990 F.3d 1073
7th Cir.2021Background
- Zurich insured Ocwen under commercial general liability policies (2010–2016) that excluded coverage for injuries "arising out of" violations of the TCPA, CAN-SPAM, FCRA, and other statutes regulating communication or personal information.
- Tracy Beecroft sued Ocwen alleging ~58 robocalls to her cellular phone (and additional calls to her home), claiming violations of the TCPA and FDCPA, plus common-law defamation and invasion of privacy, and alleging emotional and financial harm.
- Beecroft’s amended complaints alleged she answered two calls and there was a delay before an operator came on the line (allegedly indicating use of an ATDS), and later named specific dialer systems as used.
- Ocwen tendered defense to Zurich; Zurich refused and sought a declaratory judgment that the policy exclusions removed any duty to defend or indemnify; the district court agreed and entered judgment for Zurich.
- On appeal Ocwen conceded the district court’s analysis of Counts I–IV and argued only that the common-law invasion-of-privacy claim (Count V) potentially alleged conduct outside the exclusions (live-operator home calls, manually dialed cell calls, or negligent rather than intentional calls).
- The Seventh Circuit applied Illinois law: insurer must defend if any pleaded theory potentially falls within coverage; exclusions are construed against the insurer, but "arising out of" language is read broadly as a but-for link that sweeps in claims deriving from the same underlying conduct.
Issues
| Issue | Plaintiff's Argument (Ocwen) | Defendant's Argument (Zurich) | Held |
|---|---|---|---|
| Whether the complaint alleges live-operator calls to Beecroft’s home (so no TCPA violation) | Complaint references calls to a home phone and separately describes two answered calls; those could be live-operator home calls | The two answered calls are part of the 58 ATDS cell-phone calls; complaint ties the answered calls to the cell-phone set, not a separate live-operator home-call set | No — fair reading links the answered calls to the ATDS cell-phone calls, not live-operator home calls |
| Whether some cell calls were manually dialed (so no ATDS/TCPA violation) | “Some or all” language allows that some calls were not made with an ATDS | Complaint expressly alleges that some or all of the 58 cell-phone calls were made using specified ATDS systems; context distributes the 58 calls among systems, not excluding calls from the ATDS allegation | No — the complaint alleges ATDS use for the cell-phone calls; it does not plausibly reserve a subset of manually dialed cell calls |
| Whether Beecroft’s use of "intentionally and/or negligently" prevents inferring FDCPA intent to annoy/harass | The "negligently" qualifier shows some calls lacked the requisite intent for FDCPA liability | The complaint alleges repeated calls and continued calling after Beecroft asked Ocwen to stop, supporting an inference of intent to annoy/harass | Held: Court reasonably infers intent from repeated calls and continued calling after a stop request; FDCPA-based exclusion applies |
| Whether the policy’s "arising out of" exclusion bars the common-law invasion-of-privacy claim | The common-law claim could be based on separate, nonstatutory conduct | The common-law claim arises from the same factual predicate (the calls) that allegedly violated enumerated statutes, so the exclusion applies | Held: The exclusion’s broad but-for "arising out of" language sweeps in common-law claims that derive from the same operative facts; no duty to defend |
Key Cases Cited
- G.M. Sign, Inc. v. State Farm Fire & Cas. Co., 18 N.E.3d 70 (Ill. App. Ct. 2014) (interpreting an information/TCPA exclusion to bar common-law claims that arise from the same TCPA-related conduct)
- ProLink Holdings Corp. v. Fed. Ins. Co., 688 F.3d 828 (7th Cir. 2012) (insurer’s duty to defend assessed by whether complaint’s facts potentially fall within coverage)
- Health Care Indus. Liab. Ins. Program v. Momence Meadows Nursing Ctr., 566 F.3d 689 (7th Cir. 2009) (courts look to pleaded facts, not labels, to determine duty to defend)
- Title Indus. Assurance Co. v. First Am. Title Ins. Co., 853 F.3d 876 (7th Cir. 2017) (single covered theory in complaint triggers duty to defend)
- Pekin Ins. Co. v. XData Sols., Inc., 958 N.E.2d 397 (Ill. App. Ct. 2011) (policy terms and complaint allegations are liberally construed for the insured)
- Evergreen Real Estate Servs., LLC v. Hanover Ins. Co., 142 N.E.3d 880 (Ill. App. Ct. 2019) (exclusionary clauses must be clear and free from doubt to relieve an insurer of defense duties)
- U.S. Fid. & Guar. Co. v. Wilkin Insulation Co., 578 N.E.2d 926 (Ill. 1991) (insurer duty to defend exists if any theory of recovery alleges potential coverage)
- Lexmark Int'l, Inc. v. Transp. Ins. Co., 761 N.E.2d 1214 (Ill. App. Ct. 2001) (give little weight to legal labels; focus on pleaded facts)
- Knox Coll. v. Celotex Corp., 430 N.E.2d 976 (Ill. 1981) (pleader must state the essential facts; bare legal conclusions are insufficient)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (complaints must plead factual enhancement beyond naked assertions)