Redial; Third Circuit Again Rules That TCPA Claims Are Not Covered Under A CGL Policy

On January 9, 2014, the Third Circuit Court of Appeals again held that an insurance policy issued to class action defendants did not provide coverage for a claim brought under the Telephone Consumer Protection Act (TCPA). Nationwide Mutual Insurance Co. v. David Randall Associates, Inc., No. 13-1515 (U.S. Court of Appeals for the Third Circuit, January 9, 2014) (unpublished opinion). The case arose out a 2011 putative class action lawsuit filed by City Select Auto Sales, Inc. ("CSAS") against David Randall Associates, Inc. (Randall) and its director, Raymond H. Miley (Miley). CSAS alleged that Randall and Miley violated the TCPA by sending unsolicited facsimile advertisements. The complaint specifically alleged that Miley:

approved, authorized and participated in a scheme to broadcast faxes by (a) directing a list to be purchased and assembled; (b) directing and supervising employees and third parties to send the faxes; (c) creating and approving the form of faxes to be sent; (d) determining the number and frequency of the facsimile transmissions; and (e) approving and paying third parties to send the faxes.

CSAS further alleged that Randall and Miley:

knew or should have known that (a) Plaintiff and the other class members had not given express invitation or permission for Defendants or anybody else to fax advertisements about Defendants' goods or services, (b) that Plaintiff and the other class members did not have an established business relationship, and (c) that [the faxes sent by the Defendants were] an advertisement.

Randall and Miley were insured under a commercial general liability policy issued by Nationwide Mutual Insurance Company (Nationwide), which provided coverage for "bodily injury" and "property damage," but only if such damage was caused by an "occurrence." An "occurrence" was defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." "Bodily injury' or 'property damage' expected or intended from the standpoint of the insured" was excluded from coverage.

Nationwide denied the insureds' claim for coverage and filed a declaratory judgment action in federal court in Pennsylvania. The District Court granted Nationwide's motion for summary judgment, finding that the transmission of unsolicited faxes was intentional and therefore not covered under the policy. The insureds appealed to the Third Circuit.

The Court began its analysis by noting: "In Pennsylvania damages...