Invasion of Privacy Exclusion Bars Coverage for TCPA Action and Settlement

From Squire Patton Bogg’s Insurance and Reinsurance Disputes Blog

Where an insurance policy has an express exclusion for Telephone Consumer Protection Act (“TCPA”) claims it is pretty clear that coverage will not be available.  But where the insurance policy does not have an express TCPA exclusion, does an Invasion of Privacy Exclusion bar coverage for alleged TCPA violations?  A Florida federal court recently found that there is no coverage for a TCPA claim where the policy has an Invasion of Privacy Exclusion.

In Horn v. Liberty Insurance Underwriters, Inc., No. 9:18-CV-80762 (S.D. Fla. May 30, 2019), class action plaintiffs were assigned a TCPA defendant’s rights and interest in an insurance policy after a settlement and consent judgment was entered into in the underlying TCPA class action.  The TCPA defendant’s assignees, brought a declaratory judgment and breach of contract action seeking recovery of the consent judgment from the insurance policy.

The insurance policy had an exclusion “based upon, arising out of, or attributable to any actual or alleged . . . invasion of privacy . . . .”  The question before the court was whether a TCPA violation arose out of or is considered a violation of privacy for the purposes of analyzing insurance coverage and, if so, whether the exclusion bars the entire action.  The court found that a violation of the TCPA may in some circumstances be considered an invasion of privacy.  The court analyzed the Florida Supreme Court’s decision in Penzer v. Transportation Insurance Co., 20 So. 3d 1000 (2010), and found that it provided support for a reading that the Invasion of Privacy exclusion excludes TCPA violations, as a form of invasion of privacy, from coverage.  The court looked to other decisions as well and concluded that the policy in this case excluded claims that arise out of an invasion of privacy.  The court found a nexus between the underlying TCPA class action and its causes of action and an actual or alleged invasion of privacy.  Thus, when the court read the case law cited and considered the broadness of the phrase “arising out of,” the court found that the TCPA violations at issue in this case arose out of an invasion of privacy and, therefore, were excluded from coverage under the Invasion of Privacy exclusion in the policy.

The court went on to exclude the entire underlying TCPA class action from coverage because all the claims arose out of TCPA violations that invaded the class action plaintiffs’ privacy.  The court concluded that the policy’s broad exclusion barring coverage for claims arising out of an actual or alleged invasion of privacy precludes coverage in this case entirely.  Accordingly, the assignment to the TCPA class action plaintiffs of the TCPA defendant’s rights under its insurance policy provided no benefit as the policy provided no coverage for the underlying TCPA class action settlement agreement.

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