Park University Enters v. American Cas. Co.

• Decision Date: 27 March 2006
• Docket Number: No. 04-3197.,04-3197.
• Citation: 442 F.3d 1239
• Parties: PARK UNIVERSITY ENTERPRISES, INC., Plaintiff-Appellee, v. AMERICAN CASUALTY COMPANY OF READING, PA, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1239

442 F.3d 1239

PARK UNIVERSITY ENTERPRISES, INC., Plaintiff-Appellee, v. AMERICAN CASUALTY COMPANY OF READING, PA, Defendant-Appellant.

No. 04-3197.

United States Court of Appeals, Tenth Circuit.

March 27, 2006.

COPYRIGHT MATERIAL OMITTED

Andrew Butz of Bonner Kiernan Trebach & Crociata, Washington, DC (William H. White, Jr. and Jeffrey M. Koonankeil of Bonner Kiernan Trebach & Crociata, Washington, DC; and Barry W. McCormick of McCormick, Adam & Long, Overland Park, KS, with him on the briefs), for Defendant-Appellant.

Thomas M. Van Camp of Van Camp, Meacham & Newman, PLLC, Pinehurst, NC (Heywood H. Davis of Dicus, Davis, Sands & Collins, PC, Kansas City, MO with him on the brief), for Plaintiff-Appellee.

Before BRISCOE, SEYMOUR, and ANDERSON, Circuit Judges.

SEYMOUR, Circuit Judge.

Park University Enterprises, Inc. (Park University) was sued in a state court class action by JC Hauling Company (JC Hauling) for alleged violations of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, a federal statute that bans unsolicited fax advertisements. Park University's insurer, American Casualty Company of Reading, Pa. (American), declined to provide any defense or coverage in the action. Park University filed this action seeking a declaratory judgment that American has a duty to defend it in the underlying state court suit. On cross-motions for partial judgment on the pleadings, the district court concluded that American does owe Park University a defense, Park Univ. Enters., Inc. v. Am. Cas. Co. of Reading, PA., 314 F.Supp.2d 1094 (D.Kan.2004), and certified that decision as final under FED.R.CIV.P. 54(b). We affirm.¹

I

The TCPA makes it "unlawful for any person ... to use any telephone facsimile machine, computer, or other device to send an unsolicited advertisement to a telephone facsimile machine." 47 U.S.C. § 227(b)(1)(c). It defines an "unsolicited advertisement" as "any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission." Id. § 227(a)(4). The act creates a private right of action that permits recipients of unwanted faxes to seek injunctions and damages, and allows courts to grant treble damages if they find a fax sender has acted "willfully or knowingly." Id. § 227(b)(3).

JC Hauling filed suit in Illinois state court alleging that Park University violated the TCPA when it sent an advertisement to JC Hauling's telephone fax machine in Illinois "without prior express invitation or permission." Aplt.App. at 81. It brought the suit as a class action consisting of "all individuals who received unsolicited advertisements" via fax from or on behalf of Park University. Id. JC Hauling sought an injunction and treble damages, contending that Park University's actions were "willful and knowing" and that it "knew or should have known that it did not have the prior express invitation or permission of Plaintiff and the other members of the Class to send the advertisements and knew or should have known that its actions constitute a violation of law." Id. at 82-83. In response, Park University asserted that any fax advertisements it sent to JC Hauling were not unsolicited because Park University had an existing business relationship with JC Hauling or, in the alternative, it had prior express invitation or permission from JC Hauling to send the fax advertisement. Specifically, Park University contended that any fax it had sent to JC Hauling was addressed to Patty Evansco, one if its employees, who had registered for one of Park University's seminars while acting in the scope of her employment and had supplied JC Hauling's fax number to Park University. Consequently, Park University denied intentionally violating the TCPA.

Park University has a commercial general liability insurance policy with American and sought a defense and coverage upon JC Hauling's instigation of the state class action suit. American declined to provide either, prompting Park University to bring the instant action. Park University contends the insurance company owes it a defense under two different provisions of its policy: 1) "property damage" liability coverage; and 2) "advertising injury" liability coverage.²

The property damage provision of the policy states:

A. Bodily Injury and Property Damage Liability

1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages.

b. This insurance applies to "bodily injury" and "property damage" only if... [t]he "bodily injury" or "property damage" is caused by an "occurrence"....

