A federal court in North Carolina held that an insurer has no duty to defend or indemnify when the policy’s statutory violation exclusion precludes coverage for the underlying actions. Hartford Casualty Insurance Co. v. Ted A. Greve & Associates, P.A., et al. , 2017 WL 5557669 (W.D. N.C. Nov. 17, 2017), appeal filed (4th Cir. Dec. 11, 2017).
The case arose from two underlying putative class actions asserting a single cause of action against a lawyer for violation of the federal Driver’s Privacy Protection Act (“DPPA”). Plaintiffs in the underlying actions were involved in motor vehicle accidents, and upon receipt of advertisement for legal services, learned that the lawyer had obtained publicly available accident reports and disclosed their personal information in generating the advertisements. Plaintiffs sued the lawyer claiming such disclosure to be an invasion of privacy.
The lawyer’s insurer sought a declaration that it had no duty to defend or indemnify on the basis that the “personal and advertising injury” coverage included in the lawyer’s policy contained an exclusion for statutory violations. The exclusion bars coverage for personal and advertising injuries “arising out of the violation of a person’s right of privacy created by any state or federal act.” However, the exclusion stated that it did not apply to liability that the insured would have in the absence of such state or federal act. The court concluded that the privacy right at issue was “solely a creature of federal law” defeating coverage based on the exclusion and held that the insurer had no duty to defend or indemnify.