Prime Tv, LLC. v. Travelers Ins. Co.

• Decision Date: 07 August 2002
• Docket Number: No. 1:01CV00952.,1:01CV00952.
• Citation: 223 F.Supp.2d 744
• Court: U.S. District Court — Middle District of North Carolina
• Parties: PRIME TV, LLC, Plaintiff, v. TRAVELERS INSURANCE CO.; and Travelers Property Casualty Insurance Company, a Member of The Travelers Group, Defendants.

223 F.Supp.2d 744

PRIME TV, LLC, Plaintiff, v. TRAVELERS INSURANCE CO.; and Travelers Property Casualty Insurance Company, a Member of The Travelers Group, Defendants.

No. 1:01CV00952.

United States District Court, M.D. North Carolina.

August 7, 2002.

COPYRIGHT MATERIAL OMITTED

Thomas M. Van Camp, Van Camp, Meacham & Newman, PLLC, Pinehurst, NC, for Plaintiff.

G. Michael Barnhill, Amy L. Cox Gruendel, Womble, Carlyle, Sandridge & Rice, PLLC, Charlotte, NC, William T. Crbett, Jr., Mark D. Sheridan, Drinker, Biddle & Shanley, LLP, Florham Park, NJ, for Defendants.

MEMORANDUM OPINION

BULLOCK, District Judge.

Plaintiff, Prime TV, LLC, ("Plaintiff" or "Prime TV") originally filed this action in the General Court of Justice, Superior Court Division, Moore County, North Carolina, against Defendants Travelers Indemnity Company (incorrectly pled as Travelers Insurance Company) and Travelers Property Casualty Company (collectively "Defendants" or "Travelers"), seeking declaratory relief and alleging breach of contract, unfair and deceptive trade practices, bad faith and unfair dealings, and breach of fiduciary duty. Defendants removed to this court based on diversity of citizenship. Plaintiff asserts that Defendants failed to provide a defense and coverage for numerous lawsuits filed against Plaintiff under the Telephone Consumer Protection Act ("TCPA").

Plaintiff and Defendants have moved for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. Plaintiff's motion is limited to its claims for declaratory relief and breach of contract relating to Defendants' duty to defend. Defendants seek a declaration that they owe no duty to defend or indemnify Plaintiff in connection with the underlying lawsuits. For the following reasons, the court will grant Plaintiff's motion for judgment on the pleadings. Defendants' motion for judgment on the pleadings will be denied.

FACTS

Plaintiff markets and sells satellite television services in its capacity as an independent contractor for DirecTV. In January and February 2001, Plaintiff commenced discussions with various companies that specialized in faxed advertisements. These companies allegedly informed Plaintiff that these companies possessed lists of consumers, including their fax numbers, who desired information concerning satellite television services. Plaintiff alleges that the fax companies affirmatively represented to Plaintiff that the lists included only those individuals who had specifically requested information regarding the services provided by Plaintiff. These companies further represented to Plaintiff that they would fax any advertisement prepared by Plaintiff for a designated fee per fax. Based upon these representations, Plaintiff prepared an advertisement for DirecTV services and provided it to several fax companies. In February and March 2001, the faxes were sent to millions of potential customers. As a result of the faxes, Plaintiff was sued in numerous venues throughout the United States. Each of the lawsuits allege that Prime TV violated the TCPA by sending unsolicited facsimile advertisements. Some of the suits also allege state law claims for negligence, unfair trade practices, invasion of privacy, and trespass.

Plaintiff purchased a commercial general liability insurance policy from Defendants, which was effective from September 25, 2000, through September 25, 2001. The limit of liability under the policy is $2,000,000. Plaintiff also purchased a commercial excess liability insurance policy from Defendants, which was effective from September 25, 2000, through September 25, 2001. The limit of liability under the excess liability policy is $1,000,000. Plaintiff subsequently renewed these policies for the period from September 25, 2001, to January 1, 2002.

After the lawsuits were filed against Prime TV, Prime TV submitted the suit papers to Defendants and requested that Defendants provide a defense under the applicable insurance policies. After investigating the claims, Defendants refused to defend Plaintiff in the underlying actions or accept coverage.

