MAXUM INDEMNITY COMPANY, and SECURITY INSURANCE COMPANY OF HARTFORD as successor in interest to FIRE AND CASUALTY INSURANCE COMPANY OF CONNECTICUT, Plaintiffs/Counter-Defendants,
ECLIPSE MANUFACTURING CO., M & M RENTAL CENTER, INC., ROBERT HINMAN and ITALIA FOODS, INC., Defendants/Cross-Defendants/Counter-Plaintiffs/Cross-Plaintiffs.
OPINION AND ORDER
JOAN HUMPHREY LEFKOW, District Judge.
This case concerns insurance coverage of underlying class action litigation, Hinman v. M & M Rental Center, Inc., No. 06 C 1156 (N.D. Ill.), claiming violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227. The underlying litigation, before Judge Elaine Bucklo of this court, settled, and the case was dismissed on October 9, 2009. In a ruling entered on January 31, 2012, this court granted summary judgment in favor of the underlying defendant, M & M Rental Center, Inc. ("M & M"), holding that Maxum Indemnity Company ("Maxum") and Security Insurance Company of Hartford ("Security") had the duty to defend and were obligated to reimburse a third carrier, First Specialty Insurance Corporation ("FSIC"), which undertook that duty with reservation of rights (and ultimately prevailed on its claim that it had no duty to defend). See Maxum Indem. Co. v. Eclipse Mfg. Co., 848 F.Supp.2d 871, 874-75 (N.D. Ill. 2012). That aspect of the case is fully resolved. The court, however, denied summary judgment as to whether Maxum and/or Security have a duty to indemnify M & M for the damages amount reached in the settlement of the underlying litigation. Id. at 884-87. Now before the court are Maxum's and Security's renewed motions for summary judgment [dkts. 405 and 410] as to whether the class plaintiffs, as assignees of M & M's claims against Maxum and Security, have established that M & M settled "an otherwise covered loss in reasonable anticipation of personal liability." Maxum Indem., 848 F.Supp.2d at 884 (internal quotation marks and citation omitted). For the reasons stated below the court concludes that the insurers have a duty to indemnify.
The court assumes the reader's familiarity with the background of this case, including earlier decisions, as well as the underlying litigation and will set out facts only as necessary for disposition of the remaining issues.
I. History of the Litigation
The TCPA prohibits the sending of an unsolicited advertisement via facsimile transmission without the recipient's consent. See 47 U.S.C. § 227(b)(1)(c). The TCPA allows a "person or entity" to bring a private right of action and allows recovery of "actual monetary loss from such a violation, or... $500 in damages for each... violation, whichever is greater." Id. § 227(b)(3)(B). If the court determines that the violation was willful or knowing, it has discretion to triple that award. Id. § 227(b)(3)(c). The TCPA protects against injury both to person and property. See Am. States Ins. Co. v. Capital Assocs. of Jackson Cnty., Inc., 392 F.3d 939, 942 (7th Cir. 2004) (The TCPA "doubtless promotes this (slight) interest in seclusion, as it also keeps telephone lines from being tied up and avoids consumption of the recipients' ink and paper."); Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 954 (9th Cir. 2009) ("The TCPA was enacted to protect the privacy interests of residential telephone subscribers....'") (quoting S. Rep. No. 102-178, at 1 (1991), reprinted in 1991 U.S.C.C.A.N. 1968).
A. Facts Elicited In the Underlying Litigation
In August 1997, Michael Berk, M & M's president, purchased a list of approximately 5, 000 names and fax numbers ("the leads list") from Corporate Marketing Inc. ("CMI"). CMI included companies on the leads list that were likely to spend more than $5, 000 per year on corporate parties, meetings, and banquets. Between June 2002 and June 2006, M & M used Xpedite Systems ("Xpedite") to send fax blasts to the leads list. According to Xpedite's records, the first fax ("fax # 1") was sent on June 24, 2002 to 4, 469 recipients; the second fax ("fax # 2") was sent on September 15, 2003 to 4, 288 recipients; the third fax ("fax # 3") was sent on November 5, 2003 to 4, 174 recipients; the fourth fax ("fax # 4") was sent on October 29, 2004 to 3, 944 recipients; and the fifth fax ("fax # 5") was sent on June 23, 2005 to 3, 781 recipients. See Maxum Indem., 848 F.Supp.2d at 878. Copies of faxes # 4 and # 5 were produced in the litigation. Neither side however, could locate copies of faxes # 1-# 3 and their contents are unknown. Id.
B. Motion to Dismiss for Lack of Standing Denied; Second Amended Complaint Filed
During the pleadings stage of the case, Judge Bucklo ruled that a corporation could assign its TCPA claims for property damage and thus determined that Hinman, as assignee of Eclipse Manufacturing Company, the corporation which filed the law suit, had standing to sue and should be substituted for Eclipse as the real party in interest. Eclipse Mfg. Co. v. M & M Rental Ctr., Inc., 521 F.Supp.2d 739, 743-44 (N.D. Ill. 2007).
Hinman, along with additional plaintiff, Italia Foods, Inc., filed a second amended complaint. Paragraph 35 of that complaint alleged an injury to the plaintiffs' right to seclusion: "Defendant's faxes caused Plaintiffs and the other class members to waste their valuable time by receiving, reviewing, and routing Defendant's advertising faxes. That time otherwise would have been spent on their own business activities. Defendant's faxes unlawfully interrupted the class members' privacy interests in being left alone." Second Amended Complaint at ¶ 35, Hinman v. M & M Rental Ctr., Inc., No. 06 C 01156 (N.D. Ill. June 15, 2007), ECF No. 98.
C. Class Certified
Judge Bucklo certified a class defined as
[a]ll persons who, on or after four years prior to the filing of this action, were sent, without permission, telephone facsimile messages of material advertising the commercial availability of any ...