Nationwide Mutual Insurance v. Harris Medical Associates, LLC
973 F. Supp. 2d 1045
E.D. Mo.2013Background
- Insurers (Nationwide entities) seek declaratory judgment that they owe no duty to defend insured Harris Medical against St. Louis Heart’s suit alleging TCPA violations and common‑law conversion for six unsolicited fax advertisements. Plaintiffs currently defend Harris under a reservation of rights.
- Policies at issue: consecutive Nationwide primary Businessowners/Property policies (Feb 13, 2007–Mar 13, 2010) and a Nationwide Mutual Fire commercial umbrella (Sept 4, 2009–Feb 13, 2010).
- Primary policies provide coverage for "property damage" caused by an "occurrence" and for "personal and advertising injury," but include an endorsement excluding coverage for claims "arising directly or indirectly out of any action or omission that violates or is alleged to violate" the TCPA or other statutes limiting electronic/fax/phone distribution.
- Umbrella policy provides excess coverage and contains a similar "Violation of Consumer Protection Statutes" exclusion; Coverage B applies only if the underlying 2009 primary policy affords no coverage.
- Plaintiffs moved for judgment on the pleadings; defendants contend the conversion claim may be independently covered, choice of law (Missouri v. Georgia) is unresolved, and class allegations could bring some faxed acts within policy periods.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TCPA claims are covered | Exclusion expressly bars coverage for claims alleging TCPA violations | TCPA claims potentially fall under "advertising/personal injury" or "property damage" provisions | Exclusion unambiguously bars TCPA claims; no potential coverage for TCPA count |
| Whether conversion claims are excluded as "arising out of" TCPA | Conversion arises from same fax conduct and is therefore excluded by the Violation of Statutes endorsement | Conversion is a distinct common‑law tort with different elements and can be covered; exclusion targets statutory violations only | Court denies judgment for plaintiffs — unresolved whether exclusion bars conversion because choice‑of‑law and interpretive issues remain; insurer bears exclusion burden |
| Whether acts occurred outside policy periods | Faxes alleged sent in 2011, after policies expired, so no coverage | Under proposed class definition, class may include recipients back to Aug 28, 2007, bringing some claimed acts within policy periods | Plaintiffs not entitled to judgment; potential class-period claims could fall within policies |
| Whether "property damage"/"occurrence" coverage applies | Sending a fax is intentional, not an "accident," and damage (paper/toner) was expected or intended, so no occurrence or coverage | Petition alleges negligent conduct or lack of intent to injure; "occurrence" focuses on whether injury was intended, not whether fax was deliberately sent | Court declines judgment; Missouri precedent (Columbia Casualty) supports denying judgment where negligent conduct is alleged; choice of law could affect analysis |
Key Cases Cited
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (federal court must apply forum state choice‑of‑law rules)
- McCormack Baron Mgmt. Servs., Inc. v. American Guarantee & Liab. Ins. Co., 989 S.W.2d 168 (Mo. 1999) (insurer’s duty to defend where complaint potentially alleges covered claim)
- Columbia Cas. Co. v. HIAR Holding, L.L.C., 411 S.W.3d 258 (Mo. 2013) (in TCPA junk‑fax case, coverage inquiry examines whether insured intended to cause harm)
- Krombach v. Mayflower Ins. Co., Ltd., 827 S.W.2d 208 (Mo. 1992) (unambiguous insurance policy language enforced as written)
- Ashcroft v. Iqbal, 556 U.S. 662 (2010) (legal conclusions not assumed true on pleading motions)
- Erie R. Co. v. Tompkins, 304 U.S. 64 (1938) (federal courts in diversity apply state substantive law)