The U.S. Court of Appeals for the Eleventh Circuit recently affirmed a trial court’s ruling that, under Florida law, a policy exclusion that barred coverage for claims arising out of an invasion of privacy also unambiguously excluded coverage for claims alleging violations of the federal Telephone Consumer Protection Act, when the complaint specifically mentioned invasions of privacy.
A copy of the opinion in Horn v. Liberty Insurance Underwriters, Inc. is available at: Link to Opinion.
The plaintiffs were a class of consumers that sued a company for sending unsolicited text messages, asserting two causes of action under the TCPA. After the plaintiffs filed suit, the defendant company sought coverage for the claims under its insurance policy, but the insurer denied the request.
Relevantly, the insurance policy contained an exclusion that provided that the insurer “shall not be liable . . . for Loss on account of any Claim made against [the company] . . . based upon, arising out of, or attributable to any actual or alleged . . . invasion of privacy.”
The company then settled the TCPA lawsuit. In exchange for the class plaintiffs’ promise not to enforce the judgment against the company, the company admitted to liability for monetary damages, settled the suit, and assigned all of its rights against the insurer to the plaintiffs.
When the plaintiffs attempted to enforce the judgment against the insurer, the trial court determined that the insurance policy did not cover the settled class claims because the TCPA causes of action were “[c]laims . . . arising out of . . . an invasion of privacy.” The class plaintiffs timely appealed.
On appeal, the class plaintiffs argued that the class action was not excluded from coverage by the invasion of privacy exclusion because: (1) the class action alleged harms other than invasion of privacy; (2) TCPA claims do not include an element of invasion of privacy; and (3) at the very least, the exclusion was ambiguous and should have been resolved in favor of coverage.
The Eleventh Circuit determined that, under Florida law, it must read the insurance policy “as a whole, endeavoring to give every provision its full meaning and operative effect.” Auto–Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000). Additionally, the Court observed “that insurance coverage must be construed broadly and its exclusions narrowly.” Hudson v. Prudential Prop. & Cas. Ins. Co., 450 So. 2d 565, 568 (Fla. 2d Dist. Ct. App. 1984). Given that general rule, the Court held that ambiguities are to be construed against the insurer and in favor of coverage, but “to allow for such a construction the provision must actually be ambiguous.” Taurus Holdings, Inc. v. U.S. Fid. & Guar. Co., 913 So. 2d 528, 532 (Fla. 2005).
To give the invasion of privacy exclusion its “full meaning and operative effect,” the Eleventh Circuit focused its analysis on three of the operative terms in the exclusion: (1) “Claim”; (2) “arising out of”; and (3) “invasion of privacy.”
The Eleventh Circuit concluded that the insurance policy itself clearly defined the term “Claim” as “a civil proceeding against any Insured commenced by the service of a complaint or similar pleading.” In this instance, therefore, the Court held that the claim was the civil proceeding against the company commenced by the service of the class action complaint.
Accordingly, in the Court’s view, if any of the allegations of the complaint were excluded from coverage, the entire lawsuit was excluded, even if the complaint contained allegations that would otherwise be covered.
Second, the Eleventh Circuit noted that the Supreme Court of Florida has interpreted the phrase “arising out of” broadly and held that it is “broader in meaning than the term ‘caused by’ and means ‘originating from,’ ‘having its origin in,’ ‘growing out of,’ ‘flowing from,’ ‘incident to’ or ‘having a connection with.’” Taurus Holdings, 913 So. 2d at 539. Thus, the Court concluded that Florida’s broad interpretation of the phrase “arising out of” meant that if the class action even “had a connection with” the invasion of privacy, the lawsuit fell under the invasion of privacy exclusion. See id.
Lastly, the Eleventh Circuit concluded that the class action arose out of an “invasion of privacy” because the class complaint specifically alleged that the company intentionally invaded the class members’ privacy and sought recovery for those invasions.
The class plaintiffs argued that the invasion of privacy exclusion was ambiguous and should have been construed in favor of coverage because one reasonable interpretation was that, by listing multiple common law tort causes of action but not statutory causes of action like the TCPA, the exclusion did not reach a TCPA claim.
The Eleventh Circuit was not persuaded by this argument because the insurance policy did not specifically tie the invasion of privacy exclusion to claims alleging those listed tort causes of action. Instead, it broadly excluded “civil proceedings” “arising out of” an “invasion of privacy.” The Court explained that, when it construed the policy “as a whole” and “[gave] meaning to each of its provisions,” the invasion of privacy exclusion unambiguously excluded the class action—which is a civil proceeding arising out of an invasion of privacy—from coverage. Auto–Owners Ins. Co., 756 So. 2d at 34.
Therefore, although the Eleventh Circuit acknowledged that “invasion of privacy” is the name of a common law tort, it decided that it could not simply analyze the phrase without heeding the interpretive constraints imposed by the other terms in the policy.
Accordingly, because the invasion of privacy exclusion barred coverage for the class action, the Eleventh Circuit affirmed the trial court’s grant of summary judgment in favor of the insurer.