Schuetz v. State Farm Fire & Cas. Co.

Decision Date29 March 2007
Docket NumberNo. 05 CVH-08-9371.,05 CVH-08-9371.
PartiesBryan R. SCHUETZ, et al., Plaintiffs, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant.
CourtOhio Court of Common Pleas

Kevin M. Maloney, Columbus, for plaintiff.

Mark H. Gams, Columbus, for defendant.

REECE, Judge.

{¶ 1} This matter is before the court upon defendant State Farm Fire and Casualty Company's April 3, 2006 motion for judgment on the pleadings; plaintiff Bryan R. Schuetz's April 17, 2006 memorandum contra defendant's motion for judgment on the pleadings and plaintiff's cross-motion for judgment on the pleadings; defendant State Farm Fire and Casualty Company's May 4, 2006 memorandum contra plaintiff's motion for judgment on the pleadings and reply memorandum to plaintiffs memorandum contra defendant's motion for judgment on the pleadings; and plaintiff Bryan R. Schuetz's May 10, 2006 reply memorandum to defendant's memorandum contra plaintiff's motion for judgment on the pleadings. The parties' motions have been fully briefed and are deemed submitted to the court pursuant to Loc.R. 21.01.

{¶ 2} For the reasons that follow, the Court hereby grants in part and denies in part Defendant State Farm Fire and Casualty Company's April 3, 2006 motion for judgment on the pleadings and grants in part and denies in part plaintiff Bryan R. Schuetz's April 17, 2006 cross-motion for judgment on the pleadings.

BACKGROUND
The Charvat Action

{¶ 3} Bryan R. Schuetz is a licensed chiropractor, and Bryan Schuetz, D.C., Inc. is an Ohio corporation wholly owned by Bryan R. Schuetz.

{¶ 4} On January 4, 2005, Philip J. Charvat filed a first amended complaint against Bryan R. Schuetz and Bryan Schuetz, D.C., Inc. ("the Schuetz defendants," with respect to the Charvat action) in Charvat v. Bryan Schuetz, D.C, Inc., Franklin CP. No. 04 CVH-09-9669 ("the Charvat action"). Charvat's first amended complaint alleges that the Schuetz defendants intentionally and knowingly made prerecorded telephone calls to him on June 2, 2004, to advertise their goods and services, thereby violating the Telephone Consumer Protection Act of 1991, 47 U.S.C. 227 et seq., and the Ohio Consumer Sales Practices Act, R.C. 1345.02(A).

{¶ 5} Bryan R. Schuetz had previously obtained a general liability insurance policy from State Farm Fire and Casualty Company. The policy provided coverage to the named insured, Bryan R. Schuetz, d.b.a. Capital City Chiropractic, for the coverage period of March 6, 2004, through March 6, 2005.

{¶ 6} On or about April 22, 2005, the Schuetz defendants presented a claim to State Farm, seeking coverage for the Charvat claims under the terms of the insurance policy ("the State Farm policy"), as well as a request that State Farm provide a defense with respect to the same. On or about May 18, 2005, State Farm denied the Schuetz defendants' request for defense and indemnification, contending that the allegations contained in the Charvat complaint were not the result of an accident or occurrence covered by the policy and the damages sought were not for bodily injury, personal injury, advertising injury, or property damage, as defined in the State Farm policy.

{¶ 7} The Schuetz defendants paid for their own defense and eventually settled the Charvat claims.

This Action

{¶ 8} On August 26, 2005, due to State Farm's denial of coverage, plaintiffs Bryan R. Schuetz and Bryan Schuetz, D.C., Inc. initiated this action against defendant State Farm Fire and Casualty Company. Plaintiffs seek a declaration pursuant to R.C. Chapter 2721 that the Charvat claims fall within the "advertising injury" provision of the State Farm policy and that State Farm is required to defend and indemnify plaintiffs for any loss incurred with respect to the same ("Count I"). Plaintiffs further maintain that State Farm breached the terms of the insurance policy by refusing to honor its contractual obligation to defend and indemnify plaintiffs against the Charvat action ("Count II") and that State Farm also breached its duty of good faith, as its refusal, according to plaintiffs, was not predicated upon circumstances that would provide reasonable justification for the same ("Count III").

{¶ 9} Plaintiffs attached to their August 26, 2005 complaint a copy of various portions of the at-issue State Farm policy, as well as a copy of the January 4, 2005 Charvat complaint and State Farm's May 18, 2005 refusal letter.

