authorize the fax
Penzer then filed a third-party complaint against Southeast Wireless
requesting that Transportation Insurance Co., its commercial liability
insurer, defend it in the class action. Transportation refused to
provide a defense for the class action suit or the Nextel complaint,
and also disclaimed any coverage.
The CGL policy provided coverage for advertising injuries and
included in its definition of “advertising injury” an injury arising
out of “oral or written publication of material that violates a
person’s right of privacy.”
Transportation argued that the phrase “oral or written publication
of material that violates a person’s right of privacy,” provided
coverage only for injuries to privacy rights caused by the content of
the material. Also, the insurer maintained that Florida law
interpreting the phrase “publication . . . in violation of an
individual’s right of privacy” makes clear that coverage exists only
when private matters about one person are communicated to another
Transportation contended that the phrase “that violates a person’s
right of privacy,” modifies the term “material,” as opposed to
“publication,” and thus can only apply when the content of the material
violates a person’s right of privacy. Only a violation of the secrecy
right of privacy will trigger coverage, not a violation of seclusion,
the insurer said.
Although Southeast’s conduct in having the commercial advertisements
sent by facsimile may have violated the TCPA, there was no coverage
under the policy because there were no content-based privacy
violations, according to the insurer.
One lower court agreed with Transportation that there was no
coverage, while on appeal the Eleventh Circuit court sided with Penzer
and found that neither the policy language nor Florida public policy
supported denial of coverage. The case then went to the state Supreme
The Supreme Court agreed with Penzer, finding that the “plain
meaning” of the CGL policy provision on advertising injury was to
provide coverage for a written publication of material that violates a
person’s right of privacy.
The court dismissed Transportation’s grammar-based argument. “Even
if the phrase ‘that violates a person’s right of privacy’ only modifies
the term ‘material,’ it does not follow that only the secrecy right to
privacy is implicated because ‘material’ could also invade one’s
seclusion,” the high court stated.
William G. Passannante of Anderson Kill & Olick, represented the
nonprofit advocacy group United Policyholders in filing an amicus brief
in support of finding coverage under the CGL.
“Given that many state courts that have made similar determinations,
it’s remarkable that insurance companies continue improperly to dispute
their clear obligation under liability insurance policies to cover
‘blast fax’ violations under TCPA,” Passannante said.

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Date: July 21, 2024