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A Zurich Insurance Group Ltd. unit is not obligated to defend a debt collection company accused of harassing a customer under exclusions in its policy, a federal appeals court said Friday in affirming a lower court ruling.
Ocwen Financial Corp., a debt collection company based in West Palm Beach, Florida, was charged by Tracy A. Beecroft with harassment, according to the ruling in Zurich American Insurance Co., et al. v. Ocwen Financial Corp., et al.
Ms. Beecroft sued Ocwen in federal district court in Minnesota, claiming the company had aggressively pursued her for debt that had previously been discharged in bankruptcy. She said the company had made 58 calls to her cell phone or home phone between Oct. 1, 2013, and Feb. 1, 2014.
Ms. Beecroft said she suffered emotional and physical distress, including a stress-induced miscarriage, and was later denied a mortgage because Ocwen wrongly reported the alleged default to credit agencies.
Her lawsuit charged Ocwen with violating the Fair Debt Collection Practices Act, the Telephone Consumer Protection Act, defamation and invasion of privacy.
The TCPA forbids making calls using an automatic telephone dialing system, while the FDCPA forbids calls intended to “annoy, abuse or harass” those who are called. Ms. Beecroft’s lawsuit said the calls continued even after she had twice asked that they stop, in violation of the FDCPA.
Zurich refused to defend Ocwen in the litigation because of exclusions that precluded coverage if there were alleged violations of the TCPA and other laws.
The insurer filed suit in U.S. District Court in Chicago seeking a declaration it was not obligated to defend or indemnify Ocwen in the lawsuit. The U.S. District Court ruled in Zurich’s favor.
Ocwen only appealed the court’s dismissal of the invasion of privacy claim, which was the focus of the appeals court’s ruling. “Even a single covered factual allegation would suffice to trigger Zurich’s duty to defend,” the appeals court ruling said.
The unanimous three-judge appeals court panel, however, ruled that the privacy invasion claim was excluded under the coverage.
The charge “expressly incorporated by reference the 58 calls to Beecroft’s cell phone (and potential calls to her home). It was from this set of calls the district court inferred Ocwen’s intent to ‘annoy or harass’ when it continued to call Beecroft after she asked it to stop,” the ruling said.
A “debt collector may harass a debtor by continuing to call the debtor after the debtor has requested that the debt collector cease and desist communication,” the appeals panel said, quoting another ruling.
“The district court did not err in drawing a similar inference from Ocwen’s persistence in the face of Beecroft’s requests that they stop calling her,” the panel said in affirming the lower court’s ruling.
A Zurich attorney had no comment while Ocwen’s attorneys did not respond to a request for comment.