883 F.3d 881
10th Cir.2018Background
- Federal government and four states sued DISH alleging violations of the TCPA (and other telemarketing laws), seeking statutory damages ($500 per violation; $1,500 if willful) and injunctive relief to stop unlawful calls.
- DISH held CGL policies from ACE (Coverage A: bodily injury/property damage; Coverage B: personal & advertising injury) with a broadcaster/business-exclusion and, from 2006, a TCPA-specific exclusion in later policies.
- DISH tendered defense; ACE initially reserved rights, briefly paid $913,650, then filed a declaratory-judgment action seeking a ruling it had no duty to defend or indemnify.
- District court granted summary judgment for ACE, holding TCPA statutory damages are penalties (uninsurable under Colorado law), injunctive relief is not "damages" under the policies, and Coverage B’s broadcaster exception excluded DISH.
- Tenth Circuit reviewed de novo under Colorado law (applying Colorado Supreme Court precedents) and affirmed the district court: TCPA statutory damages are penal/uninsurable and injunctive relief here is not covered; ACE therefore had no duty to defend or indemnify.
Issues
| Issue | Plaintiff's Argument (DISH) | Defendant's Argument (ACE) | Held |
|---|---|---|---|
| Whether TCPA statutory damages are "damages" insurable under Colorado law | TCPA damages are liquidated/compensatory (or at least not categorically penal); if penal, ACE did not explicitly exclude penalties so coverage applies | TCPA statutory damages are penalties (per Colorado precedent) and Colorado public policy bars insuring penalties | Held: TCPA statutory damages are penalties under Colorado law (Kruse/T2 Techs.), uninsurable; no coverage |
| Whether the TCPA claim’s remedial component (actual monetary loss) or alternative pleading triggers duty to defend | State Plaintiffs alleged actual damages as an available remedy; thus a possibility of remedial, insurable damages exists | The complaint’s prayer sought only statutory damages ($500/$1,500) — not actual damages — so no claim for remedial damages appears on the face of the complaint | Held: Complaint sought statutory (penal) damages only; no plausible request for actual remedial damages to trigger duty to defend |
| Whether injunctive/equitable relief counts as "damages" under the policies | Injunctive relief costs (e.g., compliance costs) are equitable but can be "damages" and thus insurable (relying on broad meanings from Compass) | Policies cover sums legally obligated to pay as damages for past injury; injunctive relief here is prophylactic/preventive to avoid future violations, not remediation of past injury | Held: Injunctive relief requested is prophylactic to prevent future violations and does not constitute "damages" payable under the policies |
| Whether Coverage B’s broadcaster/business exclusion bars coverage | DISH argued policies could still cover TCPA claims under Coverage B | ACE argued DISH is in broadcasting/telemarketing business and so Coverage B’s advertising/broadcasting exception applies | Held: District court found DISH falls within broadcaster exception; Tenth Circuit affirmed on primary grounds (penalty/no damages) and did not need to resolve all alternative arguments; ACE had no duty to defend or indemnify |
Key Cases Cited
- Kruse v. McKenna, 178 P.3d 1198 (Colo. 2008) (Colorado Supreme Court holds TCPA statutory damages are penalties for assignability and establishes multi-factor test for penal vs. remedial)
- Compass Ins. Co. v. City of Littleton, 984 P.2d 606 (Colo. 1999) (insurance-policy interpretation principles; equitable cleanup costs can constitute "damages" when remediating past injury)
- Blackhawk-Central City Sanitation Dist. v. American Guar. & Liability Ins. Co., 214 F.3d 1183 (10th Cir. 2000) (duty-to-defend arises when complaint alleges any facts that arguably fall within coverage)
- Cotter Corp. v. American Empire Surplus Lines Ins. Co., 90 P.3d 814 (Colo. 2004) (duty-to-defend in anticipatory declaratory actions is determined from the face of the complaint)
- Lira v. Shelter Ins. Co., 913 P.2d 514 (Colo. 1996) (Colorado public policy prohibits insuring punitive damages)
- Bohrer v. Church Mutual Ins. Co., 965 P.2d 1258 (Colo. 1998) (Colorado public policy bars insuring intentional or willful wrongful acts)