Missouri Supreme Court rules insurer obligated on TCPA claim


The Missouri Supreme Court has ruled an insurance company wrongfully refused to defend its policyholder in a class action lawsuit for violations of the Telephone Consumer Protection Act (TCPA). The insured sent 12,500 unsolicited facsimile advertisements -- junk faxes -- to Missourians in 2001. A recipient of the junk faxes brought a class action lawsuit seeking an injunction against further fax spam and for statutory damages.

The defendant in the class action suit was insured by a commercial general liability policy from Columbia Casualty Company, which included coverage for property damage and advertising injury. The insurance company twice refused to defend its policyholder the lawsuit and refused a settlement offer because it asserted the claims were "outside of the policy provisions".

The policyholder defended and settled the lawsuit at its own expense, resulting in a $5 million judgment. The class then filed a garnishment and declaratory action seeking the proceedings of the insurance policy. The Missouri Supreme Court agreed the insurance company wrongfully refused to defend its policyholder, and was thus liable for the entire amount of the underlying judgment.