W. Heritage Ins. Co. v. Fun Servs. of Kan. City, No. 14-2587 (8th Cir. 2015)
Annotate this CaseAsphalt hired a company that, from 2005-2008, sent about 44,000 fax advertisements to potential customers. FS, which received some of the faxes, filed a class-action, alleging violation of the Telephone Consumer Protection Act, 47 U.S.C. 227, seeking statutory damages of $500 for each fax. Asphalt notified Western, its insurer during the time when roughly 33,000 faxes were sent. The policies contained a deductible of $1,000 “per claim” for property damage, personal, and advertising injury, applicable to “all damages sustained by one person or organization as the result of any one claim” and to “legal expenses incurred in the handling and investigation of each claim.” Western hired a law firm to represent Asphalt, but did not refer to a reservation of rights. The firm handled the defense for four years. Western sent another letter, stating that Western intended to defend subject to a reservation of rights. Western sought a declaration that it owed no duty to defend or to indemnify. The district court determined that FS lacked standing to bring counterclaims and that Western had a duty to defend, having waived its defenses by waiting four years to issue a reservation-of-rights letter. The Eighth Circuit affirmed, holding that Western did not waive the $1,000 deductible, which applies separately to each fax, so that there is also no duty to indemnify.
Court Description: Gruender, Author, with Wollman, Circuit Judge, and Doty, District Judge] Civil case - Insurance. In this declaratory judgment action to determine whether Western had a duty to indemnify and defend its insured in an action brought by Fun Services for damages related to its receipt of the insured's junk faxes, Fun Services did not have standing under Missouri law to bring counterclaims regarding the meaning of the policies because it had not yet obtained a judgment against Western's insured; deductible endorsements operate more like a policy limit that a defense to coverage and Western's failure to issue a reservation of rights did not waive its ability to enforce the deductible endorsements; the district court did not err in determining that the $1,000 deductible amount applies separately to each fax and did not err in determining that damages and legal expenses could not exceed $1,000; even if the ordinary person could define "claim" to include multiple faxes sent to one class member during a policy year, Fun Services failed to raise a genuine issue of material fact about whether any class member received more than one fax in a policy year, and the district court did not err in granting summary judgment to Western on the duty-to-indemnify issue. [ July 29, 2015
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