Id. at 68 (emphasis added). "Property damage" includes the "[l]oss of use of tangible property that is not physically injured...." Id. at 79. The policy defines an "occurrence" as an "accident, including continuous or repeated exposure to substantially the same general harmful conditions." Id. at 78. It does not, however, define the terms "loss of use" or "accident." Finally, the policy excludes coverage for "`property damage' expected or intended from the standpoint of the insured." Id. at 68 (emphasis added).

The advertising injury provision states in relevant part:

B. Personal and Advertising Injury Liability

1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "personal and advertising injury" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages.

Id. at 71. The policy defines "advertising injury" as "injury, including consequential `bodily injury', arising out of ... [o]ral or written publication of material that violates a person's right of privacy." Id. at 78 (emphasis added). The terms "oral or written publication" and "right of privacy" are not defined. The policy characterizes an "advertisement" as "a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters." Id. at 76.

Both parties moved for partial judgments on the pleadings pursuant to FED. R.CIV.P. 12(c). The district court concluded that American has a duty to defend Park University in the state action under the property damage and the advertising injury provisions of the policy. Park Univ. Enters., 314 F.Supp.2d at 1111. We address each issue in turn.

II

We review a district court's grant of a motion for judgment on the pleadings de novo, using the same standard that applies to a Rule 12(b)(6) motion. See Aspenwood Inv. Co. v. Martinez, 355 F.3d 1256, 1259 (10th Cir.2004). So doing, we accept all facts pleaded by the nonmoving party as true and grant all reasonable inferences from the pleadings in favor of the same. Judgment on the pleadings should not be granted "unless the moving party has clearly established that no material issue of fact remains to be resolved and the party is entitled to judgment as a matter of law." United States v. Any & all Radio Station Transmission Equip., 207 F.3d 458, 462 (8th Cir.2000). As with our practice for motions to dismiss under Rule 12(b)(6), documents attached to the pleadings are exhibits and are to be considered in our review of the district court's grant of Park University's Rule 12(c) motion. See Hall v. Bellmon, 935 F.2d 1106, 1112 (10th Cir.1991); FED.R.CIV.P. 10(c).

Our primary task is to construe the insurance policy between Park University and American. Because this case arises under our diversity jurisdiction, we apply Kansas' choice-of-law principles. Trierweiler v. Croxton & Trench Holding Corp., 90 F.3d 1523, 1532 (10th Cir.1996). "Kansas follows the general rule that the law of the state where the insurance contract is made controls." Safeco Ins. Co. of Am. v. Allen, 262 Kan. 811, 941 P.2d 1365, 1372 (1997). The policy in this case was made for Park University in Kansas and was delivered to it there. As a result, we apply Kansas law. Like any other contract, the language of an insurance policy is construed to give effect to the intention of the parties. Catholic Diocese of Dodge City v. Raymer, 251 Kan. 689, 840 P.2d 456, 459 (1992). If a policy is unambiguous, the intention of the parties and the meaning of the contract are determined from the instrument itself. Wolfgang v. Mid-Am. Motorsports, Inc., 111 F.3d 1515, 1524 (10th Cir.1997) (applying Kansas law). Under Kansas law, the test for determining the meaning of an insurance policy's language is what a reasonable person in the position of the policyholder would understand the language to mean. See Farm Bureau Mut. Ins. Co. v. Horinek, 233 Kan. 175, 660 P.2d 1374, 1378 (1983). Moreover, the duty to defend under an insurance policy is not necessarily coextensive with the duty to indemnify. Spivey v. Safeco Ins. Co., 254 Kan. 237, 865 P.2d 182, 188 (1993). Rather, an insurer's duty to defend arises "whenever there is a `potential of liability' under the policy." Id.; see also State Farm Fire & Cas. Co. v. Finney, 244 Kan. 545, 770 P.2d 460, 466 (1989). "The insurer determines if there is a potential of liability under the policy by examining the allegations in the complaint or petition and considering any facts brought to its attention or which it could reasonably discover." Spivey, 865 P.2d at 188 (emphasis added). With these principles in mind, we turn to the policy provisions.

A. Property Damage

Under the property damage provision at issue here, a duty to defend arises if a plaintiff contends that "loss of use of tangible property" was caused by an "occurrence." American agrees that sending an unsolicited fax can result in "loss of use of tangible property." Here, JC Hauling lost the use of its...