The United States District Court for the Eastern District of Virginia, applying Virginia law, has held that an exclusion in a D&O policy containing an entity E&O endorsement bars coverage for "invasion of privacy" resulting from violations of the Telephone Consumer Protection Act (TCPA). Resource Bank v. Progressive Casualty Insurance Co., 2007 WL 2475939 (E.D. Va. Sept. 4, 2007).
The policyholder was a banking corporation and was insured under a directors and officers policy. The policy excluded coverage for "any Claim for actual or alleged . . . invasion of privacy." In the policy, the exclusion was listed under a heading captioned: "A. Bodily Injury and Property Damage Exclusion." The coverage dispute arose in response to two class-action lawsuits alleging that the company's mortgage unit sent hundreds of thousands of unsolicited faxes in violation of the TCPA.
In granting the insurer's motion for summary judgment, the court held that the exclusion for claims alleging "invasion of privacy" applied to alleged violations of the TCPA. The court rejected the company's argument that the exclusion's heading rendered the provision ambiguous. First, the court noted that the policy expressly provided that headings were not part of the policy's terms or conditions. Second, the court held that "ambiguity does not arise merely because an exclusion appears below an imperfectly descriptive heading," as long as the heading "would alert the average insured that coverage was being limited."
The court also rejected the company's argument that the term "invasion of privacy" only applied to "secrecy privacy, rather than seclusion [privacy rights]." Agreeing that TCPA violations only involve seclusional privacy, the court nonetheless held that the term unambiguously embraced both meanings. The court also rejected the company's argument that the exclusion did not apply because the suits did not contain a count specifically alleging an "invasion of privacy." According to the court, the only reasonable interpretation of the provision was that it listed a number of harms as opposed to causes of action. Thus, the exclusion would apply if a complaint alleged the harm of invasion of privacy, irrespective of the particular legal cause of action alleged in the complaint.
Finally, the court rejected the company's argument that the exclusion did not apply to TCPA violations because it lacked the broad prefatory language found in other provisions. Specifically, the company cited the lack of the "arising out of or in any way involving" language. According to the court, even if the absence of the language narrowed the scope of the exclusion, it narrowed it "to claims involving the harms listed in the exclusion," which, as it previously determined, included TCPA violations.