UNSOLICITED FAXES - INCLUDING TREBLE DAMAGES

COVERED UNDER "ADVERTISING INJURY" PROVISIONS OF COMMERCIAL INSURANCE POLICY

Motorist Mutual Insurance Company v. Dandy-Jim, Inc. et al., (May 14, 2009), 8th District Court of Appeals.

In Motorist Mutual, the insured allegedly sent numerous unsolicited facsimilies in violation of the TCPA. The insured submitted the claims to it's insurer, Motorist Mutual and demanded coverage under the "advertising injury" provisions of the policy. The Court of Appeals agreed and found coverage despite Motorist Mutual's arguments that: (i) certain exclusions applied; (ii) there was no triggering event under the coverage; and (iii) the nature of the claims were not within the ambit of the definition of "advertising injury."

The most interesting part of the decision in Motorist Mutual was that the treble damages authorized by the TCPA, and sought by the claimants, were not punitive in nature and were also covered under the policy. The Court reasoned that the claimants were not seeking punitive damages. Rather, they are "seeking damages under the TCPA. The amounts of such damages are specified by the statute. The TCPA provides for the higher of actual damages, or damages of $500 per violation. 47 U.S.C. §227(b)(3)(B). The award may be increased to "not more than 3 times the amount available under subparagraph (B)" if the violation was committed "willfully or knowingly." 47 U.S.C. §227(b)(3)."

"Motorists offered no evidence that Congress intended TCPA damages to be punitive in nature. To the contrary, the purpose of the statutory damage provision of the TCPA is to "liquidate uncertain actual damages and to encourage victims to bring suit to redress violations." In addition, damages under the TCPA are "set to be fair." Hence, the TCPA is a remedial law. "

"The public policy prohibiting the protection of insurance for punitive damages stems from the underlying assumptions that an individual should not be able to escape punishment for his or her intentionally malicious acts and that the deterrent effect of punitive damages would be diminished if tortfeasors can be indemnified against them. ... However, no showing of intentional malice is required to obtain treble damages under the TCPA if the fax advertisements were sent "willfully." "[T]o establish a willful violation of the TCPA for an award of treble damages, a plaintiff must prove that the defendant consciously and deliberately committed or omitted an act that violated the statute, irrespective of any intent to violate the law." Thus, a willful or knowing violation of the TCPA is different from an intentionally malicious act that could give rise to punitive damages."

"As the treble damage provision of the TCPA is not punitive in nature, we find no public policy prohibiting insurance coverage for treble damages under the TCPA."