On January 3, 2019, the Eighth Circuit affirmed the Eastern District of Missouri’s granting of summary judgment in favor of an insurance company seeking to enforce policy exclusions for TCPA claims. American Family Mutual Insurance Company v. Vein Centers for Excellence, Inc., No. 17-3266, slip op. (8th Cir. Jan. 3, 2019). The underlying TCPA case was a class action involving unsolicited faxes. Id. at 2. The insurer brought a declaratory judgment action against its insured, Vein Centers for Excellence, regarding its duties to indemnify and defend Vein Centers under commercial liability umbrella and business owner’s policies. Id. at 3. The TCPA plaintiff, St. Louis Heart Center, was joined as a defendant in the insurer’s action. Id. St. Louis Heart argued that the court lacked subject matter jurisdiction and the insurer did not provide notice of the change to the business owner’s policy prior to its renewal. Id. at 3-4.
First, the court found that it had diversity jurisdiction because the amount in controversy for the insurer’s declaratory judgment action was the probable costs of indemnification and defense minus the deductible. Id. at 6. The potential indemnification amount, based on St. Louis Heart’s filings, was more than $17,000,000 and the costs of litigation would likely exceed $75,000. Id. The court rejected St. Louis Heart’s argument that the insurer could not aggregate the claims of the TCPA plaintiffs to satisfy the amount in controversy requirement because, from the insurer’s perspective, the TCPA lawsuit was one claim from its insured, not an aggregation of the plaintiffs’ claims. Id. at 7.
Second, the court ruled that the insurer provided prior notice of the policy changes that included the new exclusion of coverage for TCPA violations. Under Missouri law, a significant change in an insurance policy requires prior notice or else the change does not take effect. Id. at 4, 9. The insurer provided deposition testimony of one of its employees, who testified about the company’s standard procedures for mailing a Policyholder Communication, which included policy changes, to its insureds prior to renewal. Id. at 9-10. The insurer did not have a copy of the Policyholder Communication that was sent to Vein Centers, but the court found that the employee’s testimony was sufficient to trigger a presumption that a letter is received by its addressee. Id. In instances “where the customary volume of mail would render proof impractical or infeasible, the purported sender may rely on ‘evidence of the settled custom and usage of the sender in the regular and systematic transaction of its business’ to establish the presumption.” Id. at 9 (citation omitted). St. Louis Heart merely offered speculation that the insurer’s procedures weren’t followed instead of rebutting the presumption with evidence that Vein Centers did not receive the mail. Id. at 10. Thus, the court affirmed the district court’s granting of summary judgment in favor of the insurer.