Plaintiff contends that the policies cover the acts alleged in the underlying lawsuits, requiring Defendants to defend and indemnify Plaintiff in the lawsuits. Plaintiff asserts that the alleged acts are covered by the general liability policy under both Section I, Coverage A and Section I, Coverage B, as well as the excess liability policy.

Under Coverage A, the general liability policy provides coverage for property damage and states as follows:

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of ... `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 ... `property damage' only if:

(1) The ... `property damage' is caused by an `occurrence' that takes place in the `coverage territory';....

Policy Number I-680-371D839-IND-00, Coverage Form CG 00 01 10 93 at 1 (attached to Compl. at Ex. G) (hereinafter General Liability Policy). The policy excludes coverage for "property damage expected or intended from the standpoint of the insured." Id. The policy contains the following relevant definitions:

12. `Occurrence' means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.

....

15. `Property damage' means:

a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or

b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the `occurrence' that caused it.

Id. at 10-11. The policy does not define "accident."

Under Coverage B, the policy provides coverage for advertising injury liability and states as follows:

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

....

b. This insurance applies to:

....

(2) `Advertising injury' caused by an offense committed in the course of advertising your goods, products or services;....

Id. at 4. The policy contains the following relevant definitions:

1. `Advertising injury' means injury arising out of one or more of the following offenses:

a. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services;

b. Oral or written publication of material that violates a person's right of privacy;

c. Misappropriation of advertising ideas or style of doing business; or

d. Infringement of copyright, title or slogan.

Id. at 9. The policy does not define the term "right of privacy." Finally, the policy excludes coverage for "advertising injury":

(1) Arising out of oral or written publication of material, if done by or at the direction of the insured with knowledge of its falsity;....

Id. at 4. The extended liability policy provides similar coverages, including coverage for property damage and advertising injury.

DISCUSSION

Plaintiff and Defendants have moved for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). In considering a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), this court must view facts presented in the pleadings and the inferences drawn therefrom in the light most favorable to the non-moving party. 5A Charles A. Wright and Arthur R. Miller, Federal Practice and Procedure Civil 2d § 1368 at 590 (Supp.2002). A motion for judgment on the pleadings is determined by the same standard applied to a motion to dismiss for failure to state a claim. See Irish Lesbian & Gay Org. v. Giuliani, 143 F.3d 638, 644 (2d Cir.1998); Pledger v. North Carolina Dep't of Health & Human Servs., Dorothea Dix Hosp., 7 F.Supp.2d 705, 707 (E.D.N.C.1998). Thus, judgment on the pleadings is appropriate if, taking the non-moving party's allegations as true, the movant clearly establishes that no material issue of fact remains to be resolved and that the movant is entitled to judgment as a matter of law. Eagle Nation, Inc. v. Market Force, Inc., 180 F.Supp.2d 752, 754 (E.D.N.C.2001).

A. Canons of Construction and Legal Principles

The issue before the court concerns the construction of the insurance policies, specifically whether the policies require Travelers to defend Prime TV in the underlying state court actions. Construction and application of insurance policy provisions is a question of law appropriate for summary disposition. See Harleysville Mut. Ins. Co. v. Packer, 60 F.3d 1116, 1121 (4th Cir.1995) (citing Wachovia Bank & Trust Co. v. Westchester Fire Ins. Co., 276 N.C. 348, 354, 172 S.E.2d 518, 522 (1970)).

North Carolina courts have outlined several principles of construction that guide courts in construing insurance policies. See Wachovia, 276 N.C. at 354, 172 S.E.2d at 522. As in other contracts, the aim of construction of policy terms is to arrive at the intent of the parties when the policy was issued. See id. This intent "must be found in the language used by the parties to the [policy]." Duke v. Mutual Life Ins. Co. of N.Y., 286 N.C. 244, 247, 210 S.E.2d 187, 189 (1974). "Where a policy defines a term, that definition is to be used. If no definition is given, nontechnical words are to be given their meaning in ordinary speech, unless the context clearly indicates another meaning was intended." Woods v. Nationwide Mutual Insurance Co., 295 N.C. 500, 505-06, 246 S.E.2d 773, 777 (1978). Because the insurance company drafts the policy terms, any ambiguity as to their meaning "must be resolved in favor of the policyholder." Wachovia, 276 N.C. at 354, 172 S.E.2d at 522....