TCPA: Exclusion Bars Coverage For Non-TCPA Causes Of Action

The Illinois Second District Appellate Court rejected plaintiff G.M Sign, Inc.’s attempt to recover $4.9 million from State Farm Fire & Casualty Company under an insurance policy containing a TCPA exclusion, finding that the exclusion also barred coverage for the alternative causes of action of conversion and consumer fraud.

The Telephone Consumer Protection Act exclusion at issue barred coverage for all actions “arising directly or indirectly”out of the violation or alleged violation of the TCPA.  Plaintiff argued that its alternative causes of action for conversion and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act were not barred by the TCPA exclusion.  Specifically, plaintiff asserted that the alternative claims were distinct from its TCPA claim, because they did not require the faxes to be an advertisement, and because they did not depend on whether the parties lacked an established business relationship (which are both elements of a TCPA claim).  The appellate court disagreed:  “Plaintiff would not be able to prove Schane liable on the alternative counts without also proving that Schane committed a violation of the TCPA….Accordingly, … the defendant had no duty to defend or to indemnify Schane in the underlying suit.”  The case is G.M. Sign, Inc. v. State Farm Fire & Cas. Co., No. 2-13-0593 (Ill. App. 2nd Dist. May 2, 2014).

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