The U.S. Eleventh Circuit Court of Appeals, applying Georgia law, recently held that fax blasts do not constitute an “accident.” G.M. Sign, Inc. v. St. Paul Fire & Marine Ins. Co., 2019 U.S. App. LEXIS 10868 (11th Cir. Apr. 12, 2019).
The insured began a fax advertising program by purchasing lists of people who the insured mistakenly believed had consented to receive marketing materials by fax. A class action lawsuit was brought against the insured for, among other things, violations of the Telephone Consumer Protection Act and for sending the fax advertisements without the recipients’ permission. The insured demanded defense and indemnity from its CGL insurer which denied coverage. The insured eventually settled the class action, and the class brought a declaratory judgment action seeking a judgment that the policies issued to the insured covered the claims. The court granted summary judgment in favor of the insurer, finding that the policies did not cover. The class appealed.
The Eleventh Circuit affirmed, finding that the insured’s alleged intentional transmission of scores of fax advertisements did not constitute an “accident” under Georgia law, even if the insured believed it had consent to send the fax advertisements. Relying on the court's opinion in Mindis Metals, Inc. v. Transportation Insurance Co., the Eleventh Circuit rejected the plaintiffs’ argument that the insurer was required to indemnify it because the term “accident” under Georgia law covers injuries resulting from negligence. The Eleventh Circuit noted that the insured intended to send the faxes and thus intended to cause the resulting property damage, i.e., the use of the fax machines and the depletion of the machines’ ink and paper. The Eleventh Circuit held that the fact that the insured mistakenly thought the recipients had consented to receive the faxes was insufficient under Georgia law to render the damage as resulting from an “accident.”