Motorists Mut. Ins. Co. v. Dandy-Jim, Inc., 92023

• Decision Date: 14 May 2009
• Docket Number: No. 92023,92023
• Citation: 912 N.E.2d 659,2009 Ohio 2270,182 Ohio App.3d 311
• Parties: MOTORISTS MUTUAL INSURANCE COMPANY, Appellant, v. DANDY-JIM, INC., d.b.a. Brookgate Tire & Auto Center, et al., Appellees.
• Court: Ohio Court of Appeals

912 N.E.2d 659

182 Ohio App.3d 311

2009-Ohio-2270

MOTORISTS MUTUAL INSURANCE COMPANY, Appellant, v. DANDY-JIM, INC., d.b.a. Brookgate Tire & Auto Center, et al., Appellees.

No. 92023

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

Decided May 14, 2009.

Day Ketterer, Ltd., and Merle D. Evans III, Canton, for appellant.

Kolick, Georgeadis & Ernewein Co., L.P.A., and David Kolick, Cleveland, for appellee Dandy-Jim, Inc.

Joseph R. Compoli Jr. and James R. Goodluck; and Paul W. Flowers Co., L.P.A., and Paul W. Flowers, Cleveland, for appellees Kevin Chambers, Dennis Dawson, Felix Fedor, and Ali Mohammadpour.

CHRISTINE T. McMONAGLE, Judge.

{¶ 1} This is an insurance-coverage case. We are asked to decide whether the trial court erred in ruling that plaintiff-appellant, Motorists Mutual Insurance Company ("Motorists"), was obligated to defend its insured, Dandy-Jim, Inc., in a suit alleging a violation of the federal Telephone Consumer Protection Act ("TCPA") due to the transmission of unsolicited facsimile advertisements. We find no error and affirm.

Background

{¶ 2} The TCPA, Section 227, Title 47, U.S.Code et seq., protects the privacy interests of persons by placing restrictions on unsolicited, automated telephone calls and unsolicited faxed advertisements.

{¶ 3} In 2007, defendants-appellees, Kevin Chambers, Dennis Dawson, Felix Fedor, and Ali Mohammadpour (collectively, the "claimants"), filed suit against Dandy-Jim, Inc., d.b.a. Brookgate Tire & Auto Center ("Dandy-Jim"). Claimants alleged that during the years 2001 through 2004, Dandy-Jim violated the TCPA by sending them unsolicited junk fax advertisements and, hence, they were entitled to statutory awards authorized by the TCPA. They sought statutory damages of $500 for each violation and statutory treble damages for "willful" or "knowing" violations.¹ The case was assigned case No. CV-583434.

{¶ 4} At the time of the activities alleged in the complaint, Dandy-Jim was insured under a commercial general liability policy issued by Motorists and, accordingly, tendered a claim for coverage under its policy. After receiving notice of the lawsuit, Motorists provided a defense to Dandy-Jim subject to a reservation of rights.

{¶ 5} Motorists subsequently filed this action for declaratory judgment (case No. CV-092023) against Dandy-Jim and the claimants, seeking a declaration that it did not have a legal or contractual obligation under the policy to provide coverage or a defense to Dandy-Jim for the claimants' allegations in case No. CV-583434. The trial court stayed case No. CV-583434 pending resolution of the coverage issues in case No. CV-092023.

{¶ 6} The claimants subsequently moved for summary judgment on the coverage issue, as did Motorists. The claimants argued that Motorists was obligated to defend Dandy-Jim under the "advertising injury" provision of Dandy-Jim's policy with Motorists, which provided coverage for injury arising out of the "oral or written publication of material that violates a person's right of privacy." Motorists, on the other hand, argued that no coverage existed under the "advertising injury" provision of the contract. The trial court subsequently granted the claimants' motion and ruled that "Motorists is obligated to defend the insured, Dandy-Jim, against any suit arising out of any violation of the TCPA regarding the transmission of unsolicited fax advertisements."

{¶ 7} Motorists now appeals from the trial court's judgment.

Discussion

I. Standard of Review

{¶ 8} Generally, summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Civ.R. 56(C); Zivich v. Mentor Soccer Club, Inc. (1998), 82 Ohio St.3d 367, 369-370, 696 N.E.2d 201; Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 364 N.E.2d 267. In this case, there is no issue of fact; the dispute before the court involves a question of law, that is, the interpretation of an insurance contract. Alexander v. Buckeye Pipe Line Co. (1978), 53 Ohio St.2d 241, 7 O.O.3d 403, 374 N.E.2d 146, paragraph one of the syllabus. Such questions are likewise appropriate for determination on summary judgment. Lovewell v. Physicians Ins. Co. of Ohio (1997), 79 Ohio St.3d 143, 145, 679 N.E.2d 1119. Questions of law are reviewed de novo. Id., citing Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm (1995), 73 Ohio St.3d 107, 108, 652 N.E.2d 684.

