Columbia Casualty Co. v. Hiar Holding, L.L.C.

Summary

The Missouri Supreme Court considers whether a commercial general liability insurer had a duty to defend and indemnify its insured for liability arising from unsolicited advertising faxes that violated the Telephone Consumer Protection Act. The Court holds that the TCPA statutory damages were not fines or penalties, that the policy's property-damage and advertising-injury coverages were implicated, and that the insurer's wrongful refusal to defend made it liable for the reasonable settlement judgment and interest. The Court affirms the trial court's summary judgment for the class.

Holdings

1. An insurer that is obligated to defend but wrongfully refuses to do so may be liable to indemnify its insured for an underlying judgment for damages determined by a court to be reasonable.
2. TCPA statutory damages of $500 per violation are not damages in the nature of fines or penalties and may fall within a policy's coverage for damages.
3. The policy's property-damage coverage was invoked because the record supported a finding that HIAR did not intend to violate the TCPA or injure the recipients.
4. The policy's advertising-injury coverage applied because the TCPA claims alleged invasion of privacy rights and the policy did not more specifically limit its privacy language.
5. An insured's failure to provide an amended petition does not automatically defeat coverage; the insurer must show substantial prejudice, and Columbia was not prejudiced because the amendment did not change the theory of liability.
6. Columbia was not entitled to relitigate the reasonableness of the settlement because the underlying trial court had already held a hearing and entered judgment finding the settlement fair, reasonable, and noncollusive.
7. Columbia could not avoid liability for the settlement judgment and damages flowing from its wrongful refusal to defend merely by invoking the policy limits.
8. The trial court did not abuse its discretion by refusing to add HIAR's excess insurer as a party.

Questions Presented

1. Whether Columbia's commercial general liability policy potentially covered the TCPA class action and therefore triggered a duty to defend.
2. Whether TCPA statutory damages of $500 per violation are fines or penalties excluded from the policy's coverage for damages.
3. Whether the policy's property-damage and advertising-injury provisions applied to the TCPA claims.
4. Whether HIAR's alleged failure to provide notice of an amended petition or cooperate with Columbia vitiated coverage.
5. Whether Columbia was entitled to relitigate the reasonableness of a settlement that had already been approved by a court after a hearing.
6. Whether policy limits barred Columbia's liability for the settlement amount and interest.
7. Whether the trial court abused its discretion by refusing to add HIAR's excess insurer as a party.
8. Whether public policy barred insurance coverage for the TCPA violations.

Disposition

affirmed