Park Univer. Enter. v. Am. Cas. Co., Reading, Pa.
| Citation | 314 F.Supp.2d 1094 |
| Decision Date | 15 April 2004 |
| Docket Number | No. 03-2522-GTV.,03-2522-GTV. |
| Parties | PARK UNIVERSITY ENTERPRISES, INC., Plaintiff, v. AMERICAN CASUALTY COMPANY OF READING, PA, Defendant. |
| Court | U.S. District Court — District of Kansas |
Heywood H. Davis, Dicus, Davis, Sands & Collins, Kansas City, MO, Thomas M Van Camp, Van Camp, Meacham & Newman, PLLC, Pinehurst, NC, for Plaintiff.
William H. White, Jr., Bonner Kiernan Trebach & Crociata, Washington, DC, Barry W. McCormick, McCormick, Adam & Long, P.A., Overland Park, KS, Andrew Butz, Bonner Kiernan Trebach & Crociata, Washington, DC, for Defendant.
This insurance contract case comes before the court on cross-motions for partial judgment on the pleadings (Docs. 25 and 30). Plaintiff Park University Enterprises, Inc. ("Park") claims that Defendant American Casualty Company of Reading, PA ("American") has a duty to defend Park in an underlying state court action brought pursuant to the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, and seeks declaratory judgment to that effect. Park also seeks damages for breach of contract. Ultimately, Park claims that American has a duty to indemnify Park for any damages incurred in the underlying state court action, but the indemnification claims are not yet ripe for review.
For the following reasons, the court grants Park's motion for partial judgment on the pleadings (Doc. 25) as it relates to the duty to defend, and denies American's motion (Doc. 30).
The following facts are taken from the pleadings and attachments.
On October 16, 2002, JC Hauling Company sued Park in the Circuit Court of St. Clair County, Illinois. In that action, JC Hauling alleges that Park engaged in the following acts:
5. On or about June 19, 2002, [Park] used or caused to be used a telephone facsimile machine, computer, or other device to send a 1-page advertisement to Plaintiff's telephone facsimile machine in Illinois.
6. Said advertising materials were sent via facsimile transmission to ... Plaintiff without prior express invitation or permission.
....
15. [Park's] actions were willful and knowing in that [Park] consciously and deliberately sent or caused to be sent a one page advertisement to Plaintiff's telephone facsimile machine, and [Park] 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.
JC Hauling alleges that Park's acts violated the TCPA. JC Hauling brought the state court action as a putative class action, alleging that Park transmitted numerous unsolicited facsimiles.
The TCPA provides that "[i]t shall be unlawful for any person within the United States ... 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). "Unsolicited advertisement" is defined 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). Recipients of facsimiles in violation of the TCPA may pursue a private right of action. Id. § 227(b)(3). Through such action, a recipient may obtain injunctive relief and recover actual monetary losses, or $500 for each violation, whichever is greater. Id. If the court finds that the defendant willfully or knowingly violated the TCPA, the court may award treble damages. Id.
In the state court action, Park admits that it transmitted advertisement(s) by facsimile, but denies that any such advertisement was unsolicited. Park maintains that it has an existing business or customer relationship with JC Hauling and any other recipients, and that it did not transmit any advertising material without prior express permission and/or invitation. Park further denies intentionally violating the TCPA.
On November 1, 2002, Park gave notice of the underlying state court action to American, its liability insurance carrier. American notified Park on November 5, 2002 that it would not provide a defense or coverage in connection with the underlying state court action. Park then filed the instant suit.
Park claims that American owes a duty to defend under two provisions of the insurance policy: (1) "property damage" liability coverage, and (2) "advertising injury" liability coverage. With respect to property damage liability, the policy provides:
Coverage 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 any "suit" seeking those damages....
b. This insurance applies to "bodily injury" and "property damage" only if:
1. The "bodily injury" or "property damage" is caused by an "occurrence"....
"Property damage," according to the policy, means "[l]oss of use of tangible property that is not physically injured...." The policy defines an "occurrence" as an "accident, including continuous exposure or repeated exposure to substantially the same general harmful conditions." The policy does not define the word "accident." The policy does not define the term "loss of use." Coverage for "property damage" does not apply to property damage expected or intended from the standpoint of the insured.
With respect to advertising injury liability, the policy provides:
Coverage 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 any "suit" seeking those damages....
Under the policy, "advertising injury" means "injury, including consequential bodily injury, arising out of ... oral or written publication of material that violates a person's right of privacy." The term "advertisement" means "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." The policy does not define "right of privacy" or "oral or written publication."
Both parties have moved for partial judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c). To evaluate a Rule 12(c) motion for judgment on the pleadings, the court employs the same standard that it uses to analyze a Rule 12(b)(6) motion to dismiss. Ramirez v. Dep't of Corr., 222 F.3d 1238, 1240 (10th Cir.2000) (citation omitted). A Rule 12(b)(6) motion to dismiss will be granted only if it appears beyond a doubt that the plaintiff is unable to prove any set of facts entitling her to relief under her theory of recovery. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). "All well-pleaded facts, as distinguished from conclusory allegations, must be taken as true." Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir.1984) (citation omitted). The court must view all reasonable inferences in favor of the plaintiff, and the pleadings must be liberally construed. Id. (citation omitted). The issue in reviewing the sufficiency of a complaint is not whether the plaintiff will prevail, but whether the plaintiff is entitled to offer evidence to support her claims. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974), overruled on other grounds by Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982).
The issue before the court is whether Park's insurance policy with American possibly covers the acts allegedly taken by Park in violation of the TCPA. If the court determines that there is a "`potential of liability,' even if remote," then American has a duty to defend Park in the underlying state court action. See Spivey v. Safeco Ins. Co., 254 Kan. 237, 865 P.2d 182, 188 (1993) (citing MGM, Inc. v. Liberty Mut. Ins. Co., 253 Kan. 198, 855 P.2d 77, 79 (1993)). The court concludes that American does have such duty to defend.
The parties agree that Kansas law governs whether American has a duty to defend Park in the underlying state court action. See generally, Layne Christensen Co. v. Zurich Canada, 30 Kan.App.2d 128, 38 P.3d 757, 766 (2002). To determine whether American bears the duty to defend, the court must interpret the insurance contract between the parties.
When interpreting a written contract, the court seeks to ascertain the intent of the parties. Marquis v. State Farm Fire & Cas. Co., 265 Kan. 317, 961 P.2d 1213, 1219 (1998); Catholic Diocese of Dodge City v. Raymer, 251 Kan. 689, 840 P.2d 456, 459 (1992). Unless the contract is ambiguous, both the intention of the parties and the meaning of the contract must be determined exclusively from the instrument itself. Rigby v. Clinical Reference Lab., Inc., 995 F.Supp. 1217, 1226 (D.Kan.1998). Ambiguity is a question of law. O'Bryan v. Columbia Ins. Group, 274 Kan. 572, 56 P.3d 789, 793 (2002) (citation omitted); Catholic Diocese of Dodge City, 840 P.2d at 458. "In determining whether ambiguity exists, the language of the contract is to receive a fair, reasonable, and practical construction." Marquis, 961 P.2d at 1219. A contract is ambiguous only when the words used to express the meaning and intent of the parties are "insufficient in that the contract may be understood to reach two or more possible meanings." Amoco Prod. Co. v. Charles B. Wilson, Jr., Inc., 266 Kan. 1084, 976 P.2d 941, 945 (1999) (citation omitted); see also Liggatt v. Employers Mut. Cas. Co., 273 Kan. 915, 46 P.3d 1120, 1125 (2...
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