II. Interpretation of Insurance Contracts

{¶ 9} When interpreting a contract, a court should give effect to the intent of the parties to the agreement. Hamilton Ins. Serv., Inc. v. Nationwide Ins. Cos. (1999), 86 Ohio St.3d 270, 273, 714 N.E.2d 898. We examine the insurance contract as a whole and presume that the intent of the parties is reflected in the language used in the policy. Kelly v. Med. Life Ins. Co. (1987), 31 Ohio St.3d 130, 31 OBR 289, 509 N.E.2d 411, paragraph one of the syllabus. We give common words in the contract their plain and ordinary meaning "unless manifest absurdity results, or unless some other meaning is clearly intended from the face or overall contents of the instrument." Alexander, supra, at paragraph two of the syllabus. If the terms are susceptible of more than one interpretation, they will be construed strictly against the insurer and liberally in favor of the insured. Sharonville v. Am. Employers Ins. Co., 109 Ohio St.3d 186, 2006-Ohio-2180, 846 N.E.2d 833, ¶ 6.

III. Insurer's Duty to Defend

{¶ 10} "An insurer has an absolute duty to defend an action when the complaint contains an allegation in any one of its claims that could arguably be covered by the insurance policy." Id., ¶ 13, citing Sanderson v. Ohio Edison Co. (1994), 69 Ohio St.3d 582, 635 N.E.2d 19, paragraph one of the syllabus.

A. The Motorists Policy

{¶ 11} Under Section I of the policy, titled "Coverage B Personal and Advertising Injury Liability," Motorists promised that it would "pay those sums that the insured becomes legally obligated to pay as damages because of `personal and advertising injury' to which this insurance applies." The "Definitions" section of the policy defined "advertising injury," among other things, as "oral or written publication of material that violates a person's right of privacy." The policy did not define "publication," "material," or "right of privacy."

B. The Claimants' Second Amended Complaint

{¶ 12} The claimants' second amended complaint alleged that Dandy-Jim violated the TCPA by sending unsolicited advertisements via fax machine. It further alleged that Dandy-Jim "did not obtain `prior express invitation or permission' before sending these advertisements by fax." Thus, the complaint implicitly alleged a violation of the claimants' privacy interest in seclusion, even though it did not explicitly allege an invasion of the right to privacy.

{¶ 13} Accordingly, we must determine whether claimants' claims are covered claims of "advertising injury" under the policy provided by Motorists to Dandy-Jim. Specifically, did the trial court err in ruling that the sending of unsolicited faxes in alleged violation of the TCPA constitutes "oral or written publication of material that violates a person's right to privacy?"

C. Secrecy vs. Seclusion

{¶ 14} Ohio recognizes that the right of privacy includes both the right of seclusion and the right of secrecy. Housh v. Peth (1956), 165 Ohio St. 35, 59 O.O. 60 133 N.E.2d 340, paragraph one of the syllabus. A person asserting the privacy right of seclusion asserts the right to be free, in a particular location, from disturbance by others. Schuetz v. State Farm Fire & Cas. Co., 147 Ohio Misc.2d 22, 2007-Ohio-7267, 890 N.E.2d 374, ¶ 45, citing Am. States Ins. Co. v. Capital Assocs. of Jackson Cty., Inc. (2004 C.A.7), 392 F.3d 939, 941. A person claiming the privacy right of secrecy asserts the right to prevent disclosure of personal information to others. Schuetz at ¶ 45. The TCPA protects a person's privacy interest in seclusion. Valley Forge Ins. Co. v. Swiderski Elec., Inc. (2006), 223 Ill.2d 352, 366, 307 Ill.Dec. 653, 860 N.E.2d 307.

{¶ 15} Motorists first contends that there is no coverage for claimants' claims because the TCPA protects only against intrusions against an individual's right to seclusion, while the "advertising injury" coverage in its policy provides coverage only for intrusions against the secrecy aspect of the right to privacy. Specifically, Motorists argues that since "advertising injury" under the policy is defined as "oral or written publication of material that violates a person's right of privacy," (emphasis added), and publication is relevant only to the secrecy aspect of the right to privacy, there is no coverage.

{¶ 16} Motorists directs us to Am. States, 392 F.3d 939, and its progeny, to support its argument. In Am. States, the insurance policy at issue, like the policy in this case, defined "advertising injury" to include "oral or written publication of material that violates a person's right of privacy." Id. at 940. The Seventh Circuit Court of Appeals, interpreting Illinois law, found that the policy did not cover the seclusion interest affected by unsolicited fax advertisements because "[i]n a secrecy situation, publication matters * * * [whereas] [i]n a seclusion situation, publication is irrelevant." Id. at 942. The court reasoned that "[a] late-night knock on the door or other interruption can impinge on seclusion without any need for publication." Id.

{¶ 17} Am. States served as the basis for other decisions on which Motorists also relies to support its argument: specifically, Melrose Hotel Co. v. St. Paul Fire & Marine Ins. Co. (E.D.Penn.2006), 432 F.Supp.2d 488; Resource Bankshares Corp. v. St. Paul Mercury Ins. Co. (C.A.4, 2005), 407 F.3d 631; ACS Sys., Inc. v. St. Paul Fire & Marine Ins. Co. (2007), 147 Cal.App.4th 137, 53 Cal.Rptr.3d 786; and Erie Ins. Exchange v. Watts (S.D.Ind. 2006), No. 1:05-CV-867-JDT-TAB, 2006 WL...