{¶ 10} On April 3, 2006, Defendant State Farm filed a motion for judgment on, the pleadings.1 Therein, it argues that the policy defines an "insured" as anyone designated as such on the declarations page. State Farm cites the declarations page and argues that it lists only "Bryan R. Schuetz, d.b.a. Capital City Chiropractic" as an insured under the policy. As plaintiff Bryan Schuetz, D.C., Inc. is not listed as an insured on the policy declarations page, State Farm argues that it owes that entity no duty to defend it against any legal action(s). Thus State Farm maintains, it is entitled to judgment on the pleadings in its favor as to all claims asserted by plaintiff Bryan Schuetz, D.C., Inc.

{¶ 11} With respect to that argument, the court notes that plaintiff Bryan Schuetz, D.C., Inc. filed a notice of partial dismissal without prejudice on April 17, 2006, voluntarily dismissing all of its claims against defendant State Farm pursuant to Civ.R. 41(A)(1). Accordingly, State Farm's arguments with respect to the claims asserted by plaintiff Bryan Schuetz, D.C., Inc. are rendered moot by that dismissal, and the court's analysis of the pending motions will be limited solely to the claims asserted by plaintiff Bryan R. Schuetz, individual.

{¶ 12} In its April 3, 2006 motion for judgment on the pleadings, State Farm also maintains that it is entitled to judgment in its favor as to the claims asserted by plaintiff Bryan R. Schuetz, as the Charvat claims do not fall within the "advertising injury" provision of the policy, and State Farm has no duty to defend against them. In support of its argument, State Farm cites the policy language, which specifically provides coverage for damages because of an "advertising injury," which the policy then defines as, among other things, "oral or written publication of material that violates a person's right of privacy." Acknowledging that plaintiffs seek coverage based on the "right of privacy" definition of an "advertising injury," State Farm argues that the Charvat action does not implicate Charvat's right of privacy. Rather, State Farm argues that the Charvat action alleges that the Schuetz defendants violated the Telephone Consumer Protection Act, 47 U.S.C. 227(b)(1)(B) ("TCPA"), its related regulations, including Federal Regulation 47 C.F.R. 64.1200(a)(2), and the Ohio Consumer Sales Practices Act (hereinafter "OCSPA") and does not at all allege that the Schuetz defendants violated Charvat's right of privacy.

{¶ 13} State Farm contends that "[m]aking unsolicited prerecorded advertisement telephone calls is not an invasion of one's right of privacy, especially when the individual suing does not claim it to be such." State Farm thus maintains that as Charvat sued strictly on federal and state statutes and sought only statutorily prescribed damages, the Charvat claims are not covered by the policy, and State Farm does not owe Schuetz a duty to defend him against the same.

{¶ 14} State Farm further maintains that even if the court were to interpret the Charvat complaint as alleging a violation of one's right of privacy, the Charvat claims are still not covered by the policy, and a duty to defend still does not exist. State Farm acknowledges that while there are no Ohio cases addressing telephone solicitation violations in the context of insurance coverage, various federal courts that have considered insurance coverage of facsimile solicitation violations, and in doing so have analyzed policy language identical to the one involved in this case, counsel against an interpretation of one's "right of privacy" to such an extent that the sending of unsolicited communication is deemed a covered "advertising injury" for insurance coverage purposes.

{¶ 15} Specifically, State Farm cites Am. States Ins. Co. v. Capital Assocs. of Jackson Cty., Inc. (C.A.7, 2004), 392 F.3d 939, in which the Seventh Circuit Court of Appeals held that sending unsolicited facsimiles did not constitute an invasion of one's right of privacy and thus was not covered under the policy, which defined advertising injury as including "`oral or written publication of material that violates a person's right of privacy.'"2 Id. at 940. In analyzing the meaning of "privacy," the court held that the word has many connotations, but its "two principal meanings are secrecy and seclusion, each of which has multiple shadings." Id. at 941. The Seventh Circuit focused on the policy's use of the word "publication" and held that "[t]he structure of the policy strongly implies that coverage is limited to secrecy interests. It covers a `publication' that violates a right of privacy. In a secrecy situation, publication matters; otherwise secrecy is maintained. In a seclusion situation, publication is irrelevant. A late-night knock on the door or other interruption can impinge on seclusion without any need for publication." Id, at 942.

{¶ 16} State Farm further informs the court that the Fourth Circuit in Resource Bankshares Corp. v. St. Paul Mercury Ins. Co. (C.A.4, 2005), 407 F.3d 631, agreed with the Seventh Circuit's reasoning in American States, and based on the same, urges the court to find that Charvat's allegations in the underlying lawsuit do not constitute an "advertising injury," as the "telephone call was made directly to Charvat and did not violate a secret held by Charvat. There was no publication to a third party of a secret regarding Charvat, and again, Charvat never alleged or sought compensation...

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