Universal Underwriters v. Lou Fusz Auto. Network
| Decision Date | 21 January 2004 |
| Docket Number | No. 4:02CV1647 CDP.,4:02CV1647 CDP. |
| Citation | 300 F.Supp.2d 888 |
| Parties | UNIVERSAL UNDERWRITERS INSURANCE CO., Plaintiff, v. LOU FUSZ AUTOMOTIVE NETWORK, INC., et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
Roger J. Heidenreich, Sonnenschein and Nath, LLP, St. Louis, MO, for Plaintiff.
Christopher L. Kanzler, Dunn and Miller, PC, Town and Country, MO, for Lou Fusz Automotive Network, Inc.
Douglas R. Sprong, Jeffrey H. Schultz, Steven A. Katz, Korein and Tillery, LLC, Belleville, IL, for Onsite Computer Consulting Services, Inc. and Stephenson Electric Company.
John D. Briggs, Steven H. Schwartz, Brown and James, PC, St. Louis, MO, for West Brothers Chrysler, Inc.
This case involves interpretation of similar insurance contracts between plaintiff Universal Underwriters Insurance Company and defendants West Brothers Chrysler and the Lou Fusz Automotive Network. Universal Underwriters seeks a declaration that it does not have a duty to defend or indemnify any judgments entered against West and Lou Fusz in two state court class-action lawsuits that allege violations of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227. In the state suits, Onsite Computing and Stephenson Electric seek the full amount of TCPA statutory damages. Onsite and Stephenson are defendants here along with West and Lou Fusz.
The parties have filed cross-motions for summary judgment. Universal argues that under the policy terms it has no obligation to defend or indemnify West and Lou Fusz against the state suits. Onsite and Stephenson join here with their state-court opponents, West and Lou Fusz, to argue that the policies impose a duty to defend. They also argue that a determination of the duty to indemnify is premature until the state suits are resolved.
After full consideration of the policies and the facts alleged in the underlying state court cases, I find that Universal has a duty to defend West Brothers and Lou Fusz under the terms of the policies it issued to these defendants. Further, I need not now decide whether Universal is obligated to indemnify Lou Fusz and West Brothers because this question is premature, and its resolution will depend on the outcome of the underlying state actions. I will enter declaratory judgment in favor of the defendants on the duty to defend claim and will dismiss without prejudice the duty to indemnity claim.
Universal Underwriters Insurance Company insures two auto dealers, Lou Fusz Auto Network and West Brothers Chrysler under similar policies. On December 1, 2000, Universal issued policies numbered 190489B and 190494B to Lou Fusz. Policy 190489B was a multi-part insurance contract, providing for numerous first- and third-party coverages, including primary Garage coverage in the amount of $1,000,000. Under Part 980 of Policy 190494B, Universal provides umbrella insurance coverage to Lou Fusz.
On December 1, 2001, Universal issued policy 153159F to West Brothers. As with the Lou Fusz policy, the West Brothers policy was part of a multi-part contract of insurance providing numerous first- and third-party coverages, including primary Garage coverage in the amount of $300,000. West Brothers also carried umbrella coverage with Universal, in the amount of $3,000,000.
The insuring clause of the Garage coverage of the policies provides in part as follows:
INSURING AGREEMENT — WE will pay all sums the INSURED legally must pay as DAMAGES (including punitive DAMAGES where insurable by law) because of INJURY to which this insurance applies caused by an OCCURRENCE arising out of GARAGE OPERATIONS or AUTO HAZARD.
* * * * * *
WE have the right and duty to defend any SUIT asking for these DAMAGES. WE may investigate and settle any claim or SUIT WE consider appropriate. OUR payment of the limit shown in the declarations ends OUR duty to defend.
"Injury" under the policies is defined as:
Group 1 — bodily injury, sickness; disease or disability (including death resulting from any of these) or damage to or loss of use of tangible property;
Group 2 — mental anguish, mental injury, fright, shock, or humiliation, except when arising from DISCRIMINATION;
Group 3 — false arrest, false imprisonment, wrongful eviction, wrongful detention, malicious prosecution, abuse of process, libel, slander, defamation of character, private nuisance (except pollution), invasion of rights of privacy or possession of personal property;
Group 4 — plagiarism, misappropriation of advertising ideas or style, infringement of copyright, title, slogan or trademark;
Group 5 — any error or omission in the ADMINISTRATION of YOUR profit sharing, pension or employee stock subscription plans or YOUR group life, group hospitalization or major medical, group accident and health, Worker's Compensation, unemployment, social security or disability benefits insurance;
Group 6 — DISCRIMINATION OR WRONGFUL TERMINATION.
The policies do not further define the terms in these six groups.
"OCCURRENCE" is defined in the policies as follows:
"OCCURRENCE" with respect to COVERED POLLUTION DAMAGES, INJURY Groups 1 and 2 means an accident, including continuous or repeated exposure to conditions, which results in such INJURY or COVERED POLLUTION DAMAGES during the Coverage Part period neither intended nor expected from the standpoint of a reasonably prudent person.
With respect to INJURY Groups 3, 4, 5, and 6, OCCURRENCE means acts of the INJURED during the Coverage Part period which result in such INJURY.
Finally, the policies define "DAMAGES" as follows:
"DAMAGES" means amounts awardable by a court of law. With respect to INJURY Group 6, DAMAGES also means amounts awardable by administrative agencies. DAMAGES does not mean civil penalties, fines or assessments.
On September 26, 2002, defendants Onsite Computer Consulting Services, Inc., and Stephenson Electric Company filed lawsuits against Lou Fusz and West Brothers, respectively, in the St. Louis County Circuit Court. The state court petitions allege that Lou Fusz and West Brothers sent Onsite and Stephenson unsolicited faxes in violation of the Telephone Consumer Protection Act of 1991 ("TCPA"), 47 U.S.C. § 227. The suits were brought as class actions on behalf of all persons harmed by Lou Fusz's and West Brothers' alleged unlawful transmission of unsolicited advertisements. State court plaintiffs Onsite and Stephenson Electric requested injunctive relief and the full amount of statutory damages as set forth in 47 U.S.C. § 227(b)(3)(B) for each TCPA violation. 47 U.S.C. § 227(b)(3)(B) provides that a person may bring "[a]n action to recover actual monetary loss or to receive $500.00 in damages for each such violation, whichever is greater...".
West Brothers contracted with Autoups, a company engaged in distribution of facsimile advertisements and other services, to distribute an advertisement. West Brothers claims that it did not know the identity of the recipients of the advertisement, even though it knew that the advertisement would be faxed. Further, West Brothers claims that it did not know that the advertisement would be sent to individuals or businesses that had not expressly invited receipt of such advertisements, such as Stephenson Electric.
Lou Fusz, in its answer to Onsite's state court petition, denies that it sent unsolicited advertisements. Lou Fusz further denied that it authorized anyone to send unsolicited advertisements on its behalf and alleged that it had permission to send the challenged faxes.
Lou Fusz and West Brothers tendered the underlying actions to Universal, and, although it denies it has a duty to defend these claims, Universal accepted the defense of these suits pursuant to a complete reservation of rights. Universal then filed this action in two separate cases, which I consolidated due to the substantial factual and legal overlap between the cases.
To determine whether to grant summary judgment, I will view the facts and inferences from the facts in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A party seeking summary judgment has the burden to establish both the absence of a genuine issue of material fact and that it is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant has met this burden, the opposing party may not rest on the allegations in its pleadings but must, by affidavit or other evidence, set forth specific facts showing that a genuine issue of material fact exists. See Fed.R.Civ.P. 56(e).
At the summary judgment stage, I will not weigh the evidence and decide the truth of the matter, but rather must only determine if there is a genuine issue for trial. Anderson, 477 U.S. at 249, 106 S.Ct. 2505. Rule 56(c) of the Federal Rules of Civil Procedure mandates entry of summary judgment against a party if, after adequate time for discovery, that party fails to make a showing sufficient to establish the existence of an essential element of the case that the party will have the burden of proving at trial. Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548.
Universal asks in its complaint that I decide two issues: (1) does it have a duty to defend Lou Fusz and West Brothers, under the policies it issued, in the suits brought by Onsite and Stephenson Electric?, and (2) does it have a duty to indemnify any judgment that might be rendered against Onsite and Stephenson in the underlying lawsuits? All parties agree that if my answer to the first question is yes, then it would be premature to decide the second question before the facts are developed in the state court suits. Universal suggests that if I find there is no duty to defend